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Supply Chain Megatrends And The Arrival Of TradeTech



I am CEO of Nexxiot, an innovative TradeTech company driving responsible logistics technology.

Human hopes for solving “mega problems” largely hinge on technology. But the 20th-century industrial revolution left an atmospheric “carbon” legacy that now threatens the planet. With extensive evidence of ecosystem failure, changing climate patterns and sick oceans, creating new technology to mitigate these effects has never been more urgent.

The latest human innovations show important scientific developments, like nuclear fusion, space exploration and quantum computing. But most of these technologies are not ready for deployment or won’t scale fast enough to make an impact.

Realism is essential when deciding where to concentrate efforts. If, for example, we were to build enough direct carbon capture machines to drive down atmospheric CO2, I estimate that we would need around 100 million shipping containers of machinery at a cost of around $1 trillion.

However, current governments know that other priorities currently take precedence with voters. Geopolitics continues to incentivize the funding of defense budgets to protect national interests. If we are to make a positive impact, we must make it our economic imperative to drive change.

The Move Toward TradeTech

As computing becomes cheaper and applications become easier to build, several new segments have arrived. Biotech, Fintech, Agtech, Climatech and more are making waves. Data-driven, hybrid computing is making its mark across multiple sectors. But there is one sector that rules them all: The global supply chain is the single sector that every other depends upon.

The idea of a supply chain is somewhat outdated. Rather, we can think in terms of “global value networks” in which diverse actors, facilitators and participants contribute to resources and services. The entire supply ecosystem is entrenched in a legacy that goes back to the start of the industrial revolution.

Can a certain type of emerging technology address such complexity? As the CEO of a TradeTech company, I’ve observed that there is the hope that the TradeTech industry has arrived to do just that. For example, digital-born freight forwarders are offering cheaper and faster self-service options that democratize the booking of freight transport. This is a positive step, but it does not go the full distance to deliver real data-driven value.

From Insights To Automation

The supply chain industry is made up of problem-solving individuals. In my opinion, repeat problems happen because the root cause is not addressed, with spontaneous fixes acting as a plaster over a mortal wound.

Forward-thinkers know that many dangers can be resolved by leveraging data. This in itself is a “megatrend,” but let’s consider four wider supply chain megatrends that I believe make the transition to data-driven business models critical.

1. Emissions-free mobility will be required. As consumer support for climate measures ramps up, the transport of cargo must move toward zero emissions. Corporations will promote their credentials relating to emissions accountability, while heavy industry will come under increasing scrutiny as major emissions contributors. They must find a way to offset their output.

2. Increased regulatory control is on the horizon. Biden’s July 2021 Executive Order was aimed at bringing transparency to carrier- and freight-related charges. Transparency will be expected, with transport routes, processes and partners all coming under review. Unless the assets and cargo are connected to gather data, the proof of compliance will be difficult.

3. The data economy opens new business models. Soon, the discussion will move from “who owns the data?” to “who can communicate critical information the fastest?” Errors, delays and sub-standard service will be penalized. With transparency, there is nowhere to hide, and actions have financial and other consequences.

4. Knowing your cargo will be a requirement for future trade. Recently, the finance industry has seen a raft of changes to accountability expectations driven by regulations commonly termed “Know Your Customer.” The E-Know Your Customer market is expected to grow at 25% CAGR (paywall) and will be $1.6 billion by 2030.

The transport sector is already on board with this initiative, which will reduce the huge problem of misdeclared cargo. Wrongly declared cargo is the likely cause of more than five major fires in ports and vessels over the summer months of 2021.

The Role Of The TradeTech Industry

1. KYC Overview: What is Know Your Cargo? When a container, vessel or trip is booked by a shipper or cargo owner, they generally use a logistics service provider. The quantity, type and quality of goods are declared in paperwork, and the container is loaded. There aren’t any technology corroborated processes in place to make sure the loading is done according to the declarations made.

Active devices (such as IoT sensor gateways) installed on the transport asset with smart contracts, compulsory checks and essential processes all linked to a secure cloud platform can provide knowledge of all aspects of the cargo and processes through each step of the journey. (Full disclosure, my company offers these devices, as do others.) This data can be used by authorized parties, like financiers, transport providers and customs authorities, to manage risk and get valuable insights into incidents.

2. Digital Twins (Parts, Asset, Fleet, Process): A digital twin of a transport asset is built using the collected data and allows fleet managers to look into current and future operations. Data scientists can build a simulation model to allow business leaders to see how the asset is used. This also allows questions to be asked about how it’s maintained and deployed.

3. Culture Of Collaboration: I believe the outcome-based economy is coming. When full transparency is standard, the collective performance of multiple participants will be reviewed. Weak players will soon be under pressure. The idea of “co-opertition” (co-operation between competitors) is becoming real. There will be an expectation to share parts of the data that are essential to improve an adjacent service provider’s business processes.

4. AI, ML and Automation: How will artificial intelligence change things? When an incident occurs in the supply chain, limited data causes a marathon process of investigation and finger-pointing. As assets become equipped with sensors and connectivity and big data is processed, the guessing game can come to an end.

The time has come to be creative, intuitive and strategic, with a focus on managing essential relationships using real-time intelligence to enhance our business prospects.

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