Digital Logistics Revolution
Maersk might have just introduced the killer app that logistics’ digitization needed. Earlier this year, the freight giant launched online customs clearance documentation, available at first in select European markets.
The digital logistics revolution is well beyond its genesis. Million, even billion-dollar valuations, steady gains in traction, and a slate of industry-wide technology-enabled new product offerings say as much. But that doesn’t mean the digital logistics revolution was here to stay. It established its place in the supply chain ecosystem, but many sceptics remained, and their doubt centred around one question: what exactly is revolutionary about what the digital revolution offers?
The goal of the digital logistics revolution--and its true proposition value--has always been to reduce the points of friction in an otherwise complex freight system that is susceptible to service interruptions. Customs clearance is one major choke point that has long been targeted for a needed upgrade. Now, Maersk is hoping that their latest offering--another step in their plan to become an end-to-end supply chain service provider--claims to address this problem directly.
Some headlines relaying the news are unclear about its pros and cons. Here are a few observations:
Damco Comes Through
When Maersk announced a merger with Damco, one of the world’s top-20 biggest freight forwarders, it signalled their intent to become a full-service, end-to-end supply chain provider. How Maersk would utilize Damco’s freight management experience was to be determined. With this new program, we have our first true glimpse.
Customs clearance documentation will be handled by Damco, according to Maersk. Customs clearance will be a service add-on. Maersk mentions that forwarders will need to authorize Damco to work on their behalf to fully handle the whole process.
Without Damco, this wouldn’t be possible. Which is the same as saying without freight forwarding professionals and customs agent experience, Maersk wouldn’t be ready to offer documentation services, yet again proving how indispensable freight forwarders are.
Does Frictionless Mean Automated?
One thing that’s unclear is the level of automation in Maersk’s new service. Maersk’s short tutorial video suggests that the user picks a few options, but that they will handle the rest, as part of a "set-it-and-forget-it" kind of deal.
But it’s probable that in-house agents will still need to present and process all requests. Maersk automated document submission, but document handling will not be treated the same. When it comes to customs clearance, full automation would require multi-government integration as well. That’s the kind of solution promised by a blockchain ecosystem, but only if government agencies either adopt a private ecosystem or develop their own that becomes mandatory for their ports. Online customs clearance documentation isn’t a blockchain-based ecosystem. This is more digitization and less a complete overhaul of existing processes.
Another issue is not fully packed Maersk databases of port facilities equipment options. When you are carrying heavyweight cargo it is nice to know SWL readings at POD to determine real feasibility to arrange smooth loading/discharging and to be free from additional charges due to using mobile cranes. That's why it is highly important to back up yourself with an experienced partner who is doing your route frequently and know all undergrounds at shipment's POL and POD.
Taking Back Time (With the Right Partner)
The most significant promise of reduced friction is saving time. But how much time does customs documentation actually save on a shipment?
When it comes to filing paperwork, we’re talking minutes. Really, online shipping contracts are just one of the many improvements digitization has always claimed it can bring to the freight industry. Here is a couple:
- A step closer to the "perfect shipment" - The perfect shipment is a simple concept: a shipment that goes from order to final destination with no hang-ups, no delays, and in the most efficient way possible. Customs clearance is a bottleneck that obviously hinders the potential for a perfect shipment. It’s also just one of the things that can go wrong along the supply chain.
- More time for more business - This is an important one. We’ve mentioned before about how the value-add of using the right digitally-enabled partner is the time you save that you can then repurpose for more important things. Namely, growing your business. When you’re not worrying about signatures and deadlines (and rate shopping, and contract negotiations, and literal hurricanes, among many other things), you’re free to not only keep your existing customers happy but to go out there and find more customers. With the right partner offering the right services, your growth is almost assured.
A few minutes might not sound like much, but when your digital solution is shaving off minutes from a wide range of complex freight management tasks, that time adds up. And it’s very valuable. On another and due a lot of processes become more deeply automized you will have a lot of issues with placing a booking and getting a solid confirmed price for your shipment. It is already common practice when a lot of additional charges have been appearing after cargo is getting POD with an amount from hundreds of dollars for thousands and more. Especially if you are carrying OOG or BBK cargo it is good to be prepared for that.