TradelanesT H E M A G A Z I N E O F A G I L I T Y I S S U E 2 7 . V O L . 1 , 2 0 1 7

TECH WAVEFaster, better, now!Internet of ThingsDigital disruptionAutonomous ships

Autonomous,crewless ships. Not if,but when.Rolls-Royce Innovation Marine is leading a group of thinkers and developers who promise to makeautonomous ships a reality. In 25 years crewless“drone” ships will carry a large percentage of ocean cargo.

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Digital disruptionAgility CEO Tarek Sultan shares his view of innovation in thelogistics industry and explains how embracing disruption isenabling Agility to stay ahead of the game.

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Also in this issuePage 26 Are more new shipping rules on the horizon? Page 29 Photo contest captures change in Africa.

Faster, better, now!An expert view of the technology landscape andadvances that supply chain and logistics managersneed to be thinking about. Agility’s VP of OperationalTransformation walks you through the options andchoices before you.

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The Internet ofThings andbeyondRFID, robotics, drones, autonomous vehicles,Web2.0, Blockchain, machine learning …….. a look at the technology remaking the globalsupply chain.

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agility.com

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Tech waveSUPPLY CHAIN LEADERS FORCED TO GET SMART

Faster, better, now!

R emember when supply chain executives let the ITpeople worry about technology and digital trends?It wasn’t all that long ago that managing thesupply chain meant procurement, inventory

management and cost reduction. It also meant leavingtechnology to the specialists.

Today, it’s vital to:

• Anticipate and respond to a world of continuously changing demands

• Deliver faster than ever to satisfy a new consumer generation’s desire for instant gratification

• Keep reducing inventory levels and delivery costs

“Supply chain management requires demand forecastingand network optimization, as well as traditional freight,procurement and inventory management,” says Essa Al-Saleh, CEO of Agility GIL, Agility’s commercial logisticsbusiness. “Given the shifting landscape, it’s important tohave a logistics partner with a strong digital orientation.”

The good news is that a wave of radical innovation ismaking it possible to respond to the clamor for “faster,better and now!”

It’s understandable that supply chain managers feeloverwhelmed. The pace in this area is accelerating, makingit harder to keep abreast and leaving little time for front-lineexecutives to evaluate and test new innovations.

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Biju Kewalram is Agility GIL's VicePresident for OperationalTransformation. He has worked inthe logistics industry in the UnitedStates and Australia for nearlythree decades. He helps Agilityteams and customers understand,adopt and implement technologyintended to boost productivity, cutcosts and improve service.Tradelanes asked him to survey thetechnology landscape andhighlight advances that supplychain and logistics managers needto think about.

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ConsiderYour world keeps getting faster. How do you create asnapshot of the underlying technologies and trendsreshaping today’s supply chains? How do you create achecklist so that you can recognize when disruption isoccuring or giving your competitor an edge?

We’ve done that for you with this Survey of Digital Trends. Let’s start with a comprehensive list of the technologies

that Agility is tracking – technologies you should bewatching because of their potential to change the supplychain and logistics.

Like others, Agility is aggressively evaluating digitaltrends. As one of the world’s top logistics providers, we’vehad hundreds of conversations with our customers about

their logistics needs. Here is what they tell us is on theirminds:

• Transparency & visibility – including tracking and eventmanagement

• Flexibility – adapting to changing requirements on shortnotice, including changing mode of transport, dictated bychanging customer demand

• Lower inventory management costs – keepinginventory levels low (e.g. manufacture-to-order ratherthan manufacture-to-stock) and warehouse costsminimized

• Lower supply chain risk – being able to respond todisruptions like strikes and natural disasters, avoiding

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A geographic footprint thatmatches your supply chain

allows your logistics partnerto offer standardized

processes and standardizedimplementation of

technology.

Big Questions■ Is your logistics provider able to scale the

use of digital technology wherever you need

to operate?

■ Does your logistics partner enable partner

integration and offer a mix-and-match of self-

service and connected systems?

■ Is your logistics partner able to offer multi-

modal support for integrated systems?

ASPECT OF SUPPLY CHAIN / LOGISTICS (IMPACT AREA) TECHNOLOGY DEVELOPMENT TRACKED OR USED BY AGILITY

Physical Product Internet of Things

RFID

Nanotech

Sensors

Manufacturing Additive manufacturing (3D Printing)

Inventory Management Robotics

Transportation Drones

Autonomous vehicles

GPS & Geolocation

Partner Integration Web 2.0 (including Cloud Computing, SaaS & Mobile)

Web services (incl. EDI)

Blockchain

Big Data / Data Analytics

Machine learning

Paperless (Paper to Digital)

IT Operations – Agile & DevOps

Bloomberg Businessweek devoted adouble issue to “code” reasoning thecase that business executives whodon’t learn the intricacies ofcomputer code risk makingthemselves outdated.

McKinsey predicted that the Internetof Things – the creation of a networkof continually connectedmanufactured devices – would a havean economic impact of $3.9 trillion to$11.1 trillion by 2025.

Amazon announced it will have thecapacity to deliver “tens ofthousands” of products purchasedonline to consumers’ homes withinone hour.

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stock-out situations and avoiding obsolete inventories• Predictability – having freight and inventory move

through the network as planned• Higher service quality – continual improvement of

product and information delivery• Lower overheads – reduced administration costs through

efficiency and streamlined processes• Simplicity – elimination of complex processes• Lower transportation costs – through choice and

flexibility• Omni-channel distribution – ability to deliver into

brick-and-mortar and e-commerce supply chains uniformly• Self-service & integration – connecting systems

for electronic interchange and ability to pullinformation as needed

To see where innovation intersects withcustomer concerns, we’ve mapped themlike this in the chart below. Each ofthese innovations is discussed on thefollowing pages.

Agility’s Al-Saleh says it’s importantto remember that effective use oftechnology is not achieved in isolation:supply chains are chains of trading partners.And typically, 3PL providers and logistics

specialists are better able to deliver on thepromise of technology if they have the

second necessary aspect in place to offerleverage: a strong, effective network oftheir own offices.

A geographical footprint thatmatches your supply chain allows yourlogistics partner to offer standardized

processes and standardizedimplementation of technology. Both,

Al-Saleh says, are essential to your ability toleverage technology investments.

