3 Confusing Freight Tech Terms Explained

November 6, 2019

There's a huge knowledge gap in terms of technology in logistics - here's a little refresher on 3 big technology terms to know the next time you stumble across an article on freight tech.


Freight Tech is booming - with $1.6 billion in investment in the first quarter of 2019 alone, there are companies innovating at every stage of the modern supply chain. However, this has created a vast knowledge gap in terms of technology. With all the excitement coming from Silicon Valley (and Ottawa btw), we've forgotten a little about why freight tech exists in the first place - to help the truckers, warehouse staff, and other thousands of blue collar workers. So, before the industry jumps onto the next big buzzword, here's a little refresher on 3 big technology terms to know the next time you stumble across an article on freight tech.

1. EDI

First and foremost, what is EDI, and why does it impact you? Well, EDI, or Electronic Data Interchange, is simply the idea of businesses exchanging information electronically. This lets you move important information, like purchase orders and invoices, from paper to digital. What most people talk about when they're discussing EDI though, are the technical standards for EDI, which serve to standardize types of information (like the purchase order or invoice) so that different companies can use the same language. Without it, it would be like doing business with someone who speaks a foreign language!

If EDI is so great then, what are the problems? Well, the big issue is the lack of support for real time data exchange. Designed in the 1990s and now somewhat of a "legacy" mode of communication, EDI is greatly lacking in real-time visibility and responsiveness (a big issue for freight tech), and takes great effort to configure to the right business requirements.

2. API

That's exactly where API comes in. APIs, or Application Programming Interfaces, are a set of instructions for web-based software platforms to talk to each other. Confused? Well, think about how the user interface (the visual stuff you see on your computer screen) helps you communicate with the computer and tell it what to do. APIs allow different software platforms to do the same thing, without any human input.

Take e-commerce, for example. The process of paying an online retailer with a credit card involves a number of different parties - at the very least the retailer's web store and a credit card processing gateway. APIs let the web store send out a real time request to verify your credit card information the moment you click checkout, and allow the credit card gateway to send back successful confirmation to the web store, allowing you to pay for your new purchase.

This is where API blows EDI out of the water - the ability for real-time connections. APIs send information in less than a second, which means that in practice, information is always updated instantly, without the need for any intermediary. It's no surprise then, to see why APIs are so important for the present and future of freight tech.

3. Blockchain

Here's a big one - what's blockchain? This is the type of question that could take an entire university degree to properly discuss. However, the concept of blockchain isn't that complicated at all. It all revolves around how data is stored and secured. The traditional model for data storage and security is centralization. Confusing right? Well, imagine a super secure physical location - like a bank. That's exactly how traditional data works. You put everything, whether its money or data (or in the case of cryptocurrency, both) in one location. Now, to secure it, you need to put the best locks in the world on it, because there's one point of access to change everything. This is what blockchain experts mean when they talk about a single point of access being a security issue in traditional data.

So how is blockchain any different? Well, first and foremost, it's decentralized. Let's go back to the banking example - instead of trusting one banker with maintaining and securing a global ledger for everyone, blockchain gives everyone a ledger, and has everyone record the transactions. What if someone wanted to forge a transaction? Well they'd have to change every transaction on every ledger in the entire blockchain! Instead of taking a million dollars from one central bank location, it'd be like going to a million houses and taking a dollar from each.

What makes blockchain so sophisticated is the communication of shared data between these nodes, allowing for incredible data security and transparency at low cost. Through the lens of freight tech, blockchain allows companies to communicate incredibly important information, like shipping documentation and invoices, fast, securely, and affordably. If you want to find out more about blockchain in the supply chain, check out the Canadian Blockchain Supply Chain Association!

Wrapping Up

Freight Tech is an amazing space - but it shouldn't take a rocket scientist to understand what's going on. Hopefully this article helped you understand some fuzzy terms - and helped democratize the industry just a little bit more. If you found this type of content helpful, make sure to share it on social!

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