Why intelligent supply chains will rule the world

Imagine an advanced interconnected freight transport network that connects goods safely, quickly and cost-efficiently, a network that makes different modes of transport easier to use than ever before, and provides reliable, predictable and accessible information to enable moving a product from A to B to reach its final destination.

In today’s congested world, most would agree that the e-logistics related to movement of goods is a growing field, and one that will not plateau. Companies are seeking faster and better ways to get product to market and on consumer’s shelves or in their driveways. At the same time, many would agree that demand frequently outstrips the available capacity of transport infrastructure. There can be few companies that have not experienced sporadic load disparities, slow freight movement, or high transport expenses.

Global growth

Every product in our homes and offices got to the shop shelves as a result of efficient, safe and rapid transport, sometimes in the same city, at other times from across the globe, and often using multiple modes of transport such as rail hubs, air freight and land-based services. The movement of freight is changing in ways that could barely be imagined a few generations ago and at a pace that is faster than any in recorded history.

To better understand the impact of global freight movement, consider this. The freight industry transports trillions of dollars’ worth of goods every year to every corner of the globe and back, through an increasingly interconnected and interdependent global freight supply chain. In 2015, world trade in goods was valued at about USD 16 trillion, according to the UNCTAD report Key Statistics and Trends in International Trade 2016, the latest analysis of trade-related issues by the United Nations Conference on Trade and Development. Each seaport and airport is connected to road and rail networks with intermodal dwelling times, reflecting the multimodal nature of most freight journeys.

International and domestic freight shipping is projected to continue to grow rapidly in the coming years and decades as export-oriented economies and developing nations generate more international trade. Additional demands in freight volume (tonnes of goods moved), and the distance at which this freight is being carried, will be coupled with problems of ­rising traffic congestion, environmental damage and associated economic losses.

There is no question that today’s industry is different from that of the past because of the premium placed on speed and safety of deliveries, not only in local markets but also across borders into other countries. When will a load arrive? Where is a particular shipment right now? What condition is it in? Why did a truck make an unscheduled stop? The need for real-time data has never been so important to companies.

New demands

As the industry moves into the connectivity era and becomes more efficient, the way data is presented also takes on added performance. In the present state of things, systems cannot cope with the volume of different data formats involved. Take, for instance, the average supply chain. There are several hundred GPS devices being used by haulers and their subcontractors at any one time. This requires that data from a transporter’s own fleet and that of its subcontractors be unified into one stream and distributed only to relevant customers.

Today, the industry needs to manage the plethora of inbound and outbound data. And then there’s the problem of interconnectivity of data. The supply chain uses an alphabet soup of so many types of standards – UN/EDIFACT, SMDG, LOGINK, GS1 and OAGi – yet the lack of seamlessness and inefficiencies in general, as well as the rising costs and complexities of shipping and delivering goods, are adding to profit pressures faced by manufacturers across the globe.

“In transport and logistics, there are many standards and there will be many standards for a long time,” says Jan Tore Pedersen, President of Marlo, a leading independent logistics and transport company. “Hence, for interoperability to be efficient and effective, International Standards are important, both for connectivity and for information exchange.”

Understanding these trends is key to radically rethinking freight and future-proofing intermodal transport. It’s something Pedersen says is likely to change with initiatives such as the European Gateway Services in the Port of Rotterdam and the Common Booking Platform in the port of Antwerp, where visualizing that intermodal transport becomes more and more relevant for the feedering of intercontinental containers. “When such services are implemented further, they may attract cargo that normally would have been using road transport – due to increased availability, increased frequencies and lower cost, etc.,” he says.

Innovation in action

Much of the innovation needed to address these challenges is already happening. The ideas in data transport are not science fiction. For example, ISO technical committee ISO/TC 204, Intelligent transport systems, seeks to fill a role focusing on data exchange needs for the international supply chain, including data needs for the interface with all modes of transport. Those needs are essential for transport information and control systems.

