The Logistics Industry's Walk in the Clouds

Welcome to the 59th 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 looked at the “Human in the loop” concept as a way to gauge where automation might take root in logistics. This week, I’m explaining just the main reason all this innovation and capital is possible in logistics.

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.

Have you ever experienced the sensation of walking around when it suddenly it dawns on you that something is literally supporting you underfoot? That what’s beneath you, that feels so solid and permanent, is actually a thing that was created over billions of years, culminating in the layer of dirt or concrete or tile that literally rests under your feet? That the ground is something you take completely for granted except for the one moment of lucidity when you don’t, only to return to the normal state of taking it for granted again?

That’s the cloud in 2021. What was once a dreaded buzzword, then became an annoyingly ubiquitous term meant to convey technological differentiation, ultimately became like the power lines spanning cities and the water coming out of your kitchen sink, and yes, the ground beneath your feet. Cloud is everywhere, and yet it has receded into our collective conscience in such a way that it doesn’t really even matter anymore.

My Apple cloud storage account is set to autopay. My Google docs save themselves. Notes on my phone transfer seamlessly into notes on my laptop. I can stream every single song in the history of time, upload critical documents that I signed with a swipe of a finger. All of that is built on the cloud. Of course it is, by the way. You didn’t need me to tell you that. By now, if you’re reading this, you already knew that. Just like you didn’t need me to tell you it’s the ground under your feet that you’re walking on.

So what does this mean to logistics? Well, it means that the entire VC-backed phase of logistics technology the past 10 years has been utterly based on broader acceptance of cloud everything – phone apps, desktop apps, development tools, document sharing, and so much more. It feels so obvious that this is the case that we sometimes fail to recognize it. And maybe that’s a good thing.

But it also gives us a chance to realize why this past decade might end up being so impactful relative to generations past of logistics technology. It’s not just the plentiful capital, not just the relentless focus on user experience, not just the spirit of trying and failing and trying again. Not just the presence of Amazon. It’s because cloud became like the ground and not like an unreachable point in the sky.

That wasn’t always the case. In the wake of the dotcom boom, as some of the name brand technology providers in logistics today were birthed and came of age, moving to the cloud was a process of persuasion. It required a maddening educational campaign. And persistence. What do you mean I just use a browser? What do you mean my data isn’t stored in our servers? What do you mean everyone has access to the data at the same point? And even the associated payment and implementation models were novel and weird. What do you mean I pay per month? I don’t need a consultant to come and teach me how it works?

To be clear, even with cloud ubiquity, many of those questions still remain. But we’re well past the point of cloud skepticism. Now we’re into a phase of discovering just how powerful cloud be for the logistics industry. Will it be like the ground, a known and stable force, or will it change the physics of the industry, creating a way of working we can’t even envision right now? Like the old saying goes, you need to understand the rules before you break them, and for a long time, much of the logistics industry didn’t understand how cloud actually worked. Now they either do, or don’t care because it’s so far in the background, in a safe space beyond their cognition.

One way to gauge that impact is the paucity of times I see providers describe their systems as cloud-based. Some still do, but the number diminishes each month, and there will be a point where saying a system is cloud-based is like saying a system involves computing.

We’re not quite at the point where the logistics industry fully sees cloud like it does the ground we all walk on, but the time is coming when we’ll feel like we’re walking on air.

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

• Deep in the recesses of a filing that’s part of an FMC claim by a customs broker against a container line for what it contends is improper assessment of container demurrage fees like a simple truth: email is totally busted as a way to communicate key milestones and deadlines in global logistics. I examine how this case is like a cipher for a far broader problem.

• There’s a natural ebb and flow of M&A in the forwarding technology world, led by big platforms that aggregate niche providers with traction. That activity always leaves room for new entrants, a dynamic I explored this week through the prism of Cargologik, a Miami-based forwarding technology provider aiming to empower small forwarders around the globe.

• My colleague Bill Cassidy wrote about Home Depot’s partnership with Loadsmart to build a marketplace of flatbed carriers, a move that helps it structure a market of independent operators that sometimes lacks sophistication.

• Bill also wrote this week about the latest big M&A in freight brokerage, MoLo Solutions being acquired by ArcBest for $265 million.

• FourKites this week unveiled an order intelligence product designed to link its transportation, yard and purchase order visibility capabilities into a single hub. The target market initially is the CPG market.

• Spot procurement platform Cargobase this week expanded its tools to include a TMS, a move that grows the market for lightweight, easy-to-implement cloud-based tools. CEO Wiebe Helder told me it was a natural progression, as customers were increasingly asking for a way to execute shipments using the capacity they procured on the platform.

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

• Logward with an academic approach to the economics of ocean freight.

• Jonathan Kempe with an outstanding case for the hurdles CMA CGM will face in trying to create an Alibaba-like supplier marketplace.

• An interesting survey by Logistyx on consumer readiness to buy goods direct from foreign sellers. This has a direct impact on solutions and platforms that enable cross-border logistics and trade compliance.

• The latest dispatch from Ari Ashe is worth your time.

Some upcoming events I’ll be involved in:

• The next episode of LogTech Live is today at 10 am ET! My guest is good friend Angela Czajkowski, head of supply chain at forwarder and customs broker Shapiro. We’re discussing how her evaluation of what forwarding technology is and isn’t important has evolved, the search for supply chain talent, and (of course), the crazytown freight environment right now. Can’t wait for this, and there will the normal buzzwords explained and dadjokes aplenty. Use this page to navigate the numerous ways to catch the show.

• I’ll be moderating a panel at JOC’s Inland Distribution webcast at 2 pm Oct 14 with Ryan Schreiber of CarrierDirect and Bruce Chan of Stifel. The topic is What Does the Next Phase of Digital Brokerage Look Like? Given the events of this week, this should be a lively discussion! Register here for all three days of the free webcast series Oct. 12-14.

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