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Transparency and Flexibility Lower inventory Lower supply chain Predictability Higher service Lower overheads Simplicity Lower transport Omni-channel Self-service &

visibility management costs risk quality (admin costs) costs distribution Integration

Internet of Things ● ● ● ● ● ● ● ●

RFID ● ● ● ● ● ● ● ●

Sensors ● ● ● ● ● ● ● ●

Robotics ● ●

Drones ●

Autonomous vehicles ●

GPS & Geo-location ● ●

Web 2.0 (incl. Cloud, SaaS and Mobile) ● ● ● ● ● ● ●

Web services (incl EDI) ● ● ● ● ●

Blockchain ● ●

Big Data ● ● ● ●

Machine learning ● ● ● ●

Paperless ● ● ●

IT Ops – Agile ●

Innovation intersects with customer concerns

Your world keeps getting

faster. How do youcreate a snapshot of

the underlyingtechnologies andtrends reshapingtoday’s supply

chains?

Widespread testing of drones inurban settings has led to a focus onthe tricky ‘final mile’ piece ofdelivery. But the greatest potentialfor autonomous transport is on long-haul routes. Autonomous,crewless ships – as visualized here by Rolls Royce – will join drones,long-haul aircraft and driver-lesstrucks in moving the world’scommerce.

Rolls Royce has been researchingand developing vessel systems forseveral years. And this year, aircraftdeveloper Airbus announced plans todevelop an autonomous flyingvehicle platform for cargo transport.Planes without humans aboard don’t

need expensive, and heavy, life-support systems to keep cabinspressurized.

Uber’s offshoot, Otto, made itsfirst delivery by self-driving truck inOctober, a consignment of 50,000cans of beers on a 120-mile routethrough Colorado. Earlier in 2016,six of Europe’s leading truck makersran “truck platoons” to Rotterdamport from as far way as Sweden andsouthern Germany. Not strictly adriverless operation, a truck“platoon” has a manned vehicle inthe lead followed by two or threevehicles connected via wireless. DAF,Daimler, Iveco, MAN, Scania andVolvo are all developing this

technology. The advantage of truckplatooning is consistent speed,which will help traffic flow onheavily congested roads in Europe.

Most accidents whether in theair, on the road or at sea, are causedby human error, so over timeautonomous transport is expected tosignificantly reduce accidents as wellas operating costs.

On page 24 we look atdevelopments in autonomousshipping, which one day will bedelivering into fully automatedports, from where containers aredelivered inland by driverless trucksand consignments delivered fromICDs to customer by drone.

A world of automated logistics

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■ The Internet of ThingsThe Internet of Things refers to the ability of eachindividual manufactured item to be part of a network.

The key to understanding the Internet of Things (IoT) is,first, to realize that every manufactured object can have itsown internet identifying number (IP address). Second, eachof your items or SKUs (Stock Keeping Unit) cancommunicate with the network.

When you combine a unique identifier with the abilityto communicate, you’ve got a network in which each itemcan be constantly broadcasting its presence. The result isthat you’ve substantially increased the transparency andvisibility of inventory within your supply chain.

Today, objects from lightbulbs to thermostats comewith embedded systems, unique identifiers and the abilityto connect to Wi-Fi networks so that they act as parts ofthe network and can be continuously visible andtrackable. This also increases the number of trackableevents within the logistics/supply chain process.

This enhanced visibility in turn increases the flexibilityof the supply chain because you have no need to wait for

inventory to be checked in at a point in the distributionsupply chain. Its location is always known.

By eliminating the need to perform manual inventorycounts, you reduce the cost of managing the inventoryand the costs in the warehouse. The number of processsteps in managing the inventory is also reduced, makingfor a simpler network.

The Internet of Things continues to growexponentially and, according to Business Insider, isexpected to expand from 10 billion devices in 2015 to 34billion devices in 2020.

By eliminating the need toperform manual inventory

counts, you reduce the costof managing the inventory

and the costs in thewarehouse.

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displays can be used to track whetheror not a packaging container has beenopened and whether or not theinventory has experiencedtemperature, humidity or otherenvironmental factors that are outsidecertain ranges.

The use of sensors can help eitherwith real-time tracing of such changesor for a permanent record of theimpact being created by changes. Theinventory owner gets visible evidenceof integrity.

Sensors are of particular use in coldchain logistics, typically for high-valuepharma and life sciences products, orfor other fragile and perishable goods.These are goods for which ordinaryvisible inspection might not reveal thatan unacceptable event occurred in theshipment or in the progression of theinventory through the supply chain.

Use of sensors can cut inventorycosts and increases reliability of supplychains, reducing supply chain risk ateventual point of consumption.

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RFID technology has been available fora long time, but it is only now startingto gain significant traction in moresophisticated adaptations.

At its heart, RFID consists of a “tag”that is inserted into a manufactureditem. It can be placed or sewn in. EachRFID tag comes with a chip and anantenna, capable of being programmedwith basic stock-keeping data and ableto broadcast that data to a reader.

It is wrong to think of this

technology as a new technology.Booksellers, among others, have beenusing RFID tags to prevent theft fordecades.

To understand why it has taken solong for RFID to become more widelyadopted, it is best to think of thetechnology as an ecosystem.

In order for this ecosystem to work,it needs:

• RFID tags embedded in each SKU oritem

• A standard way, or language, tomanage the database and describethe product so that all inventorymanagement systems can interpretthe data the same way

• Scanners and readers at points inthe network or supply chain where

the presence of the SKU needs to beinventoried

The cost of the tag has been a barrierto adoption. As the cost of garments

and other manufactured itemsdecreases, the relative cost of theembedded tag has also had to decline.Otherwise, the tracking technology is adisproportionate share of the cost ofthe item and the manufacturingprocess.

RFID’s role in the supply chainholds great promise because tag costsare declining, large manufacturers andretailers are mandating their use.

As the ecosystem expands, it is easyto see why contactless scanning of anentire warehouse filled with RFID-tagged merchandise could reduceinventory management costs.Continuous inventory management atmultiple points in a supply chain alsoenhances visibility and increases thetrack-ability of products.

■ SensorsSensors are embedded componentsthat help track the “state” of objects inthe flow of the supply chain.

