The terminology is straightforward, but often misunderstood . One concept builds upon the other, in this sequence:
Digitization → Digitalization → Digital Transformation.
We are already done with digitization, that was act of converting the analog world into digital computers. Today, I think my kids’ lives are more digital than real-world, analog. All businesses are digital in some form.
Digitalization, currently in full swing, is the process of getting the data back out of the computers, mobile phones and intelligent things into the Cloud. Uber and Airbnb are examples of companies mining this data and creating tons of value. Digitalization 2.0 lets our friends at Google, Facebook and NSA apply machine learning, at scale, to analyze and predict every move in our digital lives. That part I’m less enthusiastic about. However, machine learning will also expedite flows of information, cargo and cash in global supply chains.
Digital Transformation, is the mega disruptor, the storm on the horizon the effect that will shake up things. Ocean carriers are scrambling to prepare for this phase. Manufacturers are already re-saddling to become service providers owning the equipment that calls home when it’s time for replacement or repair. Clearly the last phase is more about business than technology. Disruptors will benefit and incumbents will need to seek new opportunities.
For thirteen years, the IT community has debated Nicholas Carr’s provocative claim that IT doesn’t matter. In a Harvard Business Review article, he argued that IT, like electricity, is everywhere and therefore doesn’t provide any strategic business advantage.
He got one thing right. As it turned out, cloud computing platforms did indeed commoditize data storage, processing and communication. However, he didn’t anticipate that cloud computing would fuel innovation that enable completely new business models. Nimble, cloud native innovators created services that made available to everyone, business process automation tools that were previously reserved only for enterprises with hefty IT budgets. Global by design and deployed in days rather than years, these services instantly created strategic advantages for its users. So, IT mattered a great deal after all. What do you think?
A company’s most valuable assets are the business processes that guide planning and execution of innovation, operations and relationships with customers and partners. You are your “process” was the mantra of one of my old bosses at SAP. Of course coming from SAP, that may seem a bit self-serving. Nevertheless, in logistics, process is king and timeliness is queen. Logistics clockwork is completely dependent on processes, making the mantra spot on. Now, not all processes are equal. Processes exist in a spectrum from ad-hoc to fully automated. While not ad-hoc, many logistics processes still rely on spreadsheets, emails and phone calls and are therefore manual in nature, requiring many “touches”. In few cases is the process documented and governed by policy but rarely is it automated. The real showstopper in global logistics is that these internal processes exist in an overarching flow between carriers, terminals, truckers, forwarders and shippers each with their own data silos. Orchestrating that flow has traditionally been very challenging.
The maturity and the ubiquity of Cloud technology is changing this situation rapidly; never before has it been possible to unify all the people, information and processes involved in global supply chain networks. An evolution, called digitalization, is under way to fully automate global flows, connecting all supply chain participants and systems in real-time via the Cloud. If you are a service company, like a freight forwarder, this is a key opportunity to rethink strategy and focus on innovation to gain competitive advantage. Consider, for example, providing your consignee with complete visibility into in-transit inventory and PO management.
Global supply chain flows can be broken down further into interconnected flows of INFORMATION, CARGO and CASH. Trade Tech specializes in simplifying and automating these flows with cloud technology (captured in our neat visual above). Shipping documents and compliance filings are artifacts of these flows. A shipping document is a snapshot of the flow at specific time from a specific perspective. In other words, a shipping document is merely a view of the flow. Taking a flow centric, versus a document centric approach is important. The flow carriers the necessary information to complete a given document. There is absolutely no need to re-enter the data for the next hand-off in the chain. This seems to be an industry obsession and the source of most inaccuracies, lost visibility and delays. However, only by standardizing core reference data (master data), which is non-trivial, can true automation take place. A Cloud based system that is always on and always connected can automatically synchronize such data. Think sailing schedule, GL account codes, SKUs, carriers codes, port codes, cargo types, hazard codes or stakeholder profiles etc. Workflow rules can now take action based on standardized qualitative data and automation can take place. With repeatable outcomes you are now in pole position for taking your business global. The perspectives of this digitalization are quite exciting:
Trade Tech, a leader in cloud-based solutions for the global shipping and logistics industry, announces its cloud-based solution, Syrinx™ e-Shipping Portal (Syrinx), is equipped for freight forwarders to submit ACI/eManifest security filings. Effective Nov. 7, 2016, the Canada Border Services Agency (CBSA) requires advance secondary data to be transmitted by freight forwarders for cargo imported into, or moving in-transit through Canada.
