Written by Mikael Lind, Margi van Gogh, Hanane Becha, Norbert Kouwenhoven, Wolfgang Lehmacher, Erik Lund, Henk Mulder, Niall Murphy and Andre Simha, Article No. 64 [UNCTAD Transport and Trade Facilitation Newsletter N°88 - Fourth Quarter 2020]
Supply chain operations can be complex. Especially where multi-modal transport is necessary, and where dynamic decision making is required for the routing of goods in-transit. These supply chain operations are pursued in an environment that can be characterised as a self-organising ecosystem. Connections between various (local) data sharing environments in networks of networks enable stakeholders in the supply chain to enhance their information base. The latest internet of things (IoT) technologies can provide complementary insights as to the whereabouts and status of goods and assets. Combining all available data improves situational awareness. Data sharing enables green and humanitarian decision making and facilitates a truly smooth and seamless movement of goods.
Everybody wants to know more
Information and data are the foundation of insight. Substantial investments today are being made in digital technologies allowing for more digital data streams in supply chains. Logistic Service Providers (LSP), carriers, intermodal operators (air, sea, ground etc.), port authorities and terminal operators, regulatory bodies, and Beneficial Cargo Owners (BCO) are all working on this topic. The European Commission forecasts exponential growth of data streams.
Efficient routing and high utilisation of logistics assets and infrastructure lead to cost efficiency benefits. This includes the efficient use of vessels, planes, trucks, barges and trains, as well as loading/unloading equipment. Episodically visiting actors are being served just-in-time with short turn-around times at transhipment hubs, reducing waiting times to a minimum. All of these require the sharing of information about goods and transport as the basis for visibility and transparency.
Visibility and transparency are critical for condition and time sensitive goods, like vaccines and flowers, and for bringing agility, resilience, and predictability into the supply chain. Such visibility and transparency require data; about the location of shipments, about the temperature and shock conditions goods are exposed to, also the situation merchandise faces along the supply chain, like transit delays or bad weather.
Supply chain visibility is needed to realise improved outcomes for society and the environment. As a result of Covid-19 restrictions across the globe the number of people facing starvation due to food insecurity at the beginning of 2020 has doubled from a projected 135 million to more than 270 million by the end of the year. According to a July 2020 Oxfam Report, this could result in 6,000-12,000 deaths per day.
Transparency is a must to improve emergency and humanitarian support, such as with the COVID-19 pandemic. Flagging a container 'COVID prio' in a truly transparent supply chain would make it visible for all relevant supply chain participants thereby allowing priority treatment to speed up movement and delivery, and pre-emptively circumvent disruptions in the system. With the right infrastructure in place, a carrier could put such a container on deck, the terminal could off-load it first, customs could fast-track clearance or clear the container while still at sea, the port could even make sure all the traffic lights in the port are set to green for the haulier’s truck, etc.
Similarly, the distribution of a COVID-19 vaccine is at present a logistics challenge that has never been faced before. The optimization of insufficient and constrained air cargo capacity (due to COVID-19) as well as the limited cold chain infrastructure, combined with the short expiration dates of vaccines means that increased visibility and transparency of vaccine logistics data literally equates to more lives saved.
More visibility and transparency aid `green decision making` on transport choices and routings. Optimised routes and flows produce less carbon emissions. Supply chain visibility is an important ingredient for true planetary and human benefits to be realised. Visibility also allows for post transport analyses and the verification of fair charges. Price-gouging or excesses in supply chains could more easily be exposed.
Greater visibility creates new opportunities and innovation for trade financiers, risk managers and insurance companies. Ports and hinterland carriers want to know what cargo (and how fast it) is approaching them, and where it is heading. All share the need for data, and all want to know more.
The way forward - Connecting actors in a network of networks setting
Situational awareness can be derived from combining the small pieces of information that each involved LSP is willing to share. There are many sources for those pieces of information, such as IoT devices, and systems of records for engaging LSP’s that provide data on agreements and achievements within a system of production.[i] There are various means to share, varying from central databases such as UNCTAD ASYCUDA’s “Digitizing Global Maritime Trade" (DGMT) project, or ASYCUDA Single Windows or shared blockchain ledgers, and there are various methods to control the sharing - who can see what.
Cargo being transported can take different routes through logistics networks, within regions and globally. Therefore, the need for the many actors to be digitally connected. All parties along the transport chain need to be well joined up. An important task for all involved is collaborative alignment. As most transport involves multiple modalities, and as goods being transported along the supply chain have different characteristics, it is important to understand the many aspects that can influence a shipment, from environmental conditions, to security and safety.
Initiatives such as IATA’s ONE Record, building upon the Internet of Logistics, or the TradeLens data sharing environment, originating from the collaboration between Maersk and IBM, are two initiatives intending to create a network of (local) networks. Within the European initiative of the Digital Transport Logistic Forum (DTLF), concepts for a federated environment of networks of networks are now emerging and being validated within the FEDeRATED and FENIX projects.
Multiple entities within the consumer and supply chain and transport arena are exploring the concept of data aggregation for the common good. Essentially, bringing the least granular level of anonymised data from multiple open and closed network sources (and existing aggregator platforms) together in a non-commercial, open-source global supply system dashboard (GSSD), providing system wide visibility on the movement of essential goods to vulnerable communities served by the humanitarian sector. Further, we now see the introduction of such things as smart containers (IoT), as a source of data that cuts across the different modes of transport.
