The international logistics networks encompass numerous critical elements such as speedy cargo movement, efficiency, documentation, and supply chain digitization. Among these aspects, one definitely stands out as outdated: paperwork. Engaging in repetitive tasks like signing bills, manually sending quotations and invoices, inputting data into documents, and paperwork demands meticulous attention to detail. Even the tiniest error can potentially result in substantial financial losses, reaching millions of dollars. Digitization in logistics is the key factor that can enable this sector to expedite processes and enhance employee performance instantaneously.
In today’s post, we are going to talk about the need for document digitization in international logistics networks, while exploring several technological solutions that could facilitate the transition to a paperless environment.
Digitization in international logistics networks: Why the freight forwarding industry needs to go paperless?
The transportation and logistics industry heavily relies on paper documentation, resulting in a meticulous paper trail for every aspect of the process. This includes tasks like inventory management and tracking within warehouses, shipping goods internationally, and moving items from distribution centers to stores. One significant downside of paper documents is that the loss or damage of crucial documents can lead to insurmountable challenges including shipment cancellation. Regardless of the movement involved, numerous documents are generated to validate each activity.
The present state of paperwork in international freight forwarding involves multiple documents and manual procedures, making it a time-consuming and resource-intensive task for all parties involved. Sending a single shipment might involve up to 50 sheets of paper to be exchanged among approximately 30 stakeholders. Surprisingly, while industries like banking and aviation have embraced automated trade systems, the logistics industry still lags behind, where practices from the 1400s are still extant.
Going paperless is a crucial step towards lowering unnecessary expenses, saving time, facilitating trade, fostering resilience and preventing supply chain disruptions. Therefore, given the current emphasis on performance and resilience in transportation and logistics, now is an opportune moment for the ocean freight industry to unite and embrace digitalization.
Manual inventory entry is a time-consuming process that can take hours to input transportation data into designated fields, necessitating extra human resources. However, automated tools offer a swift alternative, allowing businesses to conduct inventory efficiently, thereby reducing labor costs. This enables companies to redirect their resources to other areas and foster rapid growth.
The current state of digital documentation in logistics
The e-CMR
The CMR Waybill holds immense significance in the ground freight sector, serving as a crucial document exchanged among the transporter, forwarder, and carrier during international road freight transportation. Traditionally, CMRs have existed in paper form, necessitating the completion of numerous fields and repetitive data entry across multiple forms. Consequently, this manual process was often time-consuming and prone to human errors.
Introducing the e-CMR, a digital rendition of the CMR, revolutionized digitization in international logistics network by consolidating all data exchanges within a single online platform. This electronic version not only streamlines the process but also enables real-time tracking of shipment progress, monitors cargo movement, and confirms accurate delivery times for all stakeholders involved. In essence, e-CMRs have significantly enhanced transparency in road freight operations and bolstered overall shipping efficiency.
The Electronic Bill of Lading
In order to overcome the limitations associated with paper Bill of Lading (B/L), the industry is actively seeking solutions that streamline document processing, while simultaneously improving time and cost efficiency. Since the 1990s, the shipping industry has been exploring various approaches to achieve paperless shipping operations.
The emergence of blockchain technology has provided renewed momentum to the development of the Electronic Bill of Lading (E B/L), introducing innovative solutions. The E B/L aims to replace the traditional paper B/L and courier services with digital documents that can be seamlessly transferred through a cloud-based system. It’s important to note that the electronic bill of lading is more than just a digital replica of its paper counterpart. It represents an electronically created, approved, and exchanged document facilitated through blockchain or cloud computing.
Nevertheless, despite these advancements, the hard copy of the Bill of Lading continues to be necessary for up to 40% of all trade transactions in shipping, as it remains a crucial shipping document.
Digital Signatures
A digital signature serves as a modern alternative to a handwritten signature, utilizing electronic devices to replace the physical act. It can be likened to an electronic “fingerprint.” By employing a coded message, the digital signature establishes a secure connection between a signer and a document within a recorded transaction. In the logistics industry, digital signatures also include a timestamp indicating the moment of signing. E-signatures offer substantial benefits, such as reducing the time required for document completion and enabling logistics operators to provide clients with an improved and expedited service.
The manual process of signing business documents, which is both time-consuming and labour-intensive, can result in significant financial losses for organizations. Consequently, freight forwarding companies are transitioning from traditional manual signing methods to digital alternatives in order to streamline the document signing process and speed-up business transactions.
Electronic data interchange
EDI, short for Electronic Data Interchange, facilitates the smooth transfer of commercial documents between business partners. By enabling the exchange of essential business data from one computer to another, EDI plays a pivotal role in enhancing the efficiency of logistics companies. It simplifies and strengthens the process of document exchange by encompassing various logistics paperwork, including invoices, dispatch data, and purchase orders. By embracing digital data exchange, organizations can eliminate the need for manual processing, improve traceability, reduce costs, minimize human errors, and promote effective communication among stakeholders.
RFID Systems
RFID systems offer logistics managers a convenient means to monitor and oversee products and assets throughout the supply chain. When coupled with QR codes, RFID tags bring significant enhancements to cargo handling, whether within the confines of a warehouse or beyond. These technologies contribute to various functions, ranging from inventory management to automation. By eliminating the requirement for handwritten documents and the potential for manual data entry errors, they ensure data accuracy. Furthermore, both RFID tags and QR codes empower workers to accomplish tasks in minutes that previously consumed hours. By swiftly identifying items and promptly inputting their details into the central computing system, they effectively save time.
QR Codes
QR codes, also known as Quick Response codes, are scannable barcodes that electronic devices can read. Similar to traditional barcodes, they store data, but unlike their limited counterparts, QR codes have the capacity to hold up to 7,089 numeric or 2,953 alphanumeric characters. Utilizing QR code labels on merchandise proves highly advantageous for inventory tracking and monitoring cargo throughout different stages of transportation. Additionally, the Google Maps QR Code feature enables delivery agents to easily navigate to the encoded location using their smartphone’s maps application.