Assessing the Value of the Worthless Silver Coin

Welcome to the 51st edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I waxed nostalgic about reaching 50 editions of of TLL. This week, I’m exploring whether logistics enterprises presume their existing systems are more valuable than they really are.

As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.

For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@ihsmarkit.com or on Twitter at @LogTechEric.

I’m currently in India and that means I’m exposed to a fundamental aspect of wealth that I never am in Western countries: using ownership of physical precious metals as a store of value. Every person here owns, or aspires to own, some quantity of gold and silver. Could be in the form of jewelry, coins, or just plain old biscuits weighing a few grams.

The idea is that these physical holdings are an insulation against the vagaries of other pots of value, whether the equity market or a currency that can fluctuate heavily against more stable currencies. There’s also a sentimental aspect to keeping gold and silver. Jewelry and gold blocks and silver coins are passed down generation to generation, a store of value linked to happy memories that mean more than a mutual fund or currency note ever could. Don’t get me started on NFTs…

But sometimes, those stores of value aren’t as safe as they appear. My mother-in-law had owned a silver coin for ages and when a few weeks ago she attempted to trade it in to defray the cost of a larger silver item, she came in for a rude awakening. The coin was not pure silver, and had hardly any worth.

This was but a tiny example of presuming that the value of something is more than it actually is. One minute, my mother-in-law believed she had an asset worth a certain amount, and she would have continued to believe that if she had never tried to trade it in and found that it was virtually worthless.

This got me thinking about the presumed value of things, whether a physical item like a silver coin, or a piece of software used by a logistics team (everything always comes back to logistics in my addled mind). I thought, how many companies are sitting on a system they think is a pure silver coin when it’s actually just an ordinary piece of metal?

In February I wrote about the notion of intrinsic value as it related to data, a riff on the ludicrous Gamestop situation. My contention then was that most people tended to overvalue their own data, and undervalue the benefits of sharing their data with carriers and 3PLs and suppliers. But there’s another layer to this intrinsic value equation as it relates to the systems that hold and use all that purportedly valuable data.

Across all walks of life, software is a funny thing. At first, a new system is thrown in our face, and we reluctantly begin to use it. Then we grow accustomed to using it. Then we begin relying on it. Eventually, we figure out all the shortcomings, and complain about loudly them, but are utterly dependent on it in the same way two spouses who could not possibly live a day without one another love to grumble about their partners. The systems become appendages that are somehow noticeable and yet taken for granted at the same time. The user’s bloodstream merges with the bloodstream of the system until it feels like removal of the system would endanger the user’s existence.

But what if the user of a system – say, a two-decade-old transportation management system (TMS) – had a “silver coin” moment? What if they realized that the system was not as intrinsically valuable as they had thought, and, even more importantly, that they were not as existentially dependent on it as they had presumed.

This realization is part of a bigger movement in logistics right now, one where companies are seeing a bunch of cool stuff to try and maybe buy. They’re all sitting on a trove of physical gold and silver that retains a certain value, but a) that trove doesn’t appreciate in value the way other stores might and b) some of that value might, in effect, be fool’s gold.

In order to take full advantage of the advances happening in the world of logistics technology, every entity (whether a shipper, 3PL, carrier or port) needs to take inventory of its “physical store” of technological value. It needs to determine whether those gold blocks and silver coins are continuing to contribute value in the way they did when they were first obtained. And it needs an independent, objective view on whether any of it is literally of no value anymore.

In the end, my mother-in-law ended up paying cash for the silver item she wanted to buy, and she took the phony silver coin home, shrugged her shoulders and wrote off its presumed value. I assume she also started thinking about whether any other physical stores of presumed value she owns were as valuable as she had always thought they were.

There will certainly be items that are as, or more, valuable than she had assumed, and others that are similarly worthless as the silver coin. Some of those other “silver coins” will have an emotional attachment that offsets some of its lack of pure value, same as a the attachement a logistics team’s user will have for a TMS that has gotten the job done for 15 years.

But heirloom jewelry is not the same as enterprise software. If a system is a presumed store of value simply because the user can’t imagine working without it, and because the existence of it provides some level of comfort, that’s a crutch for the mind, not something that is appreciating over time in line with the outside world. In that way, enterprises need to ruthlessly examine the makeup of their technical wealth. A little bit of sentimentality and comfort is okay. But when a company looks under its bed and finds that its systems are all gold coins and generations-old jewelry, it may find that much of that presumed value is actually coins made of worthless metal.

