Logistics, Perpetually in Motion (Takeaways from Descartes Evolution 2016)

“Logistics in Motion” was the theme of Descartes’ Evolution 2016 Global User & Partner Conference, and it adequately describes the dynamic nature of the logistics industry as well as the company.

A decade ago, Descartes’ solution footprint was relatively small: route planning solutions, a domestic transportation management system (TMS), and its Global Logistics Network for trading partner connectivity. Today, through numerous acquisitions (31 since 2005, including BearWare, MKData Services, and Oz Development last year) and organic development (the company invests 17 percent of sales in research and development), Descartes has not only expanded and improved its original solutions, it has also expanded its suite of offerings to include Customs and Regulatory Compliance, Forwarder and Broker, and Global Trade Content solutions. Along the way, Descartes (a Talking Logistics sponsor) has achieved 10 years of record financial results, has grown to over 1,000 employees, and has expanded its global presence to 35 countries.

Descartes CEO Ed Ryan highlighted some of the new capabilities and enhancements the company delivered over the past year:

  • Introduced iOS to its common mobile platform
  • New telematics software and hardware platforms
  • Enhanced transportation management for more complex planning and tendering requirements
  • Addressed customs initiatives in the United States, Canada, The Netherlands, Cuba and Paraguay
  • Updated denied party screening for international ecommerce and ad hoc analysis
  • Created landed cost calculation service for global trade automation
  • Enhanced route planning to take advantage of advanced map data

Rather than go into every detail of all the sessions I attended, let me share with you a couple of high-level takeaways from the conference.

First, Descartes is starting to focus on helping companies, especially small and mid-sized businesses, better integrate and automate their e-commerce, warehouse management and shipping processes. Three of the company’s most recent acquisitions — BearWare, Oz Development, and pixi (acquired a week after the conference) — are important pieces in Descartes’ strategy in this area. BearWare, for example, provides customers with carton level tracking and pool distribution management capabilities, while pixi’s platform “collects order information from an e-commerce webfront, translates that into a scanner-driven pick and pack process within the warehouse, initiates the shipment to the customer, and synchronizes all of this information with the customer’s financial system for invoicing and shipment tracking.” (For related commentary, see guest commentary by Brian Hodgson from Descartes, The Agility of Integration: eCommerce, Warehouse Management and Shipping for SMBs).

Second, Descartes continues to expand and strengthen its transportation management system (TMS) footprint, as the slide below illustrates:

Source: Descartes
Source: Descartes

Ken Wood, EVP of Product Management at Descartes, talked about the company’s TM+ vision and strategy, which are centered around the following principles:

  • Next generation TMS (TM+) should break down transportation silos
  • TM+ should enable trading partners and suppliers
  • TM+ should cross modes seamlessly
  • TM+ should enable both planning, execution, & performance management

Descartes is not fully there yet, but based on the presentation by Tjalling Schakel, Director of Global Transportation at Philips on how they’re using Descartes to manage their global shipping operations, it’s evident that Descartes is capable of meeting the transportation needs of large, global shippers.

Simply put, Descartes’ TM+ strategy is another example of how the TMS market is becoming barbell shaped, with the broader, more integrated, and feature-rich end of the TMS barbell getting larger.

Back to the “logistics in motion” theme, the freight forwarding and customs brokerage segment of the industry has experienced significant changes over the past decade. While at the conference, I had the opportunity to speak with Rennie Alston, CEO of American River International, an international and domestic freight forwarding company and a Descartes customer. “One of the biggest changes in the industry has been the elevation of regulatory compliance enforcement,” said Alston. “Government agencies are imposing additional rules and regulations on freight forwarders, brokers, and the international trade community, and that has resulted in increased fines and penalties for the trade community.”

As a result, CEOs and CFOs at importers and exporters are becoming more aware of the risks associated with global trade compliance, a point Alston discusses in more detail in this clip from our interview:

“Supply chain used to be a shipping and receiving function,” said Alston, “but when you can get a penalty of $100,000 per transaction for failure to keep adequate records in each transaction file for the last five years, you get the attention of the CFO and CEO.”

Therefore, selecting the right freight forwarding and customs brokerage partner is very important. What attributes should shippers look for in a partner? Here’s Alston’s advice::

“You can’t select a freight forwarder or broker based simply on your entry fees or your transaction fees,” said Alston.”If you’re shopping around for the lowest rate, you’re going to get the lowest service.”

I encourage you to watch the rest of my conversation with Rennie Alston for additional insights and advice on this topic.

While at the conference, I also had the opportunity to speak with Eric Geerts and Martin Meacock from Descartes about the Union Customs Code (UCC), an update to customs legislation across the European Union (EU) that went into effect on May 1, 2016. As Geerts wrote in a recent guest commentary:

The initiative aims to modernize trade by moving to more electronic formats to standardize customs procedures, synchronize processes across member states, introduce new simplified procedures cross border, provide companies with more clarity on tariff classifications and reduce paperwork.  

So, will UCC just impact brokers and freight forwarders or will it also affect shippers? “UCC will impact shippers even more,” says Geerts, as he and Meacock explain in the clip below.

What steps should companies take today to make sure they’re adequately prepared for the changes associated with UCC? Geerts and Meacock provide their advice in the clip below:

In short, two important action items for shippers and 3PLs are staying informed of the ongoing changes with UCC as it continues to roll out and seeking Authorized Economic Operator (AEO) status. For additional insights and advice on UCC, watch the rest of my conversation with Eric Geerts and Martin Meacock.

Yes, logistics is perpetually in motion, and to succeed, everyone in the industry has to keep pace or they’ll get left behind. This is true for shippers, logistics service providers, and especially technology companies. Over the past decade, Descartes has kept pace with competitors and the needs of the market, and if its most recent acquisition is any indication, the company has no plans of slowing down any time soon.