"Cargo at rest is cargo at risk." What do you think of when it comes to the security of freight in transit? Some of the obvious may be theft or natural disasters, but Chris talks with Global Director of Cargo Signal Randy Gould to expand on understanding risk and what technology is doing to raise visibility between Point A and Point B.
Prefer to read instead? We've got you covered. Take a look at the transcript below for this week's episode.
Chris Parker (Host): Hello everyone and welcome to the Expeditors Podcast, where you can hear about front of mind topics in the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today's topic: Blind Spots. Cargo security is becoming more and more widespread and the technology that allows for increased visibility on freight continues to evolve. But where's this going and what are the benefits? To learn more about this, I've got Global Director of Cargo Signal, Randy Gould with me. Randy, how are you today?
Randy Gould: Hey, Chris, doing great. How are you?
Chris Parker: Not so good. Somehow I am maintaining an awful losing streak in my solo chess tournament, but I remain hopeful.
Randy Gould: The solo chess tournament. Hey, you know what?
Chris Parker: Don't judge.
Randy Gould: Yeah. We all got to do what what we need to these days, yeah, to keep ourselves entertained.
Chris Parker: Yes, we do. I'm kind of thinking I need to just throw in the flag and call it quits, but... Well, today's topic is cargo security and IOT. When I hear those things, I'm thinking of an expansive underlit command center with tons of people in front of screens and a massive projection of the world up on a wall. Everyone's wearing glasses so you can see the screens reflecting over their eyes. Then all of a sudden alarm goes off and a red ping starts firing off in the center of the Pacific. Randy, I see you, you realize what's going on. Pirates are taking over a container ship and you take off your glasses in a really dramatic fashion. You say to someone off camera like, "Send in Delta Squad." Is that in fact the Cargo Signal experience?
Randy Gould: Well, it's pretty close, Chris. I got to tell you. There is a little bit of showmanship in what we do.
Chris Parker: Sure.
Randy Gould: I get the benefit of saying that I fight pirates, which I think is a pretty cool thing to say you do at your job, right?
Chris Parker: Talk a little bit about Cargo Signal. What is Cargo Signal and what do you do as Global Director?
Randy Gould: Yeah, sure. So Cargo Signal is all about making cargo smarter. If cargo is smarter and it's telling us what's going on with it, its location, its condition, who's handling it, where it is, then you can do a lot of different things than how supply chains have been running traditionally.
Chris Parker: So then let me start with a very basic question. Why do supply chains need to be secure? I mean, I thought that this was a kind of a very black box experience, kind of tight and closed, protected. What kind of risks could there possibly be?
Randy Gould: Yeah, that's true. I mean, you go to the store and you pick up your material. You get your products that you're looking for. They're just there, they're just on the shelf, right?
Chris Parker: Right.
Randy Gould: You don't really think about what all happened to get them they're available for you to pick up and take home. But there's a lot of moving parts in the supply chain. It's called a chain for a reason.
Chris Parker: Sure.
Randy Gould: There's a lot of different links and a lot of different people that have to work together in order to move that one product from manufacturing to the shelf or the distribution center or wherever that piece of cargo needs to go to make that process work.
Chris Parker: So then speaking more holistically, how is risk defined when it comes to freight?
Randy Gould: There's a lot of different types of risks out there, right? When you order something, you expect your product to arrive, your cargo to get to a certain location. It's all the things that don't go according to plan. Is that late? Is it later than expected? That's a risk. Sometimes, is it earlier than expected? Sometimes, that's just as bad as being late and you're not ready for it yet. Or did your product arrive and it's not functioning properly? It was damaged while it was in transit. Or with security, are you moving... Is there a product that is attractive to thieves out there? These are things that you may not think of traditionally, that could be... Everyone says high value, right?
Chris Parker: Right.
Randy Gould: But that's not always what thieves are interested in. They're interested in stealing stuff that they can turn around and sell quickly and easily, right? So if I'm a thief and I'm trying to go steal something and make a few extra bucks and I have a choice of really nice mid-range rain boots in one truck and another truck that has some really high-end expensive electronics, but not consumer electronics. Maybe it's a certain set racks or-
Chris Parker: Calibration tech or something like that.
