Why Data is No More Valuable Than GameStop
Welcome to the 26th 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 whether people have the will, not the capacity, to change as it relates to adopting logistics technology. This week, I’m talking about one of my favorite topics: how people overvalue their own data.
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 firstname.lastname@example.org or on Twitter at @LogTechEric.
Give yourselves a hand folks, we’re half a year in on this Substack thang, 26 editions in. Now let’s dive in.
I said last week that the GameStop fiasco had no bearing on the logistics industry. On further reflection, I’m wrong, and here’s why. GameStop showed us the reality that things are not intrinsically valuable. We assign things value. If everyone tomorrow just decided via ESP that paper-based currency is worthless, guess what? It’s worthless. My son was reading a book about space last night and told me about a planet in some far off galaxy that’s eight times the size of Earth and is composed primarily of diamonds. Guessing diamonds aren’t worth very much on that planet.
GameStop stock was momentarily valuable because a large number of people decided it was a valuable commodity. Same thing with Bitcoin. It’s a finite resource that intrinsically has zero value. Its value comes from others wanting it based on a notion that it will become more valuable over time and is finite in number.
Where am I going with all this? Well, half a year in, and you all know I love a nice, labored lead-in. I’d argue logistics data is overvalued. People think their data is more valuable than it is. They often think it can (and should) be monetized. They definitely think twice about whether it should be shared. But your data is like GameStop stock or Bitcoin or diamonds on a faraway planet made of diamonds. It is not intrinsically that valuable.
As Nick Chubb, managing director at the maritime innovation consultancy Thetius put it recently, “data only has utility when it is shared.” He was talking about this in the context of ports sharing data with one another to benefit each other and stakeholders dependent on multiple ports (early shameless plug - Nick is speaking on a TPM21 panel called Ports as Data Hubs That Serve Cargo Owners Effectively). But the concept can be pulled into almost any logistics scenario. That’s because logistics is innately a multi-party industry. Can a shipper move its goods without a container, a vessel, a port, and a truck? What use is a container line if a 3PL isn’t able to coordinate the legs between factory and port?
Those are physical interdependencies, but the data interdependencies are just as tough to disentangle. No one entity has all the data it needs to run its operations. A container line is dependent on a shipper’s cargo data. A forwarder is dependent on a shipping line’s data to make a cargo booking. A container terminal is dependent on the vessel operator’s stowage plan. A drayage operator is dependent on the terminal and customs agencies to know when a box is available for pick up. And on and on.
We often hear about internal data silos afflicting the logistics industry, but what that really means is that data is of limited value on its own, even within a single organization. Being able to contextualize it internally is important. But being able to share it with other parties is where real value is created.
For example, if multiple shippers can connect on their procurement needs, they can establish a process to jointly procure, theoretically driving down freight costs, administrative procurement costs, and allowing the capacity provider to more fully utilize available space. Ports that share information about vessel calls aren’t divulging competitive data. They’re helping each other be more effective on behalf of direct and indirect customers.
Shippers sharing data with their 3PLs or container lines should be a given at this point - they’re commercial partners that benefit from mutual trust in one another - and yet it’s not. I think much has to do with a tendency to overvalue data in a generic, non-specific way. Most entities would be wise to go through a pretty thorough audit of their organization. What data would be more valuable if it was shared? What must remain private? What can be shared with specific parties but not others. A data governance strategy around this would underline a logistics organization’s intent to be a valuable member of its broader ecosystem.
By the way, this cuts both ways. There is likely data that some parties are undervaluing at the same time they overvalue other parts. If you’re using a free product, you’re giving another company access to your data. Does the utility of that product offset the value of the data you’ve given the provider? In most cases, assuredly so. In other cases, maybe not. But you don’t know until you’ve undertaken an exercise to determine what is and isn’t valuable to your organization. And more importantly, what would be more valuable if shared.
Until then, most companies are hoarding data like it’s diamonds on a planet made of diamonds. You want your data to be a resource that is properly valued by the outside world, not one superficially valuable to your internal subreddit.
Here’s a roundup of pieces on JOC.com the past two weeks from my colleagues and myself (note: there is a paywall):
One of the things that has escaped many early stage LogTech providers to emerge in the last decade is big, SaaS-based ARR. Not so for the logistics automation platform Slync.io, which got two funding rounds totalling $71 million in 2020, the second of which it announced this week.
A more modest amount was raised by Pandion, a pre-product company that came out of stealth this week with big aims: to provide retailers with a legitimate alternative to UPS and FedEx. The focus is on sortation, connectivity to regional final mile providers, and network flexibility to improve delivery times for customers.
For our 2021 outlook, I wrote about the proliferation of TMS-brokerage relationships that occurred in 2020 and are likely to continue. It’s a big spaghetti bowl of connectivity that ultimately should benefit both shippers and capacity providers.
ClearMetal has apparently found a niche among shippers that need to improve their ability to convey and meet customer promise dates to their customers. That need is particularly acute in industrial sectors. I talked to CEO Adam Compain about the company’s growth and where they fit in a “shipper’s ecosystem.”
My colleague Bill Cassidy this week wrote about shipper’s “bid fatigue” based on a webcast Transplace held. As always, Bill’s analysis is worth your time.
And here are some recent discussions, reports, and analysis I found interesting:
I write about APIs a lot, so found this resource to be really interesting. It left me wondering when logistics or logistics-adjacent API-first companies might make this list.
Another solid piece from Bjorn Vang Jensen on negotiations ahead of the TP annual contract season.
Plug time: I’m moderating a session with Henning Schleyerbach, COO of Digital Container Shipping Association (DCSA), Pascal Ollivier, chair of the IAPH Data Collaboration Committee, and Julian Abril Garcia, of the IMO, on the future of ship-to-shore data sharing at ports.
Weekly moving update: still not moving to Florida or Texas. As an aside, I imagine the breathless “I just signed a lease in Miami, can’t wait to get there!” tweets from VCs are the 2020-21 version of letters that prospectors penned to friends and family as they headed to California in 1848.
Weekly Keith Rabois update: humility comes so easily to some people.
🚨 TPM21 registration is live, and so is the agenda. We’ll have two days of #LogTech focused programming Feb 25-26, ahead of the main program, which kicks off March 1. Each week until TPM, I’ll be highlighting a tech-focused session we’ll be hosting.
Hard to have a container shipping conference and ignore the topic of visibility. This year at TPM21, we’ll look at this evergreen issue through a couple different prisms: the various approaches to visibility (ie sensor-based or not); the ROI from investing in such capability; and just who is ultimately responsible for making those investments (and, of course, whether those investments can be monetized). We have experts from Globe Tracker, Ocean Insights and Clockworks Logistics to help you wade through this topic. It’s part of the vast trove of worthwhile on-demand sessions on tap this year.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.