In this article we are exploring the differences of EDI vs API for Shipping Solutions to see what advantages come from moving to API integrations for those who need to ship their products to their distributors and / or customers. In recent years, IT professionals have developed new methods of integrating platforms via cloud technology and Application Programming Interface (API). Within the Distribution and Logistics industries, many Transport or Freight Management Systems (TMS / FMS) are introducing APIs for real time integration of systems as opposed to the legacy arrangements using Electronic Data Interchange (EDI) for the transfer of data between systems and trading parties. As a result, its timely to look at the differences between these two methods, and their relative advantages and disadvantages in the context of the parcel and pallet shipping platforms.
Legacy EDI for Shipping Solutions
In the context of a shipping software platform, EDI refers to the process of sending shipping data electronically in a file, normally csv or XML, from the shipper to the carrier. Commonly this technique is used by the Shipper to manifest consignments, so that the carrier receives their consignment data electronically at the end of the day and can prepare their billing and sortation systems. This eliminates the need for the shipper and carrier having to manually enter the same data, saving time and improving accuracy of the data in the transfer.
This transfer of data via a manifest file is strictly a one-way transfer of data from the shipper to the carrier and is relatively straight forward, quick and simple. There is no data validation by the carrier on the submitted data.
API is a more modern protocol that allows two systems to interface and exchange data, normally in real time. This protocol strictly controls the way the two systems pass data between themselves, and therefore allows many systems to be interfaced without customisation, and therefore relatively cheaply and quickly and on a large scale when compared to the legacy EDI systems. As a result, there has been a proliferation of these system connections as the parties can simply work in their own item and resources to complete the process with minimal supervision.
API for Shipping Solutions
With the proliferation of cloud-based software systems you can see the appeal of connecting various software platforms via API, and hence in recent years we have seen the scale of these interface and connections build significantly.
Because API allow for the transfer of data both ways, and in real time, both carriers and shippers have taken the opportunity to use this technology to provide shippers and their customers with greater information, and in a more timely, and accurate manner.
Examples, of this process is that some of the major Australian carriers have developed API systems for the creation of consignment notes, labels, and manifests. Beyond these basic systems, they can also provide APIs for tracking of shipments, booking pick-ups, supplying rates or price estimates, and Proof of Delivery (POD) data and images. This contrasts with legacy EDI systems where the creation of con notes, label, and manifests, as well as quoting of price estimates, are all completed by the Transport Management System locally using data stored in the applications database. Any tracking data in these systems is normally provided by links to a carrier tracking url, or uploaded files at some later point. The difference between these two systems is the immediacy of the API for shipping solutions approach and the flow of the data both ways, rather than just one way.
Benefits of an API based approach
Carriers are primarily responsible for the facilitation of this new approach because it is the carriers that write the API and allow for data flow into their systems.
The primary benefits that the carrier’s get from this approach can be summarised as follows:
- Uniform and valid data. By using APIs carriers have the opportunity to validate the incoming data and reject data that is invalid. Invalid data such as incorrect address i.e., suburb and postcode combination, or missing data such as poorly formatted telephone numbers, or missing email addresses cause delays in processing and delivering the freight, and cost the carriers’ productivity. As a result, the carriers now have the opportunity to force shippers to only supply valid data, which streamlines the data transfer process and improves the probability of delivering the cargo on time and on the first attempt.
- Uniform labels – because the carriers will often provide the labels via the API, or at least, the data that generates the labels, the API allows the carriers to control the format of the freight label, and ensure that all the data is correctly displayed, and labels are not duplicated or have poorly formatted bar codes. If the labels are incorrectly formatted including the bar codes, then the freight will not scan and again, cause delays or non-delivery.
- Carriers can also veto cargo that is outside their service profile thereby reducing the instance of carriers receiving cargo that is not suitable for them to carry: such as Dangerous Goods (DGs); oversize cargo; or bulk deliveries, in the case of small package carriers.
- Carriers can also have a uniform approach to integration with many platform partners or customers and therefore this streamlines the integration process and helps to reduce the costs of the carriers maintaining these integrations.
In the case of the shippers – they too benefit if the data is correct the first time thereby improving the delivery service they receive. Beyond these indirect benefits shippers gain access to real time information that can greatly improve the immediacy and accuracy of the data coming back to the shipper from the carrier. Data such as:
- An accurate price estimate based upon the data submitted using the carrier’s up to date pricing information.
- Real time tracking data often based upon web hooks.
- Real time booking of collection from within the shipping platform.
API for Shipping Solutions – Risks & Limitations
As with all aspects of business, the adoption of new technology often creates trade-offs, and this case is no exception. APIs require two-way communication and fast internet. Should the carrier’s API or the customers internet go down for any unexpected reason, then this can cause the system to fail, and shippers will not be able to generate labels and ship until the service is restored. Many businesses are familiar with these internet risks with the growing reliance on cloud-based software systems. An example, of a risk mitigation policy could be having multiple carriers to choose from. This way if a particular carrier’s service is interrupted, or is struck by an outage, you can continue to ship with an alternative carrier until the other carrier’s system comes back online.
Another potential issue could be that the time it takes to generate a label and rate request takes several seconds longer than if the information is generated locally via the legacy EDI based system. This is because you are waiting for the carrier’s system to respond and transmit the data. For high volume shippers there are options around automatically importing and rating shipments and then printing labels locally, which ensures highly responsive and quick label printing.
Future Implications for Shippers
Because the carriers see many significant benefits to them and for their customers by using an API for shipping solutions, it’s likely that more and more carriers will insist on the use of API for rating, creating shipments, booking pick-ups, and posting manifests. As a result, shippers will need to invest in the development process to utilise the carrier APIs or switch to third party software platforms that have already written to the carrier APIs. By using third party platforms shippers can quickly and easily gain the benefits of using this new technology at very low cost and with no specific IT investment required.
It’s likely that the incidence of using carrier APIs for shipping solutions, both domestic and internal parcel and pallets, will continue to grow as carriers and shippers demand the immediacy of the technology to greatly improve their data flow, and therefore, the delivery service. There are trade-offs that comes with the adoption of this technology, however making sure that you are aware of these trade-offs for rare occurrences should see them being manageable.