Today’s sensors help measure andpreserve any changes in state ofinventory – temperature, for instance –sending alerts when an SKU venturesoutside tolerance parameters.

State-aware sensors that change

10■ RFID(Radio Frequency Identification)

It’s easy to see why contactlessscanning of an entire warehouse, ofRFID-tagged products could reduce

costs.

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■ RoboticsThe use of machines to manufactureproducts has long been a feature inautomotive manufacturing and otherhigh-value production chains.

Sophisticated manufacturers in Japan,Germany and the United States havebeen using robots in production foryears. Now though, the cost ofdeveloping and installing industrialrobots is dropping significantly, somanufacturers in developing countriessuch as China and India are aggressivelyadopting robotic production.

In addition, the proliferation ofcameras, processors and otherunderlying technology means thatsmaller, more mobile robots can nowbe deployed in warehouses and usedfor very specific purposes: picking

specific SKUs and bringing them to apacking station. With the growth ofcompanies like Kiva (now AmazonRobotics), there has been wideradoption and scale availability ofrobots in this segment.

At the same time, it’s important tonote that robotic systems indistribution centers are now able topick and palletize stock, making it

possible for DCs to prepare and ship“store ready” pallets that arespecifically built with inventoryrequired by a specific store. Thatreduces warehousing and inventorycosts – not just at the DC but alsowithin the store.

Robotics can improve warehouseand supply chain efficiency anddramatically lower costs.

■ DronesYou’re aware of the small unmannedaerial devices that are self-powered,guided remotely or self-guided, andcapable of carrying and deliveringsmall(ish) payloads over relatively shortdistances.

You can tell that a technology hasachieved mainstream recognitionwhen a government body regulates it.In June of this year, the USDepartment of Transportation andFederal Aviation Administrationannounced regulations for thelicensing of Small Unmanned AircraftSystems, known to teenagers andYouTubers everywhere as drones.

Implied in the growth of thistechnology is a significant – but stilldistant – disruption of the last-miledelivery model. Drones have limited

range. Their most immediate promiseis in delivering small packages from arelatively close inventory storagefacility to a customer’s place ofconsumption.

Currently, drone technology is limitedby:

• Adoption and regulation – chaos tobe prevented by regulated use of aspectrum

• Shorter range• Lifting capacity or size of package

The most likely place in the supplychain for this technology is in the lastmile or final leg of delivery. Amazonand others are experimenting with it.

Clearly, the most significant impactin the medium to long term willprobably be to lower the cost oftransportation in the last mile.

■ Autonomous VehiclesLike all disruptive technologies, self-driving cars and trucks appear to havearrived on the scene all of a sudden.

Volvo and other companies areconducting trials with self-drivingtrucks while auto manufacturers suchas Ford, Tesla and Audi are developingcars that operate by computer with nohuman driver needed.

The reality is that development ofself-driving and self-navigating vehicles has been under developmentfor a long time – Google’s self-drivingcars have driven over two millionmiles in four cities. Progress isunderpinned by the simultaneousarrival of advancements in theunderlying component systems:

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The most likely place in thesupply chain for this

technology is likely to be inthe last mile or final leg of

delivery.

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cameras, GPS and the ability to interfacewith cellular towers, amongst others.

Currently, the wide-spreaddeployment and availability isconstrained by the need to developlegal and insurance frameworks. Whois responsible in the event of anaccident? Another issue is the abilityfor the vehicle to communicate withsensors and guidance equipmentembedded in the roadways. Thisrequires statutory and governmentinvolvement, as well as financing andconstruction.

The most likely impact of thistechnology innovation is in the reducedcost of the road transportation leg ofthe supply chain. Those savings areachieved by removing the human driver.

To some extent, predictability ofthe supply chain is also enhanced bythis development.

For more about autonomous shipping andhow Rolls-Royce Innovation Marine isresponding to the challenge see page 24.

■ GPS & GISThese are two different but inter-related technologies that aresometimes confused with one anotheror thought to be the same thing.

A Global Positioning System (GPS) is aspace-based radio navigation systemmade up of multiple satellites thattransmit timing and geographical

location information. Ground receiverssuch as the navigation system in yourcar use signals from multiple satellites– typically three for latitude andlongitude, and four to add altitude – inorder to develop a precise location ofthe receiving unit. Like many majortechnology advancements, the systemhad its basis in military needs andtoday supports commercial positioningand a more precise, governmentpositioning option.

Geographical Information System(GIS) is software/database technologythat uses the data from GPS. DifferentGISs are set up for different purposes.They provide the databases showingwhat exists in the surrounding area. Aninterface to the GIS allows the use ofthat database. The database of “what isaround you” is derived from a GIS ormapping database while a GPS tellsyou “where you are in relation to what is around you”. The two worktogether to provide location specifictechnology uses.

In the world of logistics, the abilityto track the location of freight isclearly valuable: you are increasingvisibility. Expect the continuingproliferation of devices that allow real-time tracking of assets in motion – forexample, container seals. A GPS-enabled container seal has theadvantage of being able to identifywhere the container is at all times.When combined with GIS, a history ofthe movements of that seal can bevisually inspected. In this way, these

multiple but related technologiescombine to resolve complex logisticsproblems.

The use of GPS/GIS-enabled devicesalso provides an ability to ensure thatanytime a container leaves a spacedesignated by a range of latitude /longitude, alarms are generated (or atleast tracked and saved for later access).This increases security and lowers costsarising from loss.

Similarly, higher visibility reducesthe need to reposition freight as often,reducing associated transportation costs.

However, current GPS technologyhas inherent technical and securityshortcomings. GPS signals are weakdue to distance between satellites andterrestrial applications, making themvulnerable to jamming. A $10jamming device powered by a carlighter could render a GPS-dependentport inoperable. Current GPS systemsare controlled by countries, givinggovernments the ability to deliberatelydegrade signal quality and accuracy ifthey choose. Finally, GPS technology isineffective in urban, indoor and othersettings that multiply reflection oferrant signals – places that includeports and warehouses. Hence, the needfor GPS 2.0.

