Shipping and transportation is a relationship business. When manual processes ruled the day, we relied on faxes, phone calls, and emails. EDIs (electronic data interchanges) took over the transportation industry in the 1960s.
EDIs sped the process of transferring large amounts of documents. This made the whole process of getting deals done much simpler. We could focus on the logistics, carrier relationships, and service to our shippers and not the paper-pushing.
The advent of APIs (application program interfaces) has taken data transfers to the next level. With simplified access to an organization’s real-time data, an API far outpaces the efficiencies of an EDI.
APIs allow for greater consistency, accuracy, and speed. With improved communications and operations that drive strategy, we can focus on relationships more than ever before. But surprisingly, much of the freight/transportation industry still uses EDIs.
If freight APIs are the future, why are there so many holdouts within the logistics industry? The answer lies with the overall culture of this industry.
While technology is moving at an ever-faster pace, shippers are still digitizing. The Wall Street Journal reports that in 2017, less than 40% of companies were digitized, “including everything from deployments of digital tools in their supply chains to customer-facing products and services.”
Digitization — including the adoption of APIs — distinguishes shippers that are at the cutting edge of logistics technology. As logistics technology rapidly improves, the divide between the early adopters and holdouts will only continue to grow.
Before we jump into why APIs are the future, let’s revisit EDIs and why they are obsolete in the face of APIs.
Electronic Data Interchanges are computer-to-computer exchanges of information intended to replace email, fax, and post communications. They use a standardized format to transmit business documents. EDIs move large amounts of information while eliminating intermediary actions. This does offer time savings over paper and email transactions.
The major downside to using an EDI today, though, is that they don’t operate in real time. EDIs use a timer system as a gatekeeper for transmitting documents. So while shipping costs are fluctuating from hour to hour, your EDI is standing by complacently. In a time of capacity crunch and increasing shipping costs, this lag presents a major downside.
EDIs are also difficult to implement, requiring months of set-up time and significant IT-staff investment to maintain. Basically, an EDI could offer an existing TMS a boost, but you’d be missing out on many advantages available through freight APIs.
So what is so innovative about APIs? Here are three reasons we suggest using freight APIs over a manual system or an EDI.
Real-time visibility offers a big advantage over manual processes and EDIs. An API stays on top of changing rates while eliminating the costs associated with running older systems. Not to mention, automation decreases the incidence of errors throughout the process. A freight API offers instant, accurate quotes that are immediately actionable.
EDIs offering stale data and compromised decision-making aren’t exactly a customer selling point. And using a system that requires manual processes and maintenance means downtime — another unattractive disadvantage.