Since the COVID-19 pandemic began, the global supply chain has choked and sputtered, causing shortages of everything from computer chips to certain foods. Ports are so overrun that scores of container vessels linger near U.S. ports, often waiting weeks to unload.
But the supply chain troubles could become a boon for Seattle-area tech companies, including giants such as Microsoft and Amazon, as well as an increasing number of startups focused on shipping and logistics.
The pandemic “fundamentally accelerated the focus on digital transformation of the trucking industry,” said Ryan Gavin, a veteran of both Microsoft and Amazon who is now chief growth officer at Seattle trucking startup Convoy.
Gavin has had a front row seat to the pandemic’s supply chain meltdown. Convoy’s software uses an app to connect truck drivers with freight-hauling jobs. Its data can show trucks idling for hours awaiting cargo.
The supply chain business is flying blind, Gavin and other supply chain experts say. That’s largely because the majority of its workers still manage shipments by phone, email and fax, instead of looking to Internet of Things sensors, Edge devices, cloud computing, machine learning, all which are capable of churning out and analyzing vast streams of data.
The pains brought by the pandemic — which don’t seem to be ending anytime soon — may finally be pushing regulators and freight executives toward broadly deploying new technologies.
The old way of doing things, Gavin said, “is no longer going to stand up in a world of high volatility, where black swan events are occurring much more regularly.”
Major cloud companies such as AWS and Microsoft are uniquely positioned to capitalize on an infusion of data and connected devices into the world’s logistics networks, said Michael Crane, the vice president of global growth and business development at Imprint Energy, an Alameda, Calif., manufacturer of ultra-thin batteries that can power IoT devices used to track cargo.
“This ‘big data’ in the supply chain is best, and maybe only, managed by cloud infrastructures like AWS and Azure,” Crane said in an email.
At its Ignite developer and IT conference in November, Microsoft announced a new product called Dynamics 365 Supply Chain Insights. The software, Microsoft said, is designed to head off situations like the current supply chain crisis by providing businesses with “data in near real-time, allowing them to assess risks and mitigate problems before a massive disruption occurs.”
AWS offers similar supply chain solutions, including Amazon Forecast, which, a spokesman said, helps “track and trace the entire production process.” Another AWS offering, Amazon SageMaker, helps build custom machine learning models that can analyze supply chain data. Google and Oracle are also marketing their own supply chain-related cloud products.
There are a bevy of Seattle-area startups also with potential solutions.
In addition to Convoy, the Seattle area is home to Flexe, an on-demand warehouse logistics company serving e-commerce sellers; Logixboard, which provides logistics tracking and management software; Shipium, an e-commerce logistics company; Pandion, an online shopping “parcel network”; and several others.
Executives from these companies say their technology has in some way helped businesses circumnavigate the global supply chain’s woes. Many say the shipping industry will have to turn to large pools of data before it puts the current crisis behind it.
“In the strained supply chain of today, not having visibility means operating blind and not being able to course correct when issues come up,” Logixboard co-founder and CEO Julian Alvarez said in an email. “It’s impossible for companies to plan their supply chain if they don’t have visibility into where their freight is, and that’s exactly what’s happening today.”
Still, as laptops, new cars, bottles of shampoo and any other variety of other products make their way across the world’s oceans, they face obstacles software can’t solve.
One reprieve in an otherwise bleak shipping forecast was that most Americans received their retail orders in time for the holidays. That’s largely because consumers started shopping early and package carriers staffed up and expanded warehouse space to accommodate the crush.
But experts say the supply chain problems are expected to persist at least through this year. Indexes used by shipping companies to measure average shipping times show that as of this month it can take more than three months to ship goods from Asia to the U.S. via cargo vessels.
Separately, dockworkers have been out sick. Extreme weather events such as a typhoon that slammed China in July, have also slowed shipping. And trade tensions with China that escalated during President Trump’s administration are still simmering.
In addition, the cost of transporting a single shipping container from China has increased by a factor of 13, according to Forbes.
Matters weren’t helped when, in August, the Chinese government suspended the operations of a terminal at Ningbo-Zhoushan port, the third busiest port in the world, after a single worker tested positive for COVID-19.
More broadly, the U.S. supply chain infrastructure, from port facilities to warehouse space, needs expanding. The Biden Administration has announced more than $241 million in grants for infrastructure improvement projects at U.S. ports, including nearly $16 million for the Port of Tacoma near Seattle, which will build a new container storage site to keep cargo moving. Meanwhile, many major ports remain stretched to the max and those projects will take months or years to complete.
Throwing tech at those problems may amount to giving Google Maps to someone stuck in a traffic jam. The app shows your exact location, but it can’t get the other cars moving again.
With that in mind, Apurva Jain, an associate professor of operations management at the University of Washington’s Foster School of Business, questioned how much impact widespread adoption of Big data, cloud, AI and other technologies can have on the current crisis.
“One would say this is an overall capacity problem,” Jain said of the supply chain crisis. “If warehouse space or the number of trucks is the real problem, how much more can you milk out of that at this given moment?”
In addition, Jain said, one big challenge facing the shipping industry is that it’s composed of countless independent operators, many of them smaller companies. That, he said, makes unifying hardware and software systems across the supply chain’s many components difficult.
“The structure of the industry is so fragmented because of the small business ownership of many assets,” Jain said.
Still, he said, any effort to unify cargo tracking across the supply chain’s disparate points will help.
“That is certainly something that’s going to be the story for the next four or five years,” Jain said. “There is demand for automation… in this rather fragmented and a little hidebound industry.”