■ Web 2.0 (Incorporating CloudComputing, SaaSand Mobile Apps)

Web 2.0 refers to the evolution of theInternet to allow for more participationand collaboration between internetusers. It expands the definition of “theweb” – used interchangeably by manypeople with “the Internet” – beyond astatic place to find information.

1514A Global Positioning System (GPS) is

a space-based radio navigationsystem made up of multiple satellites

that transmit timing andgeographical location information.

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In the world of logistics, the abilityto track the location of freight is

clearly valuable: you areincreasing visibility.

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As integration increases, supply chainparticipants are able to quickly increaseor decrease their order levels based onupstream and downstream visibility.That prevents the creation of obsoletestock or unsatisfied demand that goesoff in search of substitutes.

There are two ways to increaseintegration and communication. Oneis unstructured human-to-humancommunication, such as emails. Theother is structured integration that issystem-to-system. Systems andapplications that are programed to takeaction by, for example placing orcancelling orders, rely on system-to-system communication, which in turncalls for structured data to passbetween systems.

Electronic Data Interchange, orEDI, is a long-established method ofconducting system-to-systemcommunication. Typically, it involvestwo trading partners adopting one ofmany published standards andimplementing a protocol to have theircomputer programs talk to each other,without needing to both be using thesame programs and applications.

Web services is a more modernimplementation of the same system-to-system principle, except that it is basedon internet protocols and standards.Web services typically consist of oneweb-based application, say a trackingsystem that needs to get the latestcarrier schedule, sending a messageusing coded internet protocols toanother web-based system. In response,it gets the information back in thesame coded internet protocol.

In logistics, there is a large body ofcommunication that takes place viaEDI. In all likelihood, that will remainthe case and perhaps even beexpanded. Adding a new tradingpartner to an existing EDIimplementation represents a fractional,

incremental cost and provides scalableintegration. However, where webservices are available, it makes sensefor new trading partner relationshipsto be implemented using web services.

Over the next few years, mostorganizations will continue toimplement and maintain both formsof structured communication andintegration. There is generally lesssizzle associated with these technologiesbut they still play a strong, integrativerole in smoothing supply chains.

■ BlockchainBlockchain technology is oftenconfused with or used interchangeablywith Bitcoin. In fact, Bitcoin, the digitalpayment “currency” is an applicationthat is based on underlying Blockchaintechnology.

Blockchain technology relies on fivekey components that give it thestrength to form a platform forapplications that require a high degreeof trust, such as finance:

• A historical transaction-trackingdatabase (also called a “ledger”),which is stored on thousands ofdistributed computers, therebyavoiding a single point of weakness

• Peer-peer transactions thateliminate a middle man (mostcertification authorities and financialinstitutions are middle men)

• Constant synchronization – say

every 10 minutes – across thedistributed network

• Heavy use of cryptography forsecurity

• Public inspection of the records toensure integrity

The term itself comes from the factthat every computer on the distributednetwork stores transactions in a“block” and these blocks aresynchronized in a “chain” across thecomputers on the network.

The net effect is that making anunauthorized change to the data onany one computer puts it out of synchwith the synchronized blocks on theother computers. Further, due to theconstant synchronization, it becomesimpossible to alter the historical record.

The result is a highly secure way ofproving trust in transactions. It isforeseeable that Blockchain (or Bitcoin)technology could be used on a largescale to make financial payments andto keep real estate records, online IDverification and even voting records.Currently, stock exchanges such asNASDAQ and the Australian ASX are

experimenting with Blockchain forsecurities transactions; and countriessuch as Estonia are working withgovernance programs ranging fromidentity cards to marriage certificates.

Wide adoption is slowed down bythe speed of the system and risksassociated with early adoption;however, the next decade should seecontinuation of the excitement

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It changes the nature of the interactionfrom one-way communication by a“publisher” for a “consumer” ofinformation, to a two-way interactivedialog with ongoing updating for acommunity of users.

Underpinning Web 2.0 has beenthe emergence of social media and thecreation of web sites that allowinteraction between internet users.Both factors have pushed the underlyingtechnology of the web to evolve intonewer programing models.

With the growth in interactiveparticipation has come the opportunityfor disruptive business models thatinvolve crowdsourcing, or the ability tooutsource to a large number of peoplesimultaneously. The so-called “gigeconomy” – the ability for non-traditionalplayers such as Uber and AirBnB toenter and compete in establishedindustries – is another outgrowth.

Closely tied to the disruption made

possible by Web 2.0 are someunderlying trends:

• Cloud computing – the ability toaccess a software application over abrowser rather than having toinstall the software on your owncomputer (think Google Docs)

• The Software as a Service (SaaS)business model – the ability ofcompanies to make the use of theirsoftware available for a periodic feeper user. This makes software costsfor a business variable in nature,rather than fixed, capital investments

• Mobile computing andsmartphones – devices with asoftware application or appecosystem so that the interactioncan occur over a choice of Wi-Fi andcellular, making access to theinformation more or lessubiquitous. Supply chain executivescan monitor worldwide

developments that affect theirbusinesses – say flooding in acritical supply center location –allowing them to respond quickly tominimize risk and avoid losses

Web 2.0 makes it easier for supplychain executives to have continuousvisibility, regardless of location ofgoods or time of day. At the same time,use of social media such as Instagramexpands the number of sales channelsfor a company’s product.

■ Web Services (including EDI)One of the best ways to eliminateinventory bottlenecks that requireclearance or the stock-outs caused byimproper demand forecasting is tobetter connect the participants in thesupply chain.

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Every computer on the distributednetwork stores transactions in a

“block” and these blocks aresynchronized in a “chain” across the

computers on the network.

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generated by Blockchain and wideradoption.

In the logistics world, the mostimmediate application includes self-settling invoices, payments systemsand ultimately verifiable devices in theInternet of Things. Further, the use ofBitcoin can make previously inaccessibleapplications, like online payment forfreight forwarding transactions on awebsite, a distinct possibility.

■ Big DataEverything we do online or on oursmartphones generates data.Additionally, Software as a Service(SaaS) and cloud computing are gettingmore ubiquitous.

ERP systems are becoming more widelyavailable to businesses of all scales andsizes, and these businesses are usingweb-based technologies to deepen

integration of their supply chains.All of these trends generate lots of

data that require ever-bigger databases,which is where the term “big data”originally comes from. They also requirenewer ways of thinking to cope with andmanage the explosion in data volume.

