FROM MAGAZINE: Transforming logistics with technology

While the global economy offers enormous growth potential for freight and logistics, it also creates numerous operational and business challenges. The industry needs to wade through such complexities to stay competitive, increase margins and meet market demands. To address such challenges better, IBM has the right solutions to help clients create a more agile and flexible business model.

In an exclusive tête-à-tête, Dee Waddell, IBM's Global Managing Director & General Manager for Travel and Transportation Industries shares with Surya Kannoth how IBM can help companies in the transportation industry transform their business through IT, the cloud landscape, how blockchain is a groundbreaking technology and more…

What mandate do you think IT should have in shaping the freight industry's future?
We see that there are a lot of dynamics at play within the freight logistics space. Part of this is around consolidation; right now, we have an excess of capacity of containers since there is lower demand. There are inefficiencies in processing all of the paper work that goes around between ports, shippers, freight forwarders etc. Those are the three things that we see particularly within the shipping environment.

According to IATA, the air cargo industry has rebounded a little bit in the past 18 months. Generally speaking, the growth is somewhat limited in air cargo; we do see certain areas of the world having an opportunity to capitalise in their growing marketplace. For instance, here even in India, we do see some opportunities especially with air cargo - how do you bring what we call an integrated logistics hub together?

If I step back and take a look at a macro level, how do I integrate all of these different pieces between air, trucking, shipping, ports and some of the warehouses into a system that will actually help drive demand, to have the technology backbone that can really leverage the investments that will be made, and more importantly, facilitate global trade.

While there is continued demand around the world, there are inefficiencies hampering the marketplace. What we see is that the paperwork that goes along with all the containers getting across borders having the documentation ready, making that more efficient is a key play for us. One for the things that we are doing is around bringing in our expertise in blockchain and our cloud platform. Talking little bit more about that - this is something that we see will actually help transform the industry, that will bring in some electronic pieces towards a process that is very manual. And you have clearly the opportunity on the economic basis to then optimise and save dollars; it won't just save dollars, it will also reduce the friction and grow trade.

Could you elaborate on some of IBM's offerings for the freight industry?
We currently serve seven of the top 10 freight service providers. Furthermore, we are serving eight out of the top 10 global ocean container companies.

We want to make sure that we provide everything we can to help impact the world. Hence, we see this concept of integrated logistics hub specially in growing areas where it is important to make sure that we are setting the stage for many years to come. We do see opportunities to partner with our clients and finding ways to help the industry with our products and solutions. IBM is really transforming itself; we are reinventing ourselves and a new IBM is emerging. And as a part of that, we are a cognitive solutions and cloud platform company with the industry informing everything that we do.

Within the transport industry in particular, we see that there is an explosion of data that is coming up with Internet of Things, where there are sensors and different mobile devices that can provide information. We see this as an opportunity for companies and industries and even countries to leverage data as its new natural resource. We see that as a very important digital transformation.

We produce about 2.5 quintillion bytes of data and about 80 percent of it is just unstructured making it visible to current technology. While there is a lot of data coming in, traditional systems can't see it. So, the ability to understand, learn from it and reason through it is what Watson does. We see a staggering amount of data; we are seeing smart phones becoming much more intelligent; the sensors becoming much more intelligent - the ability to then embed them whether it is in containers or in specific packages is key.

When it comes to the cloud, how do you manage to secure confidential data of clients?
We recognise that there is an inherent value for people to own and share data. In sharing that, we have an idea versus some of the other competitors. We are not interested in taking data from our clients. We are working on their behalf, for their business and supporting them in what they are doing. Secondly, we do see technology that can really help in this environment particularly block chain where we see the ability to have secure interactions with people in a non-repudiated way to then share information and keep it secure with those who need to have access to it. Block chain is the vehicle in the technology to be able to bring in secure information from people that want to keep it safe and then still be able to participate and share the aspects that make sense. That is a key fundamental belief that we have and that's one of the reasons why block chain is a very important technology for us.

It is about enabling business and that's why we see this as a platform for Internet of Things and our cloud platforms and of doing things in a secure way is something that is paramount to our clients, and of course, something that we heavily invest in.

We are in an age of disruption; the pace of innovation continues to increase and the ability and time frame to scale is decreasing effectively meaning that a very small disruptor locked under the right idea can be a legitimate predator to established companies. A start-up that has a good idea can build with a relatively small number of people and find a way to - whether it be digitising electronic records, embedding sensors in various forms and potentially get access to that information and data and then build a platform or a solution that will then scale quickly. The barriers to entry for startups has become much lower, which on a grand scale, is helpful for overall world economy.

We recently carried out a C-Suite study and we talk about companies to be torch bearers, and as a part of that, we have an opportunity to really drive out a culture of innovation, transformation, stepping back and looking at whether it would be the life of a product through the whole supply and what are the aspects that I can bring in that will facilitate a smooth transaction. The bottomline in our C-Suite study is - instead of being a market follower and potentially a laggard, we are seeing companies being forward thinking who are torch bearers.

Do you believe we're innovating and exploiting new IT fast enough as an industry?
I believe there will be a new breed or a new set of solutions that will provide value that has traditionally not been seen. Within the freight logistics industry, we are starting to see more willingness to working together because of the challenging economic environment of the industry. I think you are going to see a new set of solutions that will come from that.

There are two areas that I would like to talk about - one is the traditional way where IBM can help companies reduce the cost of them operating their current set of applications. What you are seeing is not just outsourcing the infrastructure and the application support and development which we call application maintenance. I think we are also seeing this willingness to work with others in innovation.

Many people have heard about Watson and what Watson can do for them. We hear and we talk about this cognitive era where there is a staggering amount of information and data whether it be tweets, algorithms, photos, videos, and again, it's about we need to show that companies. Right now, CEOs are trying to find out how to survive in a world that we are seeing consolidation or seeing earnings that are not so healthy.

We have been having some conversations with senior people in freight logistics about what is block chain. We are explaining how we can reduce, digitise documents and put it in a way that you can share information out of those documents with your partners or other stakeholders like ports and freight forwarders.

It is interesting that in times when things are good, it makes you change and use forward looking strategies, and then for instance, when times are bad like the Hanjin Shipping bankruptcy, you see a lot of changes in the industry. Typically that's where the change happens. Therefore, in the freight logistics space, we are definitely near the other extreme. How do we communicate more specifically to the teams about what Watson can do, what mobile can do, what IoT can do? I think it's not just a challenge but I think it is an opportunity. There are people who don't necessarily understand that Watson can truly understand data, learn from it and reason through it. And it is a new way of thinking about technology that is again based on more of a human interaction than it is on specific structured data.