As few as 40 percent of companies have made the switch to digital systems, including the use of APIs, reports Angus Loten of the Wall Street Journal. Yet, the rise of just-in-time delivery has complicated how the transportation industry sets rates for shipments, regardless of the well-documented benefits of electronic data interchange (EDI).
Moreover, under-utilized shipping modes, such as less-than-truckload (LTL) shipping, have highlighted the tough criticism and demand for change in EDI vs. APIs used by shippers and carriers. However, change can be difficult to handle in an industry where EDI has been around for more than 50 years, so knowing the basic differences, challenges and benefits between EDI and application programming interface (API) are key to making an informed decision about which system to use in your company.
What Are the Challenges and Benefits of EDI vs. APIs?
- EDI is more efficient than paper-based transportation processes, including emails. EDI allows for the immediate transfer and processing of orders.
- EDI eliminates the intermediaries in order processing. Unlike faxes or other transmissions of order materials that require someone read and process the order manually, EDI vs. APIs eliminates the intermediaries in processing, making for more efficient, rapid order fulfillment.
- EDI can send large volumes of documentation at once. Another benefit within EDI is its ability to send large volumes of documents at once. This helps to prevent inaccuracies during transmission and keeps everyone on the same page.
- EDI integrates well with legacy systems. Since most companies continue using legacy systems, EDI is the natural companion and easiest choice in automated order processing.
- It is based on timers, resulting in stale data. The first challenge in EDI occurs due to its timer-based processing. EDI functions by waiting until a timer-threshold is met, sending documents at that time. Unfortunately, this means documents have already aged a bit.
- It can break down easily. EDI-exclusive systems also have a propensity to break down. They can take days to repair, resulting in lost opportunities and orders.
- Maintenance costs are higher. The resources needed to repair EDI systems also have extensive costs, resulting in higher overall operating costs as well.
- Shippers need larger IT teams to manage an EDI. Due to its size and narrow-capacity for error, shippers using EDIs tend to have larger IT teams to manage the system, even in periods where it functions correctly.
- It takes months to set up. Implementing an EDI vs. APIs from the ground up can take months, if not longer, to complete.
- EDI system vendors are declining. The vendors that create and set up EDI systems are diminishing, but an uptick in EDI use in 2016, reports Transport Topics, is also impacting vendors by forcing them to implement new translation software suites to manage modern EDI systems.
Why Are Shippers Still Using EDI?
There are also a few reasons why shippers continue to use EDI vs. APIs today, regardless of its challenges. These reasons include the following:
- Existing investments seem too big to abandon.
- Integration with legacy systems is simpler with EDI.
- Uncertainty about the use and requirements in API.
- Standard system used by most companies in the shipping industry.
What About API?
APIs are comparable to EDI, but they have a basis in web-based protocols. They enable any system to communicate with one another without the challenges found in EDI implementation and management. In addition, APIs have several benefits that make it ideal for use in the transportation industry, which include the following:
- API provides real-time data. Real-time data lets shippers see exact costs for LTL shipping right now.
- It eliminates the barriers to data retrieval and use in legacy systems, reports William B. Cassidy of the Journal of Commerce. Since EDI systems require like systems to transfer information, they are limited in their capacity to interact with other, more advanced systems. APIs can interact with multiple systems via their universal nature.
- API is a cloud-based technology. API is also a cloud-based technology, so it can be maintained and updated without disrupting shipping operations.
- It is fundamental to Big Data analytics. Big Data and analytics are only as good as the accuracy in the data mined. In other words, recent data is critical to using analytics to their fullest potential.
- API costs less to implement. Implementing an API costs less than EDI, but testing during implementation can cause systems to crash.
How Does API Impact LTL Shipping?
The direct impact on LTL shipping from implementing an API can lead to significant benefits for shippers. This includes, but is not limited to, the following:
- Data-based carrier selection for LTL shipping reduces cost.
- Carriers can make cost determinations based on supply and demand (capacity and demand).
- Shippers have more information to use in decisions.
- API automates carrier selection and information sharing.
- API takes less time to process.
- It reduces risk in shipping.
- LTL shipping is easier to manage and use.
Should Shippers Use API or EDI?
The debate continues among transportation executives and industry experts about whether API or EDI reigns superior. Upon review of the literature available, including the past year’s reports of changes in APIs, Cerasis predictions and increasing “talk” about APIs online, shippers and carriers appear to be moving toward better technology, toward APIs. EDIs will continue to be around for some time, but like all trends that promote business, APIs will eventually replace EDIs in their entirety.