By one account, our accumulateddata will have grown from 4.4zettabytes at the end of 2015 to nearly44 zettabytes by 2020. That isequivalent to 44 trillion gigabytes. Itmeans we will be adding 1.7 megabytesof new information every second forevery human being.

The proliferation of data is both aproblem and an opportunity. There aretwo obvious questions it raises:

• How do we manage this dataexplosion? That’s a technologyanswer that involves the use ofspecialized databases like Hadoopand the evolution of skills sets andprofessions like “data scientist”

• What do we do with the data?That’s something that explains thegrowth in the fields of data scienceand predictive data analysis

Currently, data science and predictivedata analysis are growing as a discipline.Universities and other educationalinstitutions are coming to grips withthe value of the algorithm in businessand as organizations learn to manageand go beyond the “businessintelligence” wave of the last decade.

Logistics and supply chainplanning is an area particularlyamenable to the application of BigData methodologies. Predictive analysisand data modeling are helping withdevelopment of algorithms thatmaximize demand forecasting, inventorybalancing and route optimization.

Additionally, supply chainorganizations are able to leverage BigData to create better serviceopportunities. This could range fromgenerating customized discount offersfor each retail shopper to making “on-the-fly” recommendations from priorhistory for what else the consumermight find of interest.

■ Machine LearningMachine learning is a newly popularizedterm in the supply chain world, oneclosely linked to the Big Data trend.

The term refers to the concept of acomputer learning to make sense ofpatterns from data analysis withoutnecessarily being programed to do so.Machine learning is focused on thealgorithm, rather than the data itself.The focus is to generate thosealgorithms that can both learn from

and then turn around and makepredictions based on the data.

Logistics and supply chainproblems are especially amenable tosolving through machine learning,particularly as the size of the data setsgrow. Network optimization, demandforecasting and supply planning are allproblems that can use large data sets toreduce risk in the supply chain.

■ Paperless TechnologiesPaperless technologies continue toevolve, even if they have becomepushed aside by sexier technologiessuch as drones and machine learning.

The incorporation of paperlesstechnologies continues to help logisticsproviders and their customers re-engineer process flows, reducingprocess friction through streamlinedadministration. The benefits are feltthrough the entire supply chain asdocument repositories can be sharedwith trading partners and customers.

The pace of growth has beenexponential, supported by three mainunderlying trends:

• Advent of scanning technologies tothe desktop

• Continuously dropping costs of datastorage

• Cloud and web-based access tostored images

The resulting paperless environmentfrom electronic documentmanagement systems is making iteasier to provide self-serviceopportunities to customers and tradingpartners in the supply chain.

■ IT Ops –AgileClearly, the array of new technologieson the horizon demonstrates that thepace of change and adoption isquickening.

First, the arrival of new technology isitself driving demand for even moreadvanced innovation and applications.Second, developers and implementersare under incredible pressure to deliverthe benefits of technology sooner.

One result has been a change inorganizational behavior. Companies

are adopting new ways of working inorder to speed up systems developmentand technology implementation. Sincethe turn of the century, informationtechnology has seen an increasing

reliance on “lighter developmentmethods” called Agile methods. While some of these methods havebeen around longer, it’s clear thatnearly everyone is using them in someform.

Agile calls for cross-functionalcollaboration between the day-to-daybusiness and the technologists,working together in the simultaneousdevelopment of new applications.Agile methodology emphasizes speedto market and an iterative approach totechnology development, particularlysoftware development.

A number of Agile approaches are

available for organizations to use. Eachplaces an emphasis on collaborationand short bursts of iterations to reducerisk, particularly in high-cost technologydevelopment and deployment fields.

1918

Agile calls for cross-functionalcollaboration between the day-to-day

business and the technologists,working together in the simultaneous

development of new applications.

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Digital disruption in thelogistics industry ishappening in ways big andsmall. For a mature company

in a mature industry like ours, this canbe either terrifying or exhilarating.

Personally, I am excited about the potential to close knowngaps with our customers, drive efficiencies, deepen access toservices, and open entirely new markets with new ways ofdoing business. Our approach at Agility is two-fold. First,disrupt ourselves from within, and simultaneously, invest inthe disrupters.

The Certainty of DisruptionChange in our industry is inevitable. Here’s a quick example.Even if you only spend $10 on an e-commerce platform like

Amazon, you get a digital experience that works simply,easily and well. You can buy your product, track its progressenroute, and manage returns or concerns, all on a singleplatform. However, when it comes to freight forwarding,shippers can spend anywhere from hundreds of thousandsto millions of dollars on freight and still have to writeemails, make calls, fill out paperwork, and very often, still

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DIGITAL DISRUPTION IN LOGISTICS

Agility CEO Tarek Sultan recentlyspoke to Tradelanes and shared histhoughts on innovation underway inthe logistics industry.

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23not know with precision where their goods are at any pointin time. It doesn’t add up.

It’s neither coincidental nor surprising that venturecapitalists have quadrupled investments in freightforwarding start-ups in the last couple of years, according tothe Wall Street Journal. Venture capital funding for freightforwarding companies exceeded $1 billion in 2015, morethan double the amount invested in the five prior years. Putsimply: the industry is ripe for change.

Disrupting OurselvesWhile a number of logistics start-ups are trying to reshapehow freight is booked and managed, they face the challengeof not having the logistics infrastructure to executeconsistently across different markets. That’s where acompany like Agility has an inherent advantage. We’rebetting that we will gain a unique lead in the marketplace ifwe can develop an intuitive, online customer experiencesupported by a proven ability to deliver across the globe.

We are paying particular attention to the massive spikein smart phone penetration and growing comfort with e-commerce in emerging markets. We believe that our customers,especially in the small and medium enterprize segment, willincreasingly demand self-service capability and increasedfunctionality online. For bigger customers with more complexshipments, the ability to manage supply chains moreeffectively online is already a key competitive advantage.

Agility has invested in a development center in India tobuild platforms and tools that are cutting edge in ourindustry. Agility Connects is one example: a powerfulcustomer platform that allows customers to book shipments,manage orders, documents, exceptions, inventory, vendorsonline, and to customize reports that improve shippingefficiency. Our commitment to developing a globaloperating platform that drastically simplifies andstandardizes our business is another.