Benefits within reach
When parties decide to collaborate and agree to mutually share data about a shipment, the benefits are huge: Increased visibility and transparency, integrated performance (i.e. that actions pursued by all actors are continually coordinated and synchronized) throughout the supply chain, latter parts of the transport chain being administratively prepared before the actual physical operations happen, reduced waiting time, secured fulfilment levels, minimised administrative burden, collaboration regardless of location, data point accuracy, cost effectiveness, increased resilience, improved and new services, innovation potential, capabilities for predictive actions, enabled post transport analytics, real time decision making, and increased automation.
All these contribute to cost effective, integrated fluid supply chains, and provide the means for appropriate commercial, societal, and environmental prioritisation throughout the global supply chain.
Imagine a situation where the many actors engaged in the supply chain, across and among the different modes of transport, provided minimum levels of data to enable decisions on the prioritisation of transport to be made collaboratively leading to reduced delays and waste, increasing the number of lives protected. Imagine analyses on areas of extreme poverty and famine; food, medicines and medical equipment arriving faster to save lives.
The value of these benefits for BCO’s, carriers, LSP’s and other stakeholders, including the customs authorities offsets the effort required and data governance frameworks can help to overcome intuitive reluctance to sharing data.
Challenges to overcome
The transport ecosystem is reliant on many autonomous actors. Sometimes they are simply competitors chasing the same customers, yet at other times the same players seek to collaborate to reap the benefits of co-opetition. This collaboration is usually sub-optimal. To overcome this, local information sharing communities have emerged to obtain higher performance. Port Community Systems, Government Single Windows, Trader Community platforms are all examples of this sort of development.
An issue here is to allow for the co-existence of multiple platforms, both as local information sharing communities and as horizontal information sharing communities enabling the end-to-end supply chain. Inter-operability through standardised messaging and interfacing between information sharing communities is key for success.
The Data for Common Purpose Initiative (DCPI) at the World Economic Forum focuses on creating a new flexible data governance model that allows for the combining of data from personal, commercial, and government sources. The DCPI is built on a belief that orienting data policy and data models around common purposes, such as specific use cases, will unlock opportunities for public good and commercial spheres. The view is that data can and should be treated differently depending on its actual and anticipated use, and that Fourth Industrial Revolution technologies can enable differentiated `permission-ing` of the same data, dependent upon context.
At the local level there are several specific requirements and challenges to address, including:
- Overcoming resistance to new business models
- A need to lower the thresholds for any actor to become digitally included
- Establishing agreed way(s) for identifying the cargo being transported, with different levels of granularity
- Addressing the automatic fear of data sharing, even when it will be protected by robust data sharing rules and governance models
- Overcoming the misconception that withholding non-sensitive data will create a sustainable competitive advantage
- Substantiating data sharing trust and security models between role players
Summary and call for action
Quantifiable economic, environmental and societal benefits originate from sharing data. However, the foundations are yet to be fully established and there are challenges to overcome.
As a result of increasing digital data sharing activity, the maritime sector is now establishing a new discipline of maritime informatics that unites practitioners and academics to jointly contribute to making shipping more efficient, sustainable and resilient, empowered by digital data sharing.
There is a need for an attitudinal shift: Everyone needs to take responsibility for promoting data sharing, and all need to help establish simple and fair data sharing models. For every player there needs to be a benefit – a commercial or a social reward, or both. Only then can the true potential of data and information sharing be unleashed.
It is not a question of which platform should or should not be used. It is not a question of withholding data waiting for monetisation or a competitive edge. Our call for action is for a collaborative effort to share data, under mutually agreed and fair sharing conditions. This is urgent for the future of our society, vulnerable communities, industry and not the least, our planet!
- Mikael Lind ¦ Associate Professor and Senior strategic research advisor, Research Institutes of Sweden (RISE) ¦ Mikael.Lind@ri.se
- Margi van Gogh ¦ Head of Supply Chain & Transport, World Economic Forum Margi.VanGogh@weforum.org
- Hanane Becha ¦ UN/CEFACT Transport & Logistics Vice Chair, UN/CEFACT ¦ firstname.lastname@example.org
- Norbert Kouwenhoven ¦ Global Authorities Leader Tradelens, IBM TradeLens ¦ email@example.com
- Wolfgang Lehmacher ¦ Operating Partner, Industrial Innovation Partners, Anchor Group ¦ firstname.lastname@example.org
- Erik Lund ¦ Head of IoT Tracking Division, Visilion at Sony ¦ email@example.com
- Henk Mulder ¦ Head of Digital Cargo , IATA ¦ firstname.lastname@example.org
- Niall Murphy ¦ CEO & Co-Founder, EVRYTHNG ¦ email@example.com
- Andre´ Simha ¦ Chief Digital & Information Officer, MSC (Mediterranean Shipping Company SA) ¦ firstname.lastname@example.org
[i] Watson R.T. (2019) Capital, Systems and Objects: The Foundation and Future of Organizations, Athens, GA: eGreen Press