Randy Gould: Yeah, yeah. There's nothing that I can really do with that. Or we do a lot of stuff in the emerging space launch industry, rocket launch industry. I mean, the value of those components that are moving, extremely high, right?
Chris Parker: Right, right.
Randy Gould: It's literally rocket science that's moving over the road. But then two trucks lined up. I'm a thief. Am I going to steal, the rocket science in one truck could be worth a billion dollars or whatever, right? The rain boots are only worth 20 grand, right?
Chris Parker: But it's easy to sell.
Randy Gould: But it's easy to sell. I'm going to go get the rain boots because I can turn them around and people want to buy rain boots and they can put them on. What am I going to do with a really expensive piece of satellite material, right? There's not much I can do with it. So it's the nature of those commodities that increase the level of theft risk per se. But then there's other types of risks are different, right? I mean, if you think about delay, being late, being early, everyone takes on that risk if you're shipping cargo.
Chris Parker: So then risk is not so much the... It's not the stereotypical crime or damage or anything like that. It's exceptions. Exceptions are the risk.
Randy Gould: I think that's a great way to put it because a lot of things go right in the supply chain and logistics. I mean, think of it, right now there's millions and millions of packages and cargo being delivered successfully on time, right? Without damage, with all of those exceptions, right? So because of the sheer amount of activity going on, cargo being delivered everywhere, it's easy to get lulled. This is kind of what you do with risk, right? You get lulled into this sense of complacency, right? It's so many things have gone right that what could go wrong, right? Until it does go wrong. You're like, "Oh man, hold up now. Why is this carton smashed that I'm opening up? My really exciting piece of cargo that I need to get my product inside."
Chris Parker: So with the cargo security market, what does that look like right now? If you were to lay it out for me, what would I expect to see when I'm looking for a provider of these kinds of services?
Randy Gould: Well, here we are, October 2020. There's an incredible amount of turmoil and uncertainty in the world, but also within supply chains and how cargo is moving. Think about this, Chris. I mean, everyone is now focused on the risks with healthcare, with a potential vaccine, with the struggles that the world has had around COVID test kits too, right? The unavailability of products that we're all used to getting. Think about bikes. Everyone's interested in going to get a bike right now.
Chris Parker: Right.
Randy Gould: There's not a lot of bikes to be had in your local store, right? So there there's a big global event that's happened that it had all kinds of downstream effects to supply chain. I think we are in a major shift in how everyone thinks of supply chain, because just where we started, normally you walk in, I want to buy a bike. Of course, there's bikes available to me at my local bike shop.
Chris Parker: Sure.
Randy Gould: That's something that I would expect. But now, that's not a given, right? So that is a supply chain issue with the amount of inventory on hand and all that stuff. It's so cost... People don't realize that the supply chain is optimized so well for low cost delivery of goods that there's not a lot of extra inventory sitting around like you might think. Just like you said, isn't this a black box? Isn't it all just supposed to work and I can go get a bike if I wanted? But it's very highly optimized so you don't pay that extra however much, 20 bucks or 100 bucks for the bike you want to buy, right?
Chris Parker: Sure.
Randy Gould: So it all adds up.
Chris Parker: So I'm sensing a shift now then in the narrative that this isn't just about security. This is about a clean running supply chain.
Randy Gould: It absolutely is, right? Because security is one variable, one aspect of risk. That changes based off of the geography that you're moving through. Certain areas of the world are higher risk than others of theft, right? So in my example, a product may change your risk profile, but also no matter what your product is, if you're moving through a high risk area of the world that has a lot of cargo theft, they don't care. They're just going shopping, right?
Chris Parker: Right.
Randy Gould: So they don't care what your product is. So you could still open yourself up for risk there. So there's absolutely elements of theft risk on all kinds of cargo that are moving. But what we're doing at Cargo Signal is really bigger than that because there's all kinds of other things that are unlocked when we make the cargo smarter, right? When the cargo is talking to us, then you can really change how you manage your supply chain, because you never have to ask where your cargo is.
Chris Parker: So then how are you making cargo smarter?
Randy Gould: Well, it's really part of a broader technology trend of the Internet of Things. Think about it, everything, more and more things today are getting connected to the internet. I'm a music fan and so I'm always kind of looking around at different technologies and stuff that's going on with music. I've enjoyed kind of watching smart speaker trend happen, right?