Partnering with the DisruptersDigital disruption is not just about improving the businesswe have today. It’s also about anticipating new ways ofdoing business. On this front, Agility has created a newtechnology venture to invest in disruptive technologyrelated to logistics.

The idea is to look outside our company at new businessmodels that we feel that we can either adopt internally orpromote through our business. For example, we haveinvested in CargoX, a platform that is looking torevolutionize how road freight is booked in complex

markets like Brazil. We are eager to see CargoX at work inBrazil. Undoubtedly, there will be interest among customers,shippers, transport suppliers, regulators and other parties inother countries.

We have looked at investment opportunities brought tous by venture capital firms. One of the technologies that isintriguing is a hybrid technology for the trucking industrythat reduces fuel consumption and corresponding emissionsby a staggering 30 percent. These savings are achieved byrecycling otherwise wasted kinetic energy and doing itthrough a simple, 30-minute trailer retrofit. The technologyhas the potential to disrupt multiple industries, from supplyto oil-and-gas and beyond. Imagine for a moment theimpact of a near-term 30 percent reduction in dieselconsumption for trucks.

While we believe that this technology will succeed in itsown right, we also believe that we can acceleratevalue creation by using the technology in ourown fleets and promoting the technologywith customers around the world. Thisphilosophy of finding multiple points ofleverage is at the heart of our techstrategy.

Disruption without DistractionThe challenge of being a big company isnot distracting the core business, even as weinvest in the technologies that may change itforever. There are many cautionary tales of

logistics titans in our industry that spent hundreds ofmillions of dollars on transforming their

technology platforms and ultimately failed.Internally, our approach has been

measured change: engage widely, pilot atevery step, and roll out in phases, fixingproblems early and continuously. Fromour technology venture perspective, wering-fence our investments from thebusiness until it makes sense timing-wise,

geography-wise or service-wise to link them together. In this way, we hope to reap

the benefits of revolution with the relative easeof evolution.

Agility has created a new

technology ventureto invest indisruptive

technology relatedto logistics.

CAPTURING THE ENERGY FROM BRAKINGHyliion set out to bring the advantages of hybrid energy to

tractor-trailers. Its add-on system hybridizes the tractor-trailer by

installing an intelligent electric drive axle on the trailer. The

system uses regenerative braking to capture and save power

when the driver is braking, then to reuse that energy to provide

power when the truck is driving up hills.

30%$1,30030-60min* average depends on topography, fuel economy of trailer.

CargoX, a Brazilian startup, has beendescribed as “Uber for trucks.” Theanalogy might have been inevitable,since Uber co-founder Oscar Salazaris one of CargoX’s investors. He seesthe fragmentation in the Braziliantrucking market as a majoropportunity.

“They don’t have the tools to talkto each other,” Salazar says. “There’sa huge information asymmetryplaying an important role there. Ifyou show me a market withinformation asymmetry, I’m going toshow you a $1 billion opportunity.”

CargoX works to connectbusinesses that need to ship freightwith truckers who have excesscapacity. Brazil reportedly has anexcess of between 300,000 and350,000 vehicles, with trucksrunning empty 40 percent of thetime. So the goal is to reduce thenumber of empty trucks on thehighway, increasing revenue fortruckers and reducing costs forfreight owners.

The startup has now raised a total

of $14 million. The funding was ledby Goldman Sachs, withparticipation from investorsincluding Valor Capital Group,Agility Logistics, Lumia Capital,former DHL Express US CEO HansHickler and Salazar – who said thatultimately, the CargoX model could

work in other countries. He alsosuggests that the company willremain valuable if trucking moves toa more autonomous/self-drivingmodel.

From an article by Anthony Ha inTechcrunch.com

CargoX: Connecting Truckers and Shippers

Viewpoint

fuel reduction*

monthly fuel saving*

installation time

20171 20171

F igures suggest that up to 44percent of a ship’s runningcosts are in the crew, so it’snot hard to see why carriers

would be exploring the feasibility ofautonomous ships. With big savingspossible, liner operators are lookingclosely at coastal shipping, short-seaoperations, even on-demand shipping.The idea of crewless vessels plying thewaters between coastal centers anddelivering payloads by drone might notbe too far in the future.

Autonomous shipping will be a realityeven if current concerns surroundinglegality, insurance and safety cloud thewaters. Remotely-operated vessels arealready operating beneath the sea andon the surface in oil-and-gas anddefense sectors. Cargo vessels nowsometimes run sections of long

voyages on autopilot, making fullyautonomous vessels a logical next step.

Safety & RegulationThe real leap is to figure out how theywill be integrated into mainstreamlogistic operations across the oceans

and how safe they will be in use.“We will see a remote-controlled

ship in commercial use by the end ofthe decade,” Oskar Levander, VicePresident of Rolls-Royce InnovationMarine, recently told the AutonomousShip Technology Symposium inAmsterdam. “This is happening. It’snot if, it’s when. The technologiesneeded to make remote andautonomous ships a reality exist.”

Rolls-Royce leads the AdvancedAutonomous Waterborne ApplicationsInitiative (AAWA), a project that includesuniversities, ship designers, equipmentmanufacturers, and classificationsocieties. The goal is to explore theeconomic, social, legal, regulatory andtechnological factors needed to makeautonomous ships a reality.

The legal questions raised bycrewless ships are causing headaches

for regulators and potential operators.To move ahead, maritime laws andregulations will have to bereconsidered and redrafted.

The hardware and electronicsneeded to operate unmanned vesselsalready exist and look similar to the

technology behind driverless cars,trucks and other land-basedautonomous vehicles. At sea, the ideais that once a vessel has a “picture” ofthe world around it, the environmentis right for clear sailing. The biggerunknown is regulatory: how such shipsare to operate within the boundaries ofsafety and maritime legislation.Industry experts say those concernscan be addressed by adjusting existingregulation rather than adding anotherlayer of complexity with new rules.