With the implementation of ACI/eManifest, freight forwarders are required to transmit advance house bill data electronically to the CBSA. The data must be validated and accepted by the CBSA 24 hours prior to the cargo being loaded aboard the vessel at the port of origin. Freight forwarders are also required to transmit a house bill ‘close’ message once all house bills within a consolidated shipment have been submitted. This expanded requirement replaces the existing ACI/supplementary reports, that now, instead is required for freight remaining on board (FROB) in Canadian ports.
Trade Tech co-founder and CEO Bryn Heimbeck says, “The eManifest requirement is quickly approaching and we’ve found that freight forwarders are making preparations for eManifest and having Trade Tech register them with the CBSA. Affected freight forwarders must realize that they not only have to register with the CBSA Technical Commercial Client Unit (TCCU), but that there is also a lengthy testing period before they can begin filing. Trade Tech can register and test on our clients’ behalf so we’re removing that burden from them and our solution ensures that they’re compliant, avoiding cargo delays and penalties.”
Timeframe for eManifest Requirement:
• From Nov. 7, 2016, to Jan. 10, 2017, the CBSA will provide freight forwarders with a period of transition during which penalties for non-compliance will not be issued and the CBSA will work closely with freight forwarders on corrective measures.
• From Jan. 11, 2017, to July 11, 2017, freight forwarders deemed to be non-compliant with eManifest requirements may be issued zero-rated penalties (non-monetary) under the CBSA’s Administrative Monetary Penalty System (AMPS).
• Beginning July 12, 2017, freight forwarders deemed to be non-compliant with eManifest requirements may be issued monetary AMPS penalties.
Trade Tech is offering weekly educational webinars on ACI/eManifest filings. Freight forwarders can click here to register for the next webinar.
The lack of guidelines for shippers about how to comply with the SOLAS VGM regulation as it went into effect on July 1, 2016, led to a number of questions throughout the industry. Where should containers be weighed? How do shippers provide their signatures for these weights without slowing down the supply chain? Still, as of the end of July, many of the 170 countries that have adopted the regulation have not published guidelines.
Clarity Amid Chaos
In an effort to provide clarity, the Agriculture Transportation Coalition (AgTC) discussed a new proposal at their Conference in June. The primary point of the proposal was to establish a unified practice of weighing cargo containers at the terminal during the in-gate process. Since the Intracoastal Agreement Loss rule (which has been in place for 30 years) already requires terminals to weigh containers as they enter terminals for worker safety, the U.S. Coast Guard agreed that this process adhered to the weighing requirements in the SOLAS VGM regulation. In addition, the Ocean Carrier Equipment Management Association (OCEMA), recently declared the Terminal Weighing Approach (TWA) is an industry best practice.
There is no doubt that weighing containers at the terminal provides the most accurate container weight, because the entire container is being weighed at the closest point to being loaded on the ships. In addition, this is far more accurate than weighing the cargo components separately and adding the parts plus the container to arrive at a combined weight. Weighing the entire container at the terminal greatly reduces the chance of human error.
It just makes sense to support OCEMA’s TWA as an industry best practice. However, simply providing a container’s gross mass does not fully comply with the SOLAS VGM requirement. The SOLAS VGM regulation clearly states that the shipper, or a person duly authorized by the shipper, must provide a signature, either physical or electronic, with the container’s gross mass to the carrier – thus verifying that the gross mass is accurate, as well as assuming accountability for that weight. The signature verifying the gross mass is the key difference between the new VGM requirement and the 1994 SOLAS requirement that shippers were to provide the gross weight of containers.
Who Is Accountable?
Since the announcement of OCEMA’s TWA, there has been a variety of opinions within the ocean shipping industry about who is ultimately responsible if a discrepancy in container weights is discovered. Some shippers assume that, by using OCEMA’s TWA, terminals will be liable in case of a weight discrepancy. And of course the terminals do not want to assume this liability. Who would? Another cause of confusion is that some industry “experts” assert that a signature is not required from a shipper when using this approach. However, this assertion is at direct odds with the SOLAS VGM regulation, and it also subjects terminals to liability issues.
In order to secure the signature from shippers, James Newsome, president and CEO, of the South Carolina Ports, proposed that the terminal and the shipper enter an agreement where the terminal will submit VGM on behalf of the shipper, thus taking the responsibility for mis-declared container weights.
Historically, shippers and terminals have never had business relationships. The difficulty and time spent setting up a contractual relationship could slow down the supply chain. Now the question is – how does the industry comply with the VGM requirement without slowing the movement of the cargo.
