What NBA Analytics Tells Us About Logistics

Welcome to the 42st 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 examined the case for an explosion of trade finance technology. This week, I’m donning my cherished “grumpy old man” hat and comparing the analytics revolution in the NBA to what we see 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.

My beloved Lakers got (mercifully) eliminated from the NBA playoffs on Thursday. It’s okay. Deep down, I knew this wasn’t their year and I’m still basking in the glow of their title less than eight months ago.

But watching too many hours of late night hoops got me thinking about a correlation between the modern NBA and the world of logistics (of course, that’s just how my brain works). Here’s my thinking: the offensive and defensive schemes in the NBA these days are so sophisticated, and require such precise coordination between all five players on the court, that a single, small error on an individual possession can have significant repercussions.

Multiply a bunch of small errors across a 48-minute game with about 200 total possessions, and you have a situation where those single points of failure contribute to a larger breakdown. In basketball parlance, that breakdown is called a loss. Over the course of an 82-game season, too many losses gets you fired or traded.

The basic pattern of play in the NBA in 2021 would be almost unrecognizable to someone frozen in cryo-sleep since the ‘80s battles between Magic Johnson and Larry Bird, or Michael Jordan’s ‘90s battles with the Pistons and Knicks. The game’s center of gravity lies at or around the three-point line, rather than in the trenches nearer the basket. Analytics are to thank for this shift. Somewhere along the line, stat geeks realized teams that predominantly shoot three-pointers and free throws were more successful than those teams that predominantly shoot two-pointers.

Those analytics now underpin everything about the NBA: which offensive plays to use; which opposing defenders are weakest and should be targeted; which five-man lineups have the best chemistry. They also underpin training regimens, the amount of time a player should rest in games, sleep patterns before and after games.

But a thought occurred to me. The NBA is still highly entertaining, but it’s also more confusing than ever for fans to watch, even diehard ones. The schemes on any given play are so highly orchestrated, and underpinned by data, that a casual observer is probably getting only the top 25 percent of what’s actually happening, at best. You can watch a basketball blogger analyze a 24-second possession via a 7-minute Youtube dissection about where a defender’s foot is relative to the ball hander’s shoulder, and how that induces the offensive player to attack in one direction, and the sequence of offensive and defensive decisions that, in turn, triggers. It’s mind-blowing. Then you realize those orchestrations, constantly being re-optimized in actual real-time by 10 individual brains, happen hundreds of times in just a single game over a couple hours.

By now, you probably see where I’m going with this. The logistics industry is in a similar state. There are more systems, more data, more talent, more analytics, more experience, and more desire to progress than there have ever been in this industry. That’s just an incontrovertible fact at this point. And yet, supply chains are as messy as they have ever been. Shippers feel as lost as ever, only now they feel like they are losing control of their supply chains and losing control over the technology environment designed to help them re-take control of those out of control supply chains.

They need simplification, but the technology gets more sophisticated, and the external dynamics get more complicated. Here’s where you might counter, to go back to the NBA analogy, that the players themselves are more equipped than ever to meet the challenges they face. The average player today is fitter, smarter, more adaptable and more skilled than their predecessors from any generation.

But they struggle too. Star players get hurt more often, and part of it is the strain of being switched on for every possession - offensive and defensive - for longer periods of time (hence the much maligned strategy of “load management,” or resting players for certain games or parts of the season). Supply chain managers don’t get to load manage - they’ve been switched on, nonstop, for nearly an entire year now. In the NBA, whole categories of players - some too plodding, some not good enough shooters, some atrocious defenders - have been marginalized by the vicious, sober, data-as-gospel environment.

The question I have is whether the massive onset of logistics systems and data is creating a similar dog-eat-dog world for people the who make supply chains go. Or, whether technology will actually democratize things in the way that consumer apps have. I legitimately don’t know. My hope is that all the technology will empower, rather than marginalize, but I do suspect that many people will feel left behind. That the logistics equivalent of an earthbound, mustachioed center won’t be guaranteed a place in the future logistics world like the Paul Mokeskis of the ‘80s NBA would be utterly humiliated in the NBA of today.

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

• Can’t keep project44 out of the news for long these days. Last week, the visibility provider announced its acquisition of competitor ClearMetal. This week, it was a new $200 million funding round that pushes them into unicorn territory. Also important to note is the benchmark this sets for late growth stage logistics SaaS providers. One last wrinkle: a $1.2B valuation on a $200M round implies roughly 17 percent dilution. My VC friends tell me this is pretty solid from project44’s standpoint.

• Maersk waded into the carbon calculator market this week, chronicled well by my colleague Kevin Saville.

• My colleague Cathy Roberson explored the surfeit of investment and acquisition activity in the interconnected e-commerce/parcel/last mile spaces this week.

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

• Interesting perspective here from Andreesen Horrowitz on the impact of cloud investment on a company’s ultimate success. I presume there are many, many companies that disagree with this view.

• Hat tip to Cathy Roberson and Julian Counihan at Schematic Ventures for highlighting this piece on the actual cost of free shipping. Not a new subject, at all, but a well put together argument here.

• Nice blog from automated procurement software provider Keelvar.

• Speaking (again) of Cathy, you all should be checking her own Substack too.

• Great analysis here from Jason Miller, based off the JOC’s Top 100 Importer/Exporter list, in which he sees greater concentration occurring at the top of the importer market.

• Putting the bat signal out for Equal Ventures, which is looking for a digital content intern.

• A blog in which the author argues the terms of shipper-container line engagement won’t change for the next four years.

• Matt Motsick (ex-Catapult founder and current RPA Labs founder) details the new customer response bots his company has developed for the logistics industry.

• If economic analysis of trade is your thing, have a peek at the outlook my IHS Markit colleagues just put out using our Global Trade Atlas (GTA) data.

Some upcoming events I’ll be involved in:

• The IAPH World Ports Conference June 21-25 is right around the corner. I’ll be involved in various technology-related elements of the program, including sessions on how ports should prepare for automation, demystifying data collaboration, a session on how ports of all sizes can embrace the technology on offer, and a chat with MSC’s André Simha about how electronic bills of lading might impact ports. Register here.

• Joining an impressive list of experts (of which I’m the least qualified, by far!) to discuss container shipping regulatory considerations that financial institutions need to be aware of. Register here for the free webcast June 8 at 10 am EST. 

• Also on June 8, I’ll be talking to the inimitable Audrey Ross of Orchard Custom Beauty about how she prioritizes technology investment during the JOC’s Canada Trade and Shipping Outlook webcast at 1 pm EST. The event is free - register here.

• Moderating a session on where TMS is headed at 10 am CET June 22 as part of SupplyStack’s TMS Insight Series.

• Moderating two sessions at the SMC³ Connections conference June 28-30. 

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