In addition to cutting costs,autonomous vessels will reduce theneed for human interactions – andhuman error. There will be more roomaboard for cargo. Advocates tout moreefficient schedules and the likelihoodthat, with no crew, there will be lesswaste and pollution. Complex maritimeoperations will be handled by onshoreteams that aren’t pre-occupied by thepressure of working aboard the vessel.They will be able to deal withoperational issues free of distractions.

Not If, But WhenRolls-Royce says the first autonomousvessels will be on the seas by 2020.

In the next decade, the industry’semphasis will be creating strongcommunications systems capable ofmaintaining a constant flow of real-time information from ship to shore.Expensive satellite infrastructure

THE TECHNOLOGY EXISTS. NOW IT’S A MATTER OF SAFETY ANDMARITIME LEGISLATION

25Autonomousshipping

In addition to cutting costs,autonomous vessels will reduce theneed for human interactions – and

human error.

capable of handling huge amounts ofdata will be required. Early adoptersand users of autonomous vessels arelikely to be coastal-based operations asdevelopers work through obstaclesthey might confront farther out at sea:bad weather communications and thelack of satellite coverage in certaingeographic black spots on the globe.Look for crewless ferries and autonomousships running local cargo routes betweenproduction centers and large markets.

For now, the prospect of unmannedvessels remains a bit distant. Butcarriers and technologists aren’t theonly forces behind the push forautonomous shipping. Companiesmoving goods by sea want lower costs,quicker delivery and more flexibility.Retailers and other ocean shippers

have come todemand fasterdeliveries.Manufacturerswant to shortenwait times for raw materials.

ImagineIn 25 years, crewless “drone” ships willbe a large percentage of cargo oceantraffic. Imagine a large drone containership loaded with 25,000 containersarriving at the world’s two greatchokepoints – the Suez or Panamacanals. The ships are too big at first,but have the ability to break into sevenor eight smaller capsule sections andfollowing each other nose-to-tailthrough the canal, then reform into asingle vessel on the other side. What

about an autonomous vessel sailing theMediterranean with aerial droneslifting containers off at intervals fordeposit in Naples, Marseille, Malaga orAlgiers? Fanciful today, yet feasible in20 years.

Logistics is changing with theInternet of Things (IoT). Connectabilitywill result in demands for faster andmore environmentally friendlymovement of goods and raw materials.The autonomous ship could well bethe start of a drive to make shippingsmaller, faster and more locallyconcentrated.

20171 20171

27

Shippers struggling to copewith the July 1 containerweight rule could face eventougher requirements if

international authorities move to turncargo loading-and-securing guidelinesinto global industry mandates.

The “light touch” period forenforcement of the InternationalMaritime Organization’s Verified GrossMass (VGM) requirement concludedOct. 1. The period ended without amuch-feared disruption of globalsupply chains – but also without aclear picture of how well or poorlyshippers are complying with the newrequirement.

American Shipper reported that World Shipping Council data showedcompliance for the VGM rule rose toabout 95 percent. At the same time,the magazine noted deep skepticismamong insurers and risk managementspecialists, who question whetherdeclared VGMs are accurate andrepresent “the result of an actualweighing process.”

The painful adoption of the VGMrule could foreshadow deeper pain if

the three UN agencies that set standardsfor shipping turn their non-mandatorycode for loading and securing of cargointo a mandatory requirement.

Trucks, Rail & OceanIf mandated, the code – known as theCode of Practice for Packing of CargoTransport Units, or CTU Code –“would be far more disruptive andhave a much greater effect than theVGM rule,” says Sue Terpilowski,Managing Director of Image Line, aUK-based maritime and logisticsconsultant. “The IMO and otherauthorities want to change shippers’behavior to improve safety andoperational performance in the supplychain. The best way for the industry toavoid a costly, difficult mandate is toact now ourselves.”

The CTU Code applies to thecontainers, truck trailers and rail carsused for ocean and land shipments.

Terpilowski says it’s clear that noteverybody is following the guidelines.“There are too many incidents that canbe traced to poor packing, inadequatesecuring of cargo, overloading, andincorrect declaration of contents.”

Estimates indicate 65 percent ofcargo accidents result in loss or damageto the cargo and about a third stemfrom poor packing. The consequences

for shippers, carriers and theirinsurance companies are significant.

Common SenseThe CTU Code is detailed andcomprehensive, but it contains anumber of common sense practices,advising shippers, consolidators, roadand rail haulers, and other third-partypackers to:

• Arrange for a safe workingenvironment

• Check that the container, truck orrail car – and securing equipment –are in sound condition

• Select the most appropriate CTUtype for the specific cargo

• Pack dangerous goods near thedoors of the CTU where possible

• Not concentrate heavy cargo oversmall areas of the floor

• Not use securing or protectionequipment that is incompatiblewith the cargo

• Affix required placards, marks andsigns on the exterior of the CTU

“If everyone involved in supply chainsadopts the principles in the code andembeds them in their procedures andway of behaving then the IMO willhave no grounds to make itmandatory,” Terpilowski says.

New rulescoming?FIRST THERE WAS VGM. IS CTUAROUND THE CORNER?

Africa Photo Contest

20171 20171

29A gility recently announced winners of its Africa 2016

Photo Competition, images that show how quicklyAfrica is modernizing, growing and even leadingthe way in new technology.

The annual contest, now in its second year, is a pan-Africaphotography competition focusing on Africa’s rapidmodernization. This year’s competition drew more than2,500 photographs from professional and amateurphotographers in 30 countries.

The winning images depict a fisherman in a canoe onLake Victoria on his laptop, a solar farm in Rwandapowering 15,000 homes, and the skyline of Harare,Zimbabwe.

AfricaPHOTO CONTEST CAPTURES CHANGE OF A CONTINENT

■ Technology category and Grand Prize winner: Stephen Simiyu, Kenya.JUNA, UGANDA (Source of the Nile River). For more than 20 years,George Atika’s fishing business on Lake Victoria has helped himprovide his family with a comfortable life. Now they have joined theglobal digital world.

■ The winning photographs and the runners-ups were featured at asession at the United Nations General Assembly in New York.

▼

Africa Photo Contest

20171 20171

31

A cash prize of $2,000 was awarded for eachcompetition category. The winners were Stephen Simiyu,a photographer from Nairobi, Kenya (Technology); HenryOliver Hakulandaba, an environmental consultant andphotographer from Harare (Cities); and EsdoreHakizimana, a machine operator from Kigali, Rwanda(Industry). Simiyu also won the Grand Prize of $2,000 forhis photograph of a fisherman using a laptop in a canoeon Lake Victoria, Uganda.