Chris Parker: Oh yeah. Yeah.
Randy Gould: So where you look at speakers, they were pretty dumb, right? You got to hook something up to it, it'll play your music. Some play better than others. But now, you connect a speaker to the internet and then what does that open you up for? Right? I can use my phone. You can do voice activation, those sorts of things. That really opened you up to all kinds of other things. So that's really what we're doing. That's how we're making it smarter. We're taking something like a speaker that used to be just analog, plug in, play your music, and we're taking cargo and connecting it to the internet.
Chris Parker: So what is the cargo saying as it's connected? Is it saying, "Hi, I'm moving." Or is that as far as it goes?
Randy Gould: Yeah. Yeah. That's where we get into all these like... Sometimes, our clients, that's all they care about.
Chris Parker: Sure.
Randy Gould: They don't care about theft. They don't care about preventing damage, those sorts of things. That's not real apparent. That's not a big pain point for them. But that, "Hey, this is where I'm at." Making the cargo smarter, everyone has that problem in logistics because it's just the nature of like, all right, I've got this thing that I need shipped somewhere else. There's a lot of trust that you put in the person that you give that product to and say, "Please get it to its final destination at the time that I need it there." Right? So it's all those things. It's the risk of like all those handoffs and the ability to move through all of those links in the chain to get to the final destination that you really need your cargo telling you what its current state is, where it is during that whole journey, because otherwise, you're going to spend a lot of time and effort and resources making sure that it's going to get there. Or you can go the other way and just say, "Hey, good luck"-
Chris Parker: Keeping it old school.
Randy Gould: Yeah, just get it there in a couple of days. It's fine. Yeah.
Chris Parker: I'll ask later about kind of satisfying the needs of customers. But I want to talk more about what these... What it'll fricking say now that it can talk. Aside from telling me where it is, what else? How far can this go? What are the capabilities right now that IOT is bringing to supply chain visibility?
Randy Gould: Yeah. The things that it can say. I like that sort of thinking that way, right? Because it can say where it is. It can also say the condition of that product, of that cargo, right? When I say condition, it's like, "Hey, am I sitting outside on an airport tarmac in the hot sun and I'm baking here? I'm getting hot. Products' getting damaged." Someone needs-
Chris Parker: Think of like pharmaceuticals or something like that out there, right?
Randy Gould: Exactly.
Chris Parker: It can be used that way.
Randy Gould: Well, sure. I mean, you look in your medicine cabinet and even just the box of Tylenol you have in there or whatever, that's got a temperature range on it. It needs to stay within a certain temperature range. So all of the medications and healthcare related products have stringent kind of temperature ranges that they need to stay within so... It's about patients' lives and make sure that the things that patients are putting in their bodies have been shipped with integrity. It is an assumption that a patient would have that this has stayed within it. But there's heavy regulation and processes and stuff that sit behind that to protect that patient and what they're putting in their body and we take that very seriously.
Chris Parker: What else can a cargo say?
Randy Gould: Well, I think, what an interesting area for me is a cargo saying, "Yes, I'm here. But more interesting is I've been here longer than I should be." Like, "Hey, I've been waiting around for this flight." Or, "I've been at this rest stop a long time, probably longer than you would expect me to be there." Right? So the cargo's now telling us stuff like that. That's a totally different way to manage a supply chain too, right? If your cargo's like, "Hey, I'm a little slow here. Can you speed me up because you need to get to that final destination, right?" I kind of feel like we could do a whole another podcast series just what would cargo say, Chris?
Chris Parker: Right. Yeah. Just like, take it out for a nice dinner. Just get to know it a little bit. It's kind of nice.
Randy Gould: Just get to know your cargo more. Just get it talking.
Chris Parker: Yeah. Hey, how are you? What are your dreams? What are your aspirations?
Randy Gould: What hobbies do you have, cargo?
Chris Parker: Yeah, I've heard you say before, "cargo at rest is cargo at risk." That kind of thing really resonates where it might be safe and sound where it is, but those delays and stuff like that can really spell or have a greater impact on further down the supply chain or even upstream for the company's own operations and such. When taking that information that they're receiving, whether it's damage to the freight or its location, the timing of it and all, what can customers do aside from taking immediate action? How do they make the most benefit out of this information?