The Common Sense Approach – VGM Submission via a Secure Online Portal
Trade Tech recommends a “painless” VGM submission process as a best practice where shippers use a cloud-based portal in conjunction with OCEMA’s TWA in order to file a complete VGM declaration.
We see two approaches for capturing both the shipper signature and the terminal weight. In the first case, the portal “orders” a weighing from the terminal. After the in-gate process the terminal transmits the weight back to the portal that automatically completes the VGM declaration and transmits it as a regular VGM declaration to the carrier.
In the second case, shippers create shipment instructions within the portal including the usual VGM responsibility signature. This signature is automatically transmitted to the carrier, demonstrating that the shipper trusts that the stated weight coming from the terminal is true and accurate. The terminal then weighs the container and sends the weight to the carrier through normal means. From there, carriers combine the weight received from the terminal and the electronic signature received from the shipper to form complete VGM declaration. The carrier transmits the terminal weight back to the shipper for record keeping purposes.
With the addition of one of these simple approaches, the VGM requirement can be effectively met without shippers and terminals entering into any kind of legal contractual relation or terminals assuming liability.
While the main goal of this process is to meet the VGM requirement, there are additional benefits for both carriers and shippers. Using this type of online portal solution will lead to fewer booking exceptions for carriers, allowing them to know for certain which booked containers they will receive prior to their arrival at the terminal. As a result, carriers can plan accordingly. In addition, by using a cloud-based portal in combination with OCEMA’s TWA, shippers do not have to be directly involved with weighing the cargo containers and the extra handshake to capture the container weight happens automatically in the background. This also gives shippers full visibility into cargo movement from the first mile, and information flow is streamlined and faster.
The best practice of using OCEMA’s TWA in conjunction Trade Tech’s recommended VGM submission process provides the most accurate container weight and ensures the VGM requirement is met – all without slowing down the supply chain or adding extra manual steps. As the industry learns more about communication, liability, and supply chain issues in the current process for VGM submission, it will become more important that this best practice is adopted throughout the industry to meet the VGM requirement.
Today DC Velocity published Trade Tech’s perspective on using carrier websites for submitting SOLAS VGM declarations.
Trade Tech recommends shippers to use centralized cloud-based portals, like its Syrinx™ e-Shipping Portal (Syrinx), to submit SOLAS VGM declarations to carriers. Syrinx, which is connected to virtually all carriers, is significantly more efficient than using multiple carrier portals and has the added benefits of increased security and reduced risk of data entry errors. Experience how simple it is here
Since the SOLAS VGM regulation went into effect, many shippers are resorting to carrier portals to submit their VGM declarations. As a result of using this VGM submission method, shippers that work with multiple carriers are required to create multiple logins and manually enter information into multiple carrier websites for each shipment. In order to check the status of VGM declaration submissions, shippers must login to each carrier website. This time-consuming process continues to reduce productivity as shippers typically use a number of carriers. In addition to the tedious task of entering data into multiple sites, the shipper is more vulnerable to data entry errors as well as their sensitive information being hacked.
Trade Tech co-founder and CEO Bryn Heimbeck says, “It has been shippers’ initial response to use carrier portals to submit their VGM declarations because they’re free. However, there is a real inconvenience of doing business this way. For example, if a shipper does business with 15 carriers, they’re going to suffer from the extensive amount of time and effort it takes to manually enter those declarations for each shipment in 15 different carrier portals. While the carrier portals may not cost money per se, this process costs shippers’ time, which in the end is money. This is why we strongly recommend the use of one centralized, secure cloud-based portal for VGM submissions.”
By using a single, centralized, cloud-based portal that is connected to multiple carriers, such as Syrinx, shippers benefit from the following:
- One secure login to submit the VGM for all their shipments, regardless of carrier.
- Ability to check the status of each VGM submission in real-time by only logging into one platform.
- Increased efficiency and reduced risk of data entry errors by only keying data once.
- Reduced security risks by having one secure portal and login.
Unique benefits specific to the Trade Tech solution include the system’s robust validation process which, as an example, provides an auto-populate process for trading partner information, ensuring data consistency throughout the supply chain. In addition to VGM submissions, Syrinx has the capability for shippers to submit various security filings, including Automated Manifest System (AMS) filings, Importer Security Filings (ISF), Japan Customs Advance Filing Rules (AFR), Canada Advance Commercial Information (ACI) and Canada eManifest simultaneously, plus Automated Export System (AES) filings. These filings are naturally integrated into a single interface.