After the industrial revolution, the shipping industry relied mainly on manual processes. We had systems like telephones, fax machines, and other such tools to communicate between shippers, freight forwarders, and other critical stakeholders in the supply chain. These manual systems were inefficient and led to unforeseen lags and delays.
The usage of EDIs
As logistics players progressed into using computers for business processes, EDI or electronic data interchanges became popular.
Several companies, including giants like Walmart, Amazon, Target, and others, require their trading partners to use EDI systems to exchange orders and requests even now.
What are EDIs?
EDI is a computer-to-computer communication method that standardizes electronic communication between business partners, such as purchase orders and invoices. This essentially means having systems that are connected through EDI interfaces.
But with rapid shifts to e-commerce and the COVID-19 induced digitization wave that the industry is going through, there was a need for more real-time data acquisition and analysis. Enter APIs.
What are APIs?
APIs or application program interfaces are a part of the massive supply chain digital disruption. If one asks how logistics companies get the real-time information capabilities they need, the answer would be using APIs. These programs directly help streamline processes and increase communication efficiency across the supply chain.
Whether to communicate, route planning, rate information, or more, APIs are being used across the logistics industry to fine-tune their systems. APIs can be defined as cloud-based intermediary programs that allow apps with different codes and designs to exchange data with each other online.
When it comes to logistics processes, systems can be standardized and used across the industry by various players, especially EDI backed ones. But you also have transportation management systems (or other proprietary software and systems) built a custom, in-house by large corporations or individual players. When such systems need to interact and exchange data, it becomes a challenge as they are not compatible. This is where APIs or application program interface integrations are beneficial. They allow businesses to communicate with prospective consumers more effortlessly.
APIs are essentially the digital middlemen between programs used by customers, freight forwarders, NVOs, carriers, and third-party logistics providers through various freight commerce platforms or systems.
How does API differ from EDI?
While APIs and EDIs seemingly carry out the same function, there is a noted advantage to using APIs as they are more flexible.
While EDIs are useful for batch processing, APIs are more about real-time 2-way communication through systems.
Considering this, logistics and supply chain networks are organized using transportation management systems, warehouse management systems, enterprise management systems, financial management systems, and more.
Individually, these systems work well. Using EDIs, it’s possible to generate multiple requests across different systems, find suitable vehicles to carry your cargo, find the correct rates, etc. But if you want to link these systems together and get real-time updates to make more cost-effective and efficient decisions, you’re better off using APIs.
APIs also facilitate the exchange of location-related data for freight in transit, thus making your systems more effective. This makes APIs the chosen mode of digital transformation for many logistics providers.
Advantages of using APIs
A few advantages of using APIs give businesses an edge in their supply chain operations and logistics systems.
- APIs facilitate automation by creating workflows with minimal manual input, thus automating your processes.
- APIs can be customized for different business needs, making the experience personal to specific consumers.
- APIs can be integrated/ adapted with other existing systems easily, but they can also be updated when required with changing needs of the organization with minimal input.
- APIs can allow you to embed content on websites easily, making it a more interactive experience for users.
For the shipper, freight forwarder, or 3PL, this translates to a more intuitive system that adapts itself to changing processes in real-time.
Examples of Freight APIs and how they are used in the logistics industry
A few API integrations use cases below show how APIs can enhance competitive differentiation for logistics players.
Rate information and carrier availability
APIs can link shippers, freight forwarders, and other stakeholders directly to the accurate and latest information regarding spot rates or prices.
These interfaces can also be used to link existing TMS (transportation management), WMS (warehouse management), CRM, rate management, and other ERP systems to information on the latest rates and space availability aboard vehicles, containers, etc.
While many shippers choose to go with contracted rates, spot rates can at times be more cost-effective for their needs.
Various black swan events like the COVID-19 pandemic or the Russia-Ukraine conflict make it difficult to predict which routes may be best to send your freight. In such cases, spot rates might be the answer to transferring freight conveniently. Ultimately shippers need to strike a balance between contract rates, spot rates, and live rates.
An ocean freight API integration like Freightify LINK can be the linchpin to getting all this information in real-time.
LINK is Freightify’s API product, which helps retrieve the rate schedule information through an API into your existing system.
Some of the benefits of using an API integration like LINK include:
- Instant live rates of shipping liners and offline contract rates in real-time,
- A single format to consume for the contract sheet rates and live rates of different liners
- Easy integration with existing systems
- Reduction in the time to go to market
Automating processes and end-to-end visibility
Truckload tender processes involve various steps, including generating load tender, response, checking shipment status, invoicing, and actual acknowledgement. This entire system, which might require multiple touch points of contact and confirmation, can be automated using various freight API integrations across a TMS (transportation management system).
The load tender request can immediately be referred to carriers through the two-way API communication functionality, and 3PLs or other logistics providers and freight forwarders can also be notified simultaneously.
APIs also make it possible to automate invoicing and billing processes across different stakeholders of the logistics value chain, including shippers, 3PLs, freight forwarders, and more. Finally, compliance-related documentation, permissions, demurrage, and other charges can also be communicated through these two-way APIs, making the whole process more efficient and accurate.
APIs can also connect with ELDs (electronic logging devices), mobile apps, and other transportation and tracking-related devices to get real-time data for the best results. In fact, these integrations allow shippers, businesses, and other stakeholders to have end-to-end visibility of the supply chain and logistics processes.
Easy integration with back-end apps
Many businesses are already using enterprise systems to automate processes. Using freight APIs allows these systems to be linked digitally to other systems as required to get real-time data about spot rates, live rates, location tracking, route changes, updated information, and POD documentation.
APIs let businesses customize their SaaS (software as a service) application easily. For instance, your software may not have the exact interface required for logistics businesses, but using APIs for shipping and e-commerce, a custom extension can be created and deployed easily.
How can API integrations create value in logistics?
With economies becoming more global, we see more and more businesses and supply chains becoming digital.
The COVID-19 pandemic has ensured that this digitalization gets even more entrenched in supply chain and logistics processes. As a result, the logistics networks have become more and more competitive.
In numbers, the U.S. logistics industry pulls in about $1 trillion annually and is set to grow to $1.4 trillion by 2024. Of this, the 3PL market size in 2022 is estimated to be at US$212.0 Bn.
While supply chain automation is clearly the trend that is slowly changing logistics all over the globe, it’s clear that digital transformation is the need of the hour for businesses to stay afloat in this hyper-competitive landscape.
While investing in technology can be a tough bet for small to medium businesses, it is possible today for businesses of all sizes to make use of the service offered by tech players. One of these is using API integrations across different types of platforms and services, for instance, Freightify’s LINK.
The key benefits of using APIs today
A few key benefits of using API integrations provide you include:
- Accelerate shipper, carrier, logistics provider, and application onboarding with pre-built templates, connectors, and pre-defined profiles
- Provide real-time integration dashboards to surface operational visibility and insight to enable compliance
- Identify and act on ecosystem trends, enable new digital revenue streams, and drive digital transformation initiatives
The way forward
Based on all these points, you can see that going digital is really the way forward for companies now. Your digital systems need to acquire real-time data, communicate the data to other systems, analyze it effectively and help you make decisions. While EDI-enabled systems effectively automate processes, APIs are a step forward in creating more robust, interactive systems that increase accuracy.
To this end, the need of the hour is investing in API integrations, along with your EDI-enabled systems, making them more synthesized. This can help companies and individual players gain the competitive edge they need to make more insightful decisions and better top and bottom lines.