🚨LogTech Map update – Version 2.0 is in the wild

Well that escalated quickly. Last Friday Radu Palamariu, Brian Laung Aoaeh, Nick Chubb, and Ben Gordon and I released the latest iteration of our 2021 LogTech Map. Then, Ben went on Cassandra Gaines’ show and all hell broke loose. Which is great. The point of this was to stoke discussion, improve the collective understanding of the market, and to get feedback. As I wrote last week, this is an open, iterative process, and we never set out to create a perfect map, because that doesn’t exist. We wanted to create the most accurate, most useful map out there, and we’re progressing toward that goal. We know where this can be improved in future iterations and that the makeup of this map will change weekly based on funding rounds, M&A and new entrants on the scene (not to mention more representation from companies in emerging markets). Any company can tell us why they think they belong on the map, and submit your company’s information here if you haven’t already. As Ben said, step in the arena. We’ll be releasing an FAQ on the map, as well as the next iteration, very soon.

🚨TPMTech is coming to Long Beach Feb. 24-25!

Registration for both TPMTech and TPM22 opened Monday Aug. 2, and we’ll have a sneak peek next week at early themes and sessions at TPMTech. I am brimming with ideas about how to make this the most impactful global logistics technology conference ever, but again, would love your feedback on session ideas, speakers you’d like to see and formats that you think might be cool. Can’t promise we can wedge it all into two days, but I’ll do my best.

Here’s a roundup of pieces on JOC.com the past week from my colleagues and myself (note: there is a paywall):

• For some reason this was freight procurement week at LogTech HQ. Every story I wrote was about tools that are meant to sharpen the procurement process for shippers and forwarders in various modes. The first one I’ll highlight is this look at what the future of international rate management systems will look like as liner carriers, airlines, and rate marketplace continue to make rate transparency more visible.

• Relatedly, I wrote about Freightify’s $2.5 million funding round, its rebrand, its narrowed focus on rate management, and its planned expansion to the US and Europe.

• Leaf Logistics’ original aim was to wall off a shipper’s long-term, repeatable freight that could be committed to brokers and carriers in a way that resembles dedicated, and then let the shipper focus its procurement resources on dynamically sourcing capacity for the rest of its volume. It took another step in that direction in recent weeks with the advent of Leaf Adapt, a platform that takes a holistic view of a shipper’s spend and continuously optimizes it. This stuff doesn’t fit on a slogan – it’s complicated. Which is why I chatted with Leaf execs to have them walk me through it.

• Finally, I looked at how two European technology platforms are incorporating carbon calculation tools into their procurement tools for shippers. 3PLs have started doing this en masse, and now independent software platforms more and more are seeing an opportunity for sustainability to legitimately be a third leg on the procurement decision-making stool, alongside price and service. (Actually, maybe it’s a four-legged table, with data as the fourth leg).

• My colleague Janet Nodar also had a really insightful look at how a project cargo forwarding network is providing digital tools for its members and their customers.

And here are some recent discussions, reports, and analysis I found interesting:

• Have to first address this from a month ago:

  Four minutes in, Flexport CEO Ryan Petersen says: "We ship more containers than anybody on Asia to US. At the end of the year we'll be the largest provider of ocean freight from Asia to the United States." Not sure how Ryan is calculating this, whether by container or volume or revenue, or some other metric. Anyone from the company or elsewhere care to weigh in?

• Forager does a good job of explaining the value it sees from the aforementioned LogTech Map.

• Virgil Ferreira, COO of rate management at Magaya, with a succinct blog from June about the industry’s continued reliance on rate sheets and how that may change in the near future.

• Big news of the week was a US importer alleging that two container lines (MSC and COSCO) were not only failing to fulfill contracted container allocations, but also colluding. Here’s a blog from Bjorn Vang Jensen on the topic and a column from my colleague Peter Tirschwell, where he notes that carriers essentially conveyed two decades of value to shippers through low freight rates.

• Encourage any shippers to take this survey by good friend Ken Kowal about what technology they use.

• Interesting WEF case study on data portability in India and Japan.

Some upcoming events I’ll be involved in:

• Today’s the day! My new monthly show on the Let’s Talk Supply Chain network premieres 10 am EST. It’s called LogTech Live and our first guest is Rachel Premack, intrepid reporter at Business Insider. I’ll be discussing tech topics of the day, which buzzwords are meaningful or not, with a healthy sprinkling of dadjokes. Here’s a rundown of what we’ll discuss.

• I’m moderating a JOC webcast at 2 pm Aug. 12 (this was pushed back from the original July 29 date) on how technology can play a role in improving freight invoice accuracy. In a year of, as one tech provider put it, “duplicate freight invoices, previously negotiated surcharges re-emerging without cause, new surcharges on international ports that weren’t properly disclosed, and heightened detention and demurrage charges,” this hardly seems more relevant. Register for the free webcast here.

Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.