The winning photographs and the runners-ups werefeatured at a session at the United Nations GeneralAssembly in New York and were shown at the Thomson

Reuters Africa Summit 2016 in Cape Town in October.They also were showcased in Forbes Africa, on CNBCAfrica.

Simiyu, the Grand Prize winner, said he was trying totake a photograph that illustrated how much Africa istransforming: “I needed an image that could tell thatstory in one picture. The competition really made methink about Africa – there’s nowhere like it.”

Hakulandaba, winner in the Cities category, said non-Africans are continually surprised by the pace of changein Africa. “Whenever I exhibit images of Harare or anyother African city, there is always someone who says theynever thought Africa has such development,” he said.“This competition is a platform to reach a wideraudience about African development. It will help changeperspectives of the continent’s potential.”

“The winning images speak eloquently about thehistoric change underway in Africa and the opportunitiesfor Africans, African businesses and the world,” saidGeoffrey White, CEO of Agility Africa. “As a companyinvesting in the logistics infrastructure of the continent,we are proud to show the world powerful images thatcapture a more positive view of Africa and demonstrate

the progress that has already been made, hopefullychanging the perceptions of Africa in 2016.”

The competition was judged by an independent panelthat consisted of Sneha Shah, Managing Director,Thomson Reuters Africa; Bronwyn Nielsen, Editor-in-Chief, CNBC Africa; and Salim Amin, Chairman ofCameraPix and co-founder of Africa24 Media.

30

■ Cities category winner: Henry Oliver Hakulandaba, Zimbabwe.The central business district of Harare, capital of Zimbabwe, justafter rush hour.

■ Industry category winner: Esdore Hakizimana, Rwanda.This 42 acre solar power farm 20 miles east of Kigali, Rwanda, has acapacity of 10 megawatts. The energy it produces powers nearly15,000 homes. Operational since July 2014 it went from contractsigning to producing in just 12 months.

32

20171

Global Integrated Logistics

International HQ Baar, Switzerland

Tel: +41 41 766 5270

gil@agility.com

AmericasIrvine, California, US

Tel: +1 714 617 6300

Asia PacificSingapore

Tel: +65 6463 9868

EuropeBasel, Switzerland

Tel: +41 61 316 5555

Middle East & AfricaDubai, United Arab Emirates

Tel: +971 4 813 1222

Chemical LogisticsLiverpool, UK

Tel: +44 151 494 5900

Fairs & EventsSingapore

Tel +65 6463 9868

Project LogisticsHouston, Texas, US

Tel: +1 713 452 3500

Infrastructure Companies

Defense & Government ServicesAlexandria, Virginia, US

Tel: +1 703 417 6000

dgs@agility.com

Real EstateSulabiya, Kuwait

Tel: +965 1 809 222

red@agility.com

National Aviation ServicesFarwaniya, Kuwait

Tel: +965 1 842 842

info@nascorporate.com

Inspection & Control Services, LtdSulabiya, Kuwait

Tel: +965 2498 1256

BKhoury@agility.com

Metal and Recycling CompanyAmghara, Kuwait

Tel: +965 2457 7773/4

mrc@mrc.com.kw

GCC ServicesDubai, United Arab Emirates

Tel: +971 4 455 2600

info@gcckwt.com

United Projects for AviationServices Company (UPAC)Kuwait City, Kuwait

Tel: +965 1 833338

upac@upac.com.kw

Other EnquiriesCareer Opportunitiescareers@agility.com

Mediapress@agility.com

Investorsinvestor@agility.com

Tradelanes is the magazine of Agility,published by Agility Holdings Inc,240 Commerce, Irvine, California, 92602, US.

Editor in Chief Jim Cox Managing Editor Nita Bhatkar Consultant Editor Richard PavittDesign Paul Cooper DesignProduced by Nugene Ltd and printed in England.

Editorial CoordinatorsGlobal Integrated Logistics (GIL)Toby Edwards tedwards@agility.com

Americas Nevino Rocco nrocco@agility.com

Asia Pacific Toby Edwards tedwards@agility.com

Europe Vanessa Dethorey vdethorey@agility.com

Middle East & AfricaJames Gildea jgildea@agility.com

Chemicals Mark Ridge mridge@agility.com

Fairs & Events Jennifer Lim jlim@agility.com

Project Logistics Amy Grizzaffi agrizzaffi@agility.com

Defense & Government ServicesJim Cox jcox@agility.comSarah Benrazek sbenrazek@agility.com

InfrastructureNita Bhatkar nbhatkar@agility.comMichel Karam mkaram@agility.com

Corporate MarketingMariam Al Foudery malfoudery@agility.comNita Bhatkar nbhatkar@agility.comDeena Al-Shatti dalshatti@agility.com

© 2017 Agility Holdings Inc. All rights reserved.

Copyright of Tradelanes, and the Agility trademark areowned by Agility.Other trademarks reproduced in this magazine are theproperty of their respective owners.

For more information about Agility, visit www.agility.com Twitter: https://twitter.com/AgilityLinkedIn: http://www.linkedin.com/company/agilityYouTube: http://www.youtube.com/user/agilitycorp

Locations

Agility brings efficiency to supply chains in

some of the globe’s most challenging

environments, offering unmatched personal

service, a global footprint and customized

capabilities in developed and developing

economies alike. Agility is one of the world’s

leading providers of integrated logistics. It is a

publicly traded company with $4.3 billion in

revenue and more than 22,000 employees in

500 offices across 100 countries.

Agility’s core commercial business, Global

Integrated Logistics (GIL), provides supply chain

solutions to meet traditional and complex

customer needs. GIL offers air, ocean and road

freight forwarding, warehousing, distribution, and

specialized services in project logistics, fairs and

events, and chemicals. Agility’s Infrastructure

group of companies manages industrial real estate

and offers logistics-related services, including

e-government customs optimization and

consulting, waste management and recycling,

aviation and ground-handling services, support to

governments and ministries of defense, remote

infrastructure and life support.

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