Randy Gould: Yeah, that's a key one there, Chris. Because just having the information, just getting your cargo talking to you is not enough.
Chris Parker: Sure.
Randy Gould: You got to answer back. This is a two way conversation here, right? So you're like, "Okay, you're here at rest." Cargo at rest is at risk. Absolutely, great, great line and great kind of guidance for that piece. So if it is sitting longer than you want, then what do you do about that, right? That's where that response and putting things into perspective. It's not only a technology play, right? You need people that know how cargo moves in order to make an effective decision and prompt action based off of it, right? Because where cargo rests are vastly different locations and is a huge variable, especially in a market, like we said today, that has a lot of turmoil. So people are trying to get that cargo delivered and coming up with incredible creative solutions, all the logistics experts out there are routing and moving things in creative ways to get things delivered on time.
Randy Gould: But that creates a lot of variability. So you don't actually, a lot of times, know where your cargo is at rest. So if you don't know, how do you know whether you're okay with it or not? It's tough to even make a decision on, no, I'm not comfortable with this cargo sitting at an unsecure, open lot parking lot versus well secured in a facility that's has good lighting, it's monitored, that sort of thing, right? So you really have to look at that, but you can't make that risk-based decision and get that cargo moving into a more secure place if you don't know where it is in the first place.
Chris Parker: So then let's say, I do reach out to a service that does provide IOT integration into my supply chain. How much of a role can technology play when it comes to supply chain? Ultimately, I'm asking, can I just set it and forget it and let IOT devices do their job and not worry about it?
Randy Gould: Yeah, I like that. So the set it and forget it, I would say the technology, and particularly the hardware side of the technology stack, obviously there's... We spend a lot of time on the software side because that's where... What you do with all this information is really the key aspect there. So yeah. Okay, your cargo's talking to you, but then how do you enable good action and tools and a platform to really take advantage of it? So that's mostly what we focus on when we are actually creating our products and building, we're writing our own software, that sort of thing. But on the hardware side of the house, we always go out. We're always looking on the market at who's doing the best stuff on the hardware space, right? We evaluate those products. We're kind of like CNET. We have to think about a review podcast later on of IOT devices and logistics.
Randy Gould: But yeah, we're bringing them in. we're testing them, we're road testing them, making sure that they work and they have the necessary regulatory approvals as well. That's a big piece. That's what I would say is not exactly a set it and forget it sort of set up. But with the goal being once we get it all set up, we want this hardware to be like labeling. We want it to be so simple, streamlined and easy to use that it's like pulling a label off and labeling your cargo, right? But now, this label is making your cargo smarter rather than relying on other humans to physically read or scan that label. That's where the forget it part comes into play. Because once you set it up, I mean, you get that smart label on, that's when you don't have to do anything else. Now, your cargo is smarter. You can forget it. Now you can trust that your cargo is going to tell you what's going on and then you can jump right to, all right, what am I going to do with this information now? And back to those exceptions.
Randy Gould: But now I don't have to uncover those exceptions myself. I just deliver the exceptions so I can go like, "All right. Well, I guess, now I can use my knowledge of supply chain and logistics and say, 'Well, this is the sort of action I want to take.' Now, I'm going to reorder that product because it's delayed, or I'm going to tell my own customer, 'Hey, we're a little early. Is that okay'?"
Chris Parker: Sure.
Randy Gould: That sort of thing. So that's where you got to have all of your organization to set it up, but once you do and you send that cargo on its way, then you can forget about it until something doesn't go according to the plan.
Chris Parker: It'll say it. It'll speak out. It'll say something about, "Hey, I'm actually going to be here a couple of days earlier than expected," things like that.
Randy Gould: Right.
Chris Parker: So does this kind of visibility replace what was known as event based visibility? Can this completely overwrite it? We don't need that anymore?
Randy Gould: Yeah. I think, it's just different. So it's about timing, right? If we go back to having a conversation with cargo, it would be like having a phone conversation or a live conversation like we're having today with Cargo Signal. With the traditional event milestone management, it works. It's just more like texting, where it's like, hey, every once in a while you might get an update or you might plan to get that update, but it's not live, right? Someone's got to go find out, ask the cargo, "Hey, where are you? How you doing?" And then send you that update periodically.
