Unlocking Efficiency: API vs. EDI in Shipping and Logistics

The shipping and logistics industry is no stranger to technological evolution. From the introduction of Electronic Data Interchange (EDI) to the growing adoption of Application Programming Interfaces (APIs), businesses have continually sought ways to data connections with partners and customers. While EDI has been a cornerstone of data exchange for decades, APIs are emerging as the preferred choice for modern supply chains. This article explores the benefits of APIs compared to EDI and why they are revolutionizing shipping and logistics.

API vs. EDI

What is EDI?

EDI is a standardized method of exchanging business information between organizations electronically. A precursor of EDI was used to support the Berlin Airlift in 1948-1949, and when its commercial use was introduced in the 1970s, EDI began replacing manual processes like faxes and paper documents. The structured file format has evolved into standards such as EDIFACT and ANSI X12, and the transmission protocols have evolved from telex to VANs and AS2. 

If these terms are foreign to you, not to worry. You likely have experienced EDI in action through the electronic transfer of purchase orders, invoices, shipping notices, and other logistics transactions.

EDI transactions remain the dominant mode of data exchange in shipping. According to the Digital Container Shipping Association (DCSA), a group founded by major ocean carriers to digitize and standardize data flows in the container shipping industry, almost 20% of shipping activities are arranged using EDI. Company websites and portals make up about 30%, and email is about 25%. The phone, the miraculous invention of the 19th century, still has a role, making up just under 20%. 

The remainder, 6-9% depending on the activity, is conducted using API. It is a small percentage but it’s growing. 

What is an API?

APIs allow different software applications to communicate and share data seamlessly. Unlike EDI, APIs operate closer to real-time and offer greater flexibility and scalability, enabling businesses to build custom integrations tailored to their specific needs. 

Think of an API as a phone call. You dial, ask a question, and get an immediate answer. EDI on the other hand is more like a post card. You write it and put it in the mailbox to be picked up at some point. The post card is delivered to another mailbox, where it is read, and the reverse takes place. The speed and clarity of the API phone call is superior. 

APIs have both push and pull varieties. In simple but accurate terms, APIs work to pull data by making requests of the source when needed. Think of it as, "Ask and you shall receive." The push form of an API is called a webhook. Webhooks are more like, "Set it and forget it," where updates are pushed automatically when something changes. Both APIs and webhooks are event-driven, which makes them highly useful and appropriate for shipping and logistics.

A previous Splice article explains the differences between APIs and webhooks, which are a form of APIs. In this article, we discuss APIs relative to EDI to highlight their advantages. 

API will overtake EDI as the method of data exchange.

Key Benefits of APIs Over EDI

Sometimes it seems like there is an API vs. EDI battle taking place. In our opinion, expect APIs to come out on top. Here's why.

Event-Drive Data Exchange

EDI typically operates in batch processing mode, where data is transmitted in scheduled intervals, often resulting in delays. APIs, on the other hand, enable event-driven data exchange. For logistics companies and those in a shipper’s logistics operation, this means up-to-the-minute tracking of shipments, almost instant updates on delivery statuses, and faster decision-making.

Greater Flexibility

EDI standards are rigid and require extensive setup and maintenance. APIs are inherently more flexible, supporting customizations that adapt to a company’s workflows and software ecosystem. This adaptability is particularly valuable in shipping and logistics, where operations vary greatly across regions and partners. 

Splice is a big user of APIs for this very reason. As we set up ecosystems for our customers – be they shippers, forwarders, 3PLs or truckers – APIs provide the ability to tailor the sequence and direction of data. Splice has over 100 pre-built APl connectors to quickly automate a workflow. The connectors link to ocean carriers, ports, transportation management systems (TMS), GPS tracking systems, and various tools, like email, EDI translators, and spreadsheets. (Splice is a Microsoft Cloud Partner and pending as a Google Cloud Partner.)

Enhanced Scalability

APIs are designed to handle high transaction volumes without requiring complex infrastructure changes. They allow businesses to scale as their operations grow, unlike EDI, which can become cumbersome and expensive to expand. The scalability goes hand in hand with the cost effectiveness of APIs, especially when APIs are sending thousands of transactions per day.

The scalability of APIs allow Splice to act as a one-to-many resource. By building one connection to Splice of any kind – API, EDI, FTP, or even email – an organization can take advantage of any API. Splice has unique capabilities to translate data between these formats to APIs. Notably, we have special tools to translate data into DCSA standards. Even if your enterprise resource management (ERP) platform or TMS is not API compatible, you can be DCSA compliant by using Splice. 

Cost-Effectiveness

EDI implementations often require substantial upfront investment in hardware, software, and ongoing maintenance. APIs, with their cloud-based nature, reduce these costs significantly. They are easier to deploy and maintain, allowing companies to save on IT resources and focus on core operations. Splice often plays the role of integration meisters, providing its expertise on APIs and data flows to allow its customers to focus on their operations. Data integration is not normally a foundational competency of logistics operations, but it is at Splice. 

Seamless Integration

Modern logistics platforms and cloud-based software solutions are increasingly API-driven. 

In shipping and logistics, APIs enable seamless integration with tools such as TMSs, warehouse management systems (WMS), ERPs, and data sources like ports

and ocean carriers, fostering a connected ecosystem.

Enhanced Customer Experience

The agility and transparency provided by APIs empower businesses to offer superior customer experiences. Real-time tracking, faster responses, and accurate delivery timelines enhance customer satisfaction, a critical factor in the competitive shipping industry. 

A common use case for asset-based 3PLs and trucking companies is the reporting of container events to the customer’s visibility aggregator, like Project 44. By automating the workflow using Splice, customers receive the required data without you manually managing it. They get the experience they expect – instantaneous information on their shipment – and you look like the forward-leaning company that you are.    

The Rise of APIs in Ocean Freight

Consider the complexities of container shipping, where multiple stakeholders – shippers, carriers, forwarders, and ports – rely on accurate and timely information. APIs streamline operations by offering near real-time visibility into container movements, automating booking processes, and enabling predictive analytics for delays. Companies like Maersk, MSC, CMA CGM and a growing list of other carriers have adopted APIs to enhance operational efficiency and meet customer demands.

But users of APIs need not be global, giant ocean carriers. APIs are accessible tools, and with the help of universal translators like Splice, companies of any size can deploy the latest and greatest technologies. 

Moreover, artificial intelligence (AI) offers incredible promise to revolutionize internal processes and the customer experience, and with solid data from multiple sources, the promise of AI can be realized. AI needs data and data integrators can help you deploy the AI tools you need to generate efficiencies and take advantage of AI. 

Are APIs Replacing EDI?

APIs are transforming the shipping and logistics industry by providing faster, more flexible, and cost-effective solutions compared to EDI. By enabling event-driven data exchange, seamless integrations, and enhanced scalability, APIs are setting new benchmarks for operational efficiency and customer satisfaction.

As the DCSA study found, the migration to APIs in shipping is budding and momentum is gaining as businesses prioritize speed, agility, and innovation.While APIs are gaining traction, EDI is not disappearing overnight. Many legacy systems in logistics still rely on EDI, and its standardized structure remains valuable in certain contexts. In the API vs. EDI competition, APIs will eventually take the lead.

For companies in logistics, adopting APIs is becoming a necessity to stay competitive in a rapidly evolving market. When companies were previously unsure how to start, integration platforms like Splice are simplifying and accelerating adoption.