Take ISO technical specification ISO/TS 24533:2012, Intelligent transport systems – Electronic information exchange to facilitate the movement of freight and its intermodal transfer – Road transport information exchange methodology. It focuses on motor carrier transport interfaces through the supply chain, or those data items that deal specifically with the key pieces of transport information critical to getting the goods to the marketplace without delay related to data sharing. Therefore, the interfacing modes’ data structures and formats must accommodate each other to ensure efficiency and security from end to end.

The aim of ISO/TS 24533 is to allow electronic data sharing through many-to-many relationships between supply chain partners, which will help ensure sustaining standards. The many-to-many relationships also guarantee that data initiated by the first partner will allow other partners equal access and can help customs agencies to access data early in the progress of goods coming through the supply chain.

Although the technical specification contributes to removing bottlenecks in data exchange, it was its predecessor – the Universal Business Language (UBL) – that started the trend. Published as ISO/IEC 19845, the standard is a generic data interchange language that allows disparate business applications and trading communities to exchange information along their supply chains using a common format.

All too obvious

But how are companies taking the news? Commercial transport companies have been hesitant about adopting more advanced technologies for a number of reasons and there is widespread confusion about which breakthroughs will have the biggest effect on profitability and overall organizational performance.

Marlo believes International Standards are, and will continue to be, important for the logistics industry. “If we want to achieve increase in intermodal transport,” says Pedersen, “international standards organizations need to perfect what they have, but, more importantly, support interoperability and collaborate, rather than compete.”

Collaboration is key indeed. New partnerships and new ways of working with other standards organizations are needed to achieve shared goals. To this end, ISO/TC 204 has advanced the idea of close coordination among other appropriate ISO technical committees, OASIS, IATA, IEC, CEN, the UN Centre for Trade Facilitation and Electronic Business and the World Customs Organization. Working in isolation is no longer viable, particularly in view of the dramatic growth of the global intermodal freight market.

Research consultancy MarketsandMarkets¹⁾ expects the global intermodal freight transport market to grow to USD 26.19 billion in 2019. This represents an estimated compound annual growth rate of 16.4 % from 2014 to 2019. In the current scenario, North America is expected to be the biggest market on the basis of spending and adoption of the intermodal freight transport market.

Given the global boom in the intermodal freight transport industry, the need for standards has risen dramatically. Add in today’s heightened security concerns and there is perhaps no other sector that better illustrates the axiom “the time is now” as it looks for new ways to manage the challenges of moving goods across the planet.

Michael Onder, President of C3 Consulting in the United States, gives his insights into these important questions. “Today’s highly competitive global market calls for intermodal transport systems that meet industry’s expectations in efficiency and reliability as well as government’s sustainability expectations,” he says. “There can be no doubt that transport is a very complex and diverse system of systems, with complex networks. However, well endorsed and accepted International Standards are essential for building an interface system.”

Onder, who is also the project leader for ISO/TS 24533, goes on to explain the benefits: “We are hoping to use ISO/TS 24533 as a standard for interoperability that will allow the messages constructed under ISO/IEC 19845 to be used interoperably with other systems (UN/EDIFACT, GS1, LOGINK). This will reduce the cost of operation and energy consumption and, at the same time, deliver greater reliability with predictability that is vital in the decision-making process of the logistics chain.”

A vision of the future

Today’s freight transport system has become as much about dealing with a crisis and understanding technology as it is about loading boxes on to trucks, trains, ships and aircraft. New challenges are pushing boundaries: ­minute-by-minute tracking in all parts of the world; ­realizing cost efficiencies while guaranteeing timely delivery; and anticipating problems and having back-up plans.

What seemed impossible yesterday is now very possible with access to today’s technology and information. Achieving a perfect world in future transport means overcoming a series of challenges, not to mention an array of standards and interoperability issues. Intermodal data exchange standards developed by ISO will help connect our ports with the rail hubs, air freight and land-based distribution, and offer greater efficiency in how goods are moved.

In this future, the longer-term vision is one of harmonized intermodal transport that will enable economic growth. It will be resilient, energy-efficient and sustainable. So, will ISO standards be the solution? If design and forward-thinking technology are the drivers, there is every chance.

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