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The Pros and Cons of API and EDI TMS Software Integrations for Freight Brokers

The Pros and Cons of API and EDI TMS Software Integrations for Freight Brokers

New system vendors often advertise application programming interface (API) as the best way to eliminate integration problems. Nevertheless, thousands of businesses operating in the industry continue to rely on electronic data interchange (EDI) for all their integration needs.

For freight brokers, shippers, and carriers to know how TMSs integrate with legacy systems and new platforms, they need to understand the technology behind such integrations.

API and EDI are two of the most popular integration methods in TMS technology. Let’s take a closer look at API and EDI to see how they can help streamline communication, improve efficiency, reduce errors, and generate better data for freight broker operations.

What is EDI?

The traditional way of doing things is manual-based and relies on manual data entry through every system. For example, users might export data in an Excel spreadsheet and share this with others. Yet, the efficiency and capability of new freight management systems are undermined by existing manual processes.

The most common and easily recognizable technology used in TMS is electronic data interchange (EDI). This type of connection relies on a set of shared data among systems, triggering an action between multiple systems.

Having been standardized around the 1970s, EDI works by establishing a secure and reliable peer-to-peer connection to transmit data from physical documents. The standard then processes that information into an electronic format.

EDI is a great way to streamline the transportation management system because it minimizes labor and eliminates irregularities like illegible handwriting or various forms of human error. These types of EDI integrations will streamline communication and optimize order processing.

This technology can send a large volume of information at once, and it typically aids SQL integration with legacy systems. That is part of the reason that EDI is still heavily used within the logistics industry. The diversity of EDI is limited. For example, it is based on timings rather than real-time information.

EDI Pros 

  • Accessibility – Electronic data interchange has become an industry standard, and any freight broker integrating EDI technologies will find that many partners are already compatible.
  • Security – EDI transmissions are encrypted, making it difficult for unauthorized individuals to access them. The information is secured by encrypting it and limiting access to only the authorized users.
  • Easy to use – EDI is not a new technology, and its standardization makes it easy to use.
  • Streamlining – EDI integration will facilitate communication, improve order processing, and eliminate human errors in the process.

EDI Cons

  • Incompatible Versions – EDI integration has three specific versions. For compatibility, both partners need to use the same version. If one party uses a different version, there must be an upgrade before these systems can be integrated.
  • Technology Limitations – Electronic data interchange cannot be used for real-time communication because it relies on timings. EDI is not compatible with blockchain technology and cannot read encrypted data.
  • Limited Access – EDI can only be accessed by one party at a time, so it is not useful when two parties need to interact with the same document simultaneously.
  • Limited Functionality – EDI is not as sophisticated and complex as API or XML integration, so there are some limitations on the types of data transmitted using this technology.
  • Costs – This type of connection relies heavily on manual labor because it’s a peer-to-peer system with no automation involved in processing data.

What is API?

API, which is similar to EDI, streamlines communication and improves freight broker transportation management software procedures.

While EDI establishes a connection between two EDI systems, API is a web-based protocol that enables different programs to communicate. With cloud-based solutions, API allows transportation management systems (TMS) to transmit data in less than a second.

API is a helpful tool for freight brokers, freight forwarders, third-party logistics providers, various other logistics service providers, and bulk shippers who need to access TMS data, such as shipment status updates or inventory levels, without using an intermediary system.

While using API when it comes to connection technologies in their TMS seems like the best option, such an implementation doesn’t come without its series of challenges, particularly for those who’ve never used EDI before.

While EDI is leading in terms of connecting technologies used in TMS deployment, API connectivity is increasing, especially among parcel and LTL freight carriers. The benefits of using API to implement new technology are significant. Moreover, many concerns associated with EDI use are eliminated by an API. Data in legacy systems are difficult to access and limited, but API helps overcome the limitations of data retrieval.

Implementing API integration into a TMS can be overwhelming for a company without the fundamentals of EDI connection technologies. It’s, therefore, unlikely that APIs will fully replace EDI as the standard means for connection in the next several years.

API Pros

  • Faster Data Transfers– The application programming interface facilitates collecting data, as it does not require manual input from a user. API provides a connection between different systems and continually updates information, data, or other types of content as it becomes available. The application programming interface is capable of performing specific processing tasks much faster than electronic data interchange. API can upload pickup requests automatically rather than manually and provide more accurate information about customers’ shipping needs.
  • Connection Simplicity – API simplifies data transmission and eliminates the need for customization. Also, when it comes to matching between different versions, API connections allow systems that have been integrated to connect seamlessly, such as between a TMS, and a WMS (warehouse management system), ERP (enterprise resource planning), as well as load boards, tracking software, and carrier systems.
  • Future Technology Compatibility – By anticipating new technologies, API systems can become compatible with those technologies as they roll out so that they can expand their capacities and remain favorable among suppliers in the chain. For example, blockchain technology gives users the ability to see all transactions happening in real-time. This system discourages unethical or illegal practices.

API Cons

  • Newer Technology than EDI – API is a relatively new player in the freight industry and has less popularity than EDI does. Some of your EDI clients may be reluctant to switch to a web-based application, so you should determine which system gives them the most functionality while still respecting their current usage.
  • Lack of Security – API, because it’s software dependent on the web and connects to many of your systems, may be more susceptible to hacking and data breaches than EDI.
  • Reliant on an internet connection – While the internet is so commonplace, connectivity problems happen. API can be bogged down at the mercy of a stable internet connection due to interruptions that can affect every system connected via API. As anyone in the transportation industry will attest to, when it’s down, nothing gets done.

Bringing API and EDI Together

Roughly 25% of EDI connections have been replaced with APIs as of 2020. That said, legacy applications and technologies are still handling the majority of connections.

Often playing the role of the intermediary, freight brokers will stand a far better chance if their TMS systems utilize both API and EDI integrations. In doing so, they will make the best use of both worlds, API being the interface and EDI providing an engine.

The Benefits of API-EDI TMS Integrations

With API, you can free up your resources to focus on other projects or processes without worrying about managing data inputs manually. APIs work great for low volume tasks like bulk uploads, while EDIs are better suited to high volume tasks like sending individual invoices.

One of the best API-EDI TMS integrations is an API that serves as a data feed for EDI software, which does all the heavy lifting when getting orders from your API up and running in a freight broker’s system.

Another great API-EDI combination is a freight broker’s API feed. They can use an API for customer inquiries about order status, tracking details, and other information related to orders on behalf of tools and technologies that use API integration.

The API-EDI TMS integrations work best when you have some API management system in place to keep track of the feeds and ensure that they are all working correctly, sending data where it needs to go at the right time. The API management also helps with managing access across different teams or groups within the freight brokerage.

Tai Software is a cloud-based TMS system specifically designed for freight brokers that include API-EDI TMS integrations.

API and EDI carrier integration help increase insight into freight brokers’ shipment lifecycle. The automated dispatching and tracking of shipments from quote to delivery with never any need for manual intervention. Carrier updates and the EDI Integration and API integration with our TMS software for freight brokers, streamline communication and improve broker processes.

Tai TMS can be easily integrated with EDI/API technology to give brokers greater flexibility to manage LTL shipments through direct integrations and an easy-to-use interface. This enables your operations team to monitor freight in transit and empower your customer service team with on-demand information. Updates are also displayed in your client portal, giving your customers the ability to track their shipments remotely.

Request a free demo today and take advantage of what some of the best TMS solutions have to offer!

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