Chris Parker: So then when does it make sense for a company to engage with integrating IOT into their supply chains? What kind of questions do they need to ask themselves in order to say, "Hey, yes, this is the direction we want to go," or, "We're ready to adopt this kind of approach to supply chains"?
Randy Gould: Yeah. It's something that we talk about regularly. The thing that I always go back to is speed. Can you use speed in your operation to achieve a benefit, right, an operational benefit for you, right? If you're an organization that's considering implementing IOT and getting cargo talking to you, it's really the speed that is the benefit that they're receiving. So you have to take advantage of that speed in knowing sooner. So if you can figure out, "All right, if I knew this issue sooner, could I prevent that bad thing from happening? Or could I just let people know that a bad thing just happened," right? There's benefits to that. If you see those benefits operationally, like knowing sooner when a piece of cargo is delivered and then telling the finance team for revenue recognition quicker, right?
Randy Gould: Towards quarter ends, there's big financial benefits to that in speeding the information related to delivery of cargo and turning that into financial recognition for the company. So as just one example of taking advantage of that speed. If we know sooner and confirm that that cargo is delivered, then I can tell my finance department sooner and then I can book that revenue sooner, which could really help the financial health of the company.
Chris Parker: Wow. Okay. Yeah. So it really ripples out, which is what you're saying. That simple concept of speed can have huge impact on a company.
Randy Gould: Huge. It will create winners and losers with companies in the supply chains that they operate.
Chris Parker: Sure. Yeah, absolutely. They'll see that they're having more success going a certain route or going with a certain program or service as opposed to others and saying, "Okay, we're actually really... In order for us to take ourselves further, we're going to invest and commit ourselves to these avenues."
Randy Gould: Yeah. Because you can just react quicker, right?
Chris Parker: Yeah. Absolutely.
Randy Gould: Whether the cargo is moving fast or slow, that doesn't matter, but your reaction and your decisions that you can make are faster than your competitors, then you're driving an advantage.
Chris Parker: Okay. So final question before we wrap up. The technology sounds very cool. IOT sounds very neat and hot. It sounds like it reduces a lot of headaches and also offers a lot of information. Is this as far as it can go? What's next?
Randy Gould: Well, I think, while the technology is hot in the logistics space right now, it's actually been around a lot longer than people think. So in my mind, where we have ahead of us next is scale. Is taking this technology and using it in logistics at the sheer massive scale that logistics is in the world, right? So increasing the overall amount of cargo that's smarter and moving and reaching to a point where in order to get exceptions, I have to have 100% visibility in order to only deliver me the exceptions that I need to action. In order to get there, companies are going to have to scale with this technology up.
Chris Parker: Probably across the whole board, make it as standard as possible.
Randy Gould: Yeah, that's right.
Chris Parker: I mean, it's standardizing, right?
Randy Gould: It is standardizing it.
Chris Parker: That's what it amounts to.
Randy Gould: That's it, yeah. Because otherwise, you don't know when something's going to go wrong.
Chris Parker: Sure.
Randy Gould: That's the whole idea, right? So how else do you know this is going to be the thing that's going to tell you? So how do you scale it up? Can you really take true advantage of that technology if it's not on 100% of your cargo? If you're asking future world, that's the question I would be asking.
Chris Parker: Right. No one will ever, ever ask again, "Where's my freight?" That is the goal. That's the mission.
Randy Gould: Yeah.
Chris Parker: Throw that out of the vocabulary.
Exactly. We're moved on. We've evolved past that question.
Chris Parker: Right, right, right. Excellent. If people want to learn more about this kind of stuff, how can they get into contact with you? Where can people find you?
Randy Gould: Cargosignal.com. We just launched a new website, please check it out. There's a lot of really great information on there. So that's what I would suggest.
Chris Parker: Cool. Excellent. Well, thank you so much, Randy. Really appreciate chatting with you. I'm excited to see where this kind of stuff goes because it's super, super cool to see in action. So thank you so much.
Randy Gould: Always a pleasure, Chris.
Chris Parker: All right. Take care.
Randy Gould: Good luck on the chess game.
Chris Parker: Thanks. Thanks for listening to today's episode. If you've got questions or want to learn more about today's topic, check out the show notes for more information. Before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care and I'll see you next time.