A conversation with Trade Tech’s Bryn Heimbeck on the challenges and solutions for the “digital transformation” of the logistics sector.
1/0 – Ones and Zeros
Bryn Heimbeck, president and co-founder of Trade-Tech, a global logistics platform, is a digital devotee — his vision is to deploy ‘digitalization’ to break down the information silos constricting the logistics industry. And for a proponent like Heimbeck, this ‘digital transformation’ is the logical next step for an industry that has been slow in adopting tech that other industry sectors have readily embraced. As Heimbeck exclaims, “Fintech is flying in an airplane and the rest of us are riding a horse.”
To put his remark in perspective, Heimbeck entered the logistics industry at the ‘horse and buggy’ stage of the industry’s tech evolution. “My first job, I was working for a customs broker here in Seattle [Trade-Tech’s headquarters], typing bills of lading (BOL), and I was terrible at it because we had to use IBM Selectrics [typewriters] and use whiteout [to make corrections], and it was just terrible.” For Heimbeck, who relates “I was always interested in computers” the solution was as simple as ones and zeros — digital BOLs.
The ‘light bulb’ revelation that digital documentation was the key to unlocking efficiencies in the logistics industry started Heimbeck down a path that was anything but direct or simple. And many of the complexities of digital adoption he encountered along the way are still founding features of the problems the logistics sector faces today.
The Pushback to Digitalization
For example, take the Internet itself. In the early days of the Internet, it seemed it should have provided the ideal tool to addressing many of the communication snags the logistics industry routinely encountered.
But “embracing” a new technology like the internet isn’t always simple: “I thought at the time global trade would be the next one in line, and it wasn’t. And I’ve always been surprised that it’s been taking 20 years for this industry to embrace or even start to embrace the capacity of the internet because it opens such a different paradigm that makes things so much easier.”
As a case in point, Heimbeck relates a story of an early venture. While he was working at Fritz, one of the most tech savvy freight forwarders of its time, Heimbeck launched a side business that provided ship sailing schedules over the internet. The product was superior to the paper and fax competition and less costly to other products on the market at the time. However, there was push back as the internet was considered a waste of office time and a vehicle for “inappropriate behavior”. And Heimbeck says of the pushback, “in some respects the Internet is still considered a social media, people wasting time, people not getting their job done…”
And there is also often a disconnect within logistics companies between their commercial and IT sides of the business.
“I see a real gap between the commercial side of businesses … and the IT groups, Heimbeck says. Adding, “And the IT group is bright, fascinated with code, speaks a totally different language, doesn’t always want to slow down and explain what the hell a cookie [is] or an API [Application Programming Interface] push is… [while the] commercial side says, ‘I don’t have time for you. I got to go do sales and focus on the business.’”
And like many of the industry’s problems, the solution is better communication. As Heimbeck puts it, “We have to break through… and have businesspeople talking to the coders and the coders talking back to businesspeople. The coders say what’s possible and the businesspeople say, ‘This is what needs to happen.’”
The Complexity of Logistics
Still the main reason that the logistics sector has lagged other industries in adopting end-to-end digitalization is the onerous complexity of the task. As Heimbeck explains there is a major difference between say Fintech and logistics. “They [Fintech] can do it because it’s a small finite number where every element is a number. The dates a number, the amount is a number. Okay, currency is not a number, but it’s a defined group.”
On the other hand, there is a lot of moving parts to shifting a marine container full of goods from one country to another. “They’re [FinTech] ahead because they don’t face the complexity of a bill of lading [BOL]. Some of its port-to-port, some of its inland-to-port. Some of its inland-to-inland. Sometimes it’s one container, sometimes it’s twenty. Sometimes its ten 20-foot containers and five ‘high cubes’ [oversized containers]. Some of them are refrigerated [reefers]… The complexity of international transportation leaves Fintech in the dust.”
And what is inside the container only increases the level of complexity. “…the details inside [the container] just morphs into higher-level information about the shipment. But US Customs, all customs agencies have demanded to have that level of detail declared to them precisely in the customs entry process. Don’t do it. You’re a smuggler. And so, it’s interesting, we have these ABI [Automated Broker Interface] systems that can do exactly that, but why don’t we feed them with the PO [Purchase Order] and the information about the transport? But it’s [the information] siloed right now,” says Heimbeck.
Knocking Down the Silos
So, the question remains how to leverage all the tools in the logistics-tech toolbox to knock down the silos constricting the industry?
Heimbeck says the impetus to change might come from the regulators. As he points out, “Everybody has to drive on the right side of the road in the United States.” And “It’s not voluntary.”
After all, how far along the path to digitalization would the industry have come if US Customs hadn’t introduced the 24-hour rule back in 2002? [A requirement that ocean carriers and NVOs electronically submit a cargo declaration 24-hours before the cargo is loaded on the vessel]. “The 24-hour rule, they [US Customs] gave us eight months [for compliance]. So, it makes you wonder at some point whether there wouldn’t be benefits to the trade to have a certain enhanced regulatory compliance that said cargo had to be cleared in transit before it arrives.” And while as Heimbeck says, “I hate to be the guy saying, “Let’s have regulation.” There is a need to improve cargo flows and that involves the entire logistics community — inclusive of ocean carriers, NVO, ports and terminals, trucking, rail, BCOs, customs brokers and all the authorities regulating the transaction. And the best way to accomplish this is through digitalization of the logistics community.
“And that’s where I think it’s really going to be interesting, maybe that’s the next step, better collaboration between the government, private commerce, the state, online security with Customs and the trade and digitization. All of those things are going to come together and self-reinforce. And this could be something that we’re discussing more and more in the next few years to come.”
About TradeTech: Since 1997, Trade Tech, Inc., a global logistics platform, has provided world-class solutions that connect shippers, importers, Customs House Brokers, NVOCCs, carriers, truckers, and warehouses, enabling full visibility across the supply chain. With its multi-tenant, cloud-based platform, Trade Tech enhances connectivity, reduces operational costs, and minimizes errors for its clients globally—without the need for software downloads.
