A group of nearly 20 major retailers and logistics providers are working with the White House to share their supply chain data by developing a proof-of-concept information exchange, following a Biden Administration initiative announced Tuesday.
The move is the administration’s latest effort to break the stubborn logjams that have clogged seaports with shipping containers and slowed the flow of imports and exports to markets throughout the nation. If it works, participants say the approach could ease supply chain congestion, speed up the movement of goods, and cut costs for American consumers.
However, to reach its goals, the administration’s “Freight Logistics Optimization Works (FLOW)” will have to break those companies’ habit of keeping their logistics data private to gain competitive leverage, participants say.
“Supply chains are notoriously closed and opaque, and the lack of data sharing has exacerbated the supply chain crisis,” logistics real estate firm Prologis said in a statement. “We're working with the Biden Administration and 17 other companies including Target and Fedex on FLOW to pilot key freight information exchange between parts of the supply chain.”
The current lack of information exchange can cause delays as cargo moves from one part of the supply chain to another, driving up costs and increasing fragility, Prologis said. FLOW will attempt to untangle that knot by working with various players such as shipping lines, ports, terminal operators, truckers, warehouses, and beneficial cargo owners (BCOs).
The list of companies in the effort announced to date include: Port of Long Beach, Port of Los Angeles, Georgia Ports Authority, Gemini Shippers Association, DCLI, FlexiVan, Prologis, CMA CGM, MSC, C.H. Robinson, Target, True Value, Land ‘O Lakes, FedEx, and UPS.
While FLOW members face a difficult challenge, the administration believes a solution can be forged from the existing data networks already established by most major corporate supply chain operators.
“While this is a needed step from a federal perspective, it also signals the work that businesses throughout the supply chain have already done to digitally transform the supply chain, including real-time tracking and truck routing within an ERP system to help move along goods and avoid hiccups,” Pete Zimmerman, North American software sales manager at VAI, a provider of cloud-based enterprise resource management (ERP) software, said in a release. “The global movement of goods may become more complex as e-commerce activity connects consumers to global regions, which means that distributors and logistics companies need to prepare now with the right digital tools to avoid disruption.”
That bottom-up approach could help the FLOW plan succeed, for example by encouraging strategic partnerships between industries and their trade associations, which could act as neutral integrators, Dan Varroney, CEO of Potomac Core Consulting, said in a statement. “There must be greater and more strategic effort driven by the supply chains themselves in order to achieve the type of durability that consumers expect,” Varroney said. “Moving forward success will be built around innovation and collaboration among the industry itself. There are pre-competitive opportunities where the federal government can effectively collaborate.”
Another critical ingredient for FLOW to work will be establishing the appropriate technology to support the information sharing network, William Fox, chief product officer at smart contract platform provider Data Gumbo, said in a statement. “What’s interesting is that among the 18 initial FLOW participants, none of them are technology companies,” Fox said. “Technology that provides transparency in the commodity custody timeline – accurately recording and safely sharing among counterparties what was exchanged, when and where, is going to be the key to the initiative’s success. I suspect blockchain will be that technology. We’ve already witnessed other nations experiment with blockchain for this purpose, and the FDA more recently here in the U.S.”
Examples of those platforms include a pilot electronic cargo tracking system (ECTS) project based on blockchain technology launched in India in 2021, and the TradeLens platform jointly created by Maersk and IBM currently in use at the Port of Los Angeles and Port of Long Beach. A third recent data sharing initiative is a national freight data portal now under development by the Supply Chain Optimization and Resilience (SCORe) Coalition and the global standards organization ASTM International.
Consumers are frustrated by empty shelves, long waits, and higher prices. The lack of data sharing has exacerbated the #supplychaincrisis. We're working with the Biden Administration and @USDOT to solve this and create a more resilient supply chain https://t.co/iIlxEhuGap— Prologis (@Prologis) March 15, 2022