As a non-technologist working in supply chain management, I live in awe of the human mind and its ability to develop applications that create visibility into the international movement of goods. Dating back to EDI and XML, and now through solutions that employ the Internet of Things, GPS, API’s and Artificial Intelligence, there’s no limit to what people can build in their quest to facilitate global trade.
With the above said, I’ve observed a “Visibility Paradox” regarding ocean container tracking that I believe requires a call-out. Specifically, it seems that when a container vessel arrives at a port of discharge, the level of traceability actually decreases. Of course, the paradox lies in thinking that upon arriving to the U.S., container visibility should actually be greater. Unfortunately, that’s not the case.
At its core, terminal operations represent the transition from international to domestic shipping. As such, we’re not just talking about off-loading containers from a ship, but coordination between entities that include carriers, terminal operators, U.S. CBP, Partner Government Agencies, customs brokers and drayage companies. The complexity of these operations, combined with the diversity of technologies in use, is really what creates the visibility gap found at many terminals.
When one looks closely at the technological links between these players, a couple of realities come to light. First, most of the connectivity that ocean carriers share with terminals is through Electronic Data Interchange. A 1970’s technology, EDI is challenged by the fact that it is point-to-point, batch oriented, difficult to map between players and expensive. These days, EDI also finds it hard to co-exist with newer visibility tools that make use of GPS and the Internet of Things.
Second, the technological abilities of the ocean terminals themselves vary, too. At one end of the spectrum, one can find terminal operators that employ API calls to communicate with other players in the maritime eco-system. Conversely, it’s just as easy to find situations where parties are typing container numbers into terminal websites in the hopes of finding the true status of their cargo.
Third, the tech used by importers, customs brokers and drayage providers varies from cutting edge to non-existent. For example, there are still plenty of customs brokers that send Delivery Orders to their drayage partners via PDF email attachments, who in turn have to key vital information into their own systems, and then try to coordinate an empty return with a full container pick-up via the phone.
We could go on, but the reason there is a visibility gap at container terminals is because it’s a really hard problem to solve. With at least six participants engaging in multiple interactions that are supported by different technologies, it’s no wonder there’s a gap. At large ports like Los Angeles and Long Beach that feature appointment systems, chassis pools, and thousands of drayage drivers, the job gets really tough.
There are several supply chain challenges born of this visibility gap, but the key issue is one of inventory management and the inability to know exactly when merchandise can be accessed. After all, a key tenet of inventory allocation is knowledge of the whereabouts of goods and without it, supply chain professionals can’t make accurate delivery commitments to their customers, stores or DC’s. The end result is often one of late domestic deliveries and ultimately, lost sales.
To add insult to injury, not only does this lack of visibility hobble the domestic distribution of goods, it can be expensive, too. By no fault of their own, the demurrage charges that importers incur on terminals that are due (in part) to a lack of visibility, can run into several hundred dollars per container. Add to that dry runs, wait times, chassis splits and other fees, and the financial burden can be considerable.
Needless to say, the fact that a challenge is super difficult doesn’t mean that it can’t be solved.