What is Shipping EDI and How does it Work?

Modern shipping industry companies have evolved to offer a range of services beyond just shipping and transportation. They now offer advanced warehouse management, inbound freight coordination, order fulfillment, and outbound shipping and delivery. The increasing demand for efficiency and savings in the shipping industry has led to the adoption of technological solutions that enable fully automated data exchange between logistics partners. Electronic Data Interchange (EDI) is one of the most widely used options for this purpose. In this blog post, we take a closer look at EDI in shipping and logistics, including its importance on vendor compliance.

What is EDI (Electronic Data Interchange)?

Electronic Data Interchange (EDI) is a standardized method for exchanging business documents electronically between different companies. It allows for the automated exchange of documents such as purchase orders, invoices, and shipping notices, among others. EDI helps to streamline the supply chain process, reduce errors and delays, and improve visibility and control over logistics and supply chain operations. It is widely used in the shipping, transportation, and logistics industry to facilitate communication and data exchange between different trading partners.

What is shipping EDI?

EDI in shipping and Logistics refers to the use of Electronic Data Interchange (EDI) technology in the shipping and Logistics industry to automate and streamline the exchange of information between trading partners. EDI shipping allows shipping companies and logistics providers to exchange shipping-related documents such as bills of lading, deliver receipts, shipping notices, and other transactional information in a standardized electronic format.

True EDI files adhere to either ANSI ASC X12 or EDIFACT standards, which are the commonly used "languages" or syntax for facilitating EDI communication.

EDI transactions can occur directly between two parties, such as a client and a third-party logistics (3PL) provider, using protocols such as FTP, SFTP, or AS2. Alternatively, they can be transmitted through any EDI Value Added Network (VAN).

A VAN acts as an intermediary between trading partners and helps to manage the transmission and routing of EDI documents. It can provide additional services such as data translation, compliance checking, and data archiving. Many businesses choose to use a VAN for their EDI transactions as it can simplify the process and reduce the complexity of managing direct connections with multiple trading partners.

Regardless of whether transactions occur directly or through a VAN, the use of EDI can help companies automate and streamline their supply chain processes, resulting in greater efficiency, cost savings, and improved accuracy.

How does shipping EDI work?

Shipping EDI works by enabling the electronic exchange of shipping-related documents and information between trading partners in a standardized format. Let's say a company is shipping a product to a customer. Before the shipment can take place, certain documents need to be exchanged between the company and their logistics partner, such as a Bill of Lading (BOL) and an Advance Ship Notice (ASN). Here are the basic steps involved in a shipping EDI transaction:

1. Document preparation:The sender of the document creates a standard EDI message (Such as an Advance Ship Notice or Bill of Lading) using the ANSI ASC X12 or EDIFACT format.
2. Document transmission:The EDI message is then transmitted electronically via a communication protocol such as FTP, SFTP, AS2, or through a VAN (Value-Added Network).
3. Document translation: The receiver's EDI software receives the message and translates it into a format that can be read by their internal systems.
4. Document processing:The receiver's internal systems process the information contained in the EDI message, which may include shipment details, product information, and other relevant data.
5. Confirmation:Once the shipment has been received and processed, the receiver can send an EDI message back to the sender confirming that the shipment has been received and accepted.

What are the most important shipping EDI documents used?

There are several important shipping EDI documents that are commonly used in the logistics industry. Some of the most important ones include:

• EDI 856 - Advance Ship Notice (ASN)::An ASN is a document that provides detailed information about a shipment, such as the contents of the shipment, the carrier, and the delivery date. This document is sent by the supplier to the receiver before the shipment arrives.
• EDI 211 - Bill of Lading (BOL):A BOL is a legal document that details the contents of a shipment, the parties involved, and the terms of the shipment. It serves as a receipt for the goods being transported and as a contract between the shipper and carrier.
• EDI 214 (Transportation Carrier Ship Status Message):This document confirms that the shipment has been delivered to the intended recipient. It typically includes information such as the date and time of delivery, the name of the recipient, and the signature of the person who received the shipment.
• EDI 810 (Invoice):An invoice is a document that requests payment for goods or services that have been provided. It includes information such as the date of the transaction, the amount owed, and the payment terms
• EDI 850 - Purchase Order (PO):A PO is a document that is sent by a buyer to a supplier to request goods or services. It includes information such as the quantity and description of the goods or services requested the price, and the delivery date.

Benefits of EDI in the Shipping Industry

There are several benefits of using EDI in the shipping industry:

• Increased efficiency: EDI can streamline the shipping process by reducing manual data entry, minimizing errors, and increasing the speed of transactions. This can help to reduce lead times, improve order fulfillment, and increase productivity.
• Improved accuracy: EDI can help to reduce errors by eliminating the need for manual data entry and reducing the risk of human error. This can help to improve the accuracy of shipping and billing information, which can lead to fewer disputes and faster payments.
• Cost savings: By automating the shipping process, EDI can help to reduce costs associated with manual processing, such as paper-based documents and manual data entry. This can help to save time and money for both the shipper and the carrier.
• Enhanced visibility:EDI can provide greater visibility into the shipping process, allowing for better tracking and monitoring of shipments in real-time. This can help to improve supply chain management and customer service.
• Improved communication: EDI can facilitate communication between different parties in the shipping process, such as shippers, carriers, and receivers. This can help to improve collaboration and reduce delays.

Overall, EDI can help to improve the efficiency, accuracy, and cost-effectiveness of the shipping industry, while also providing greater visibility and improved communication.

To learn more about how Infocon Systems can take care of your EDI needs for your Shipping and Logistics industry, contact our sales department at +1 888-339-0722 or email us at sales@infoconn.com