An Introduction to “Walled Gardens” in Logistics and Transportation

In the dynamic world of logistics and transportation, beware of  "walled gardens" that will frustrate your ability to innovate on behalf of your customers. These closed systems, where a company controls all operations, data, and interactions within its network, are primarily interested in self-preservation.  Self-preservation is not bad in-and-of itself, but does not benefit logistics as a whole when transparency is intentionally suppressed and prices are kept artificially high based on fear of disintermediation or loss of control. 

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Characteristics of Walled Gardens

• Proprietary Systems: Companies operate on their own all-inclusive platforms with limited compatibility with external systems.
• Data Silos: Information is contained within the company, restricting data sharing and collaborative insights.
• Limited Transparency: You can only see what the platform chooses to show you from within its own ecosystem.
• Static and rules-based:  Does not provide a framework or set of heuristics that make room for evolution over time.

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Indicators that you are dealing with a walled garden supplier

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1. You have hired a consultant to help negotiate with the supplier.  Bonus points if your  consultant used to work for the supplier (ideally in pricing). 
2. The solutions (and the pricing structure)  is complex.  And this complexity is sold as sophistication - when in fact a simple solution would be better.
3. The supplier’s contract is designed around your multi-year volume forecasts (impossible to predict with specificity) set against the supplier’s capacity forecast, which is just as impossible to predict.  
4. You have little-to-no visibility into the performance of assets within the supplier network, such as amount of backlog at a hub (during peak), on-time departure performance of a transportation lane, or localized capacity risk.
5. You are not allowed to pick-and choose components to complement your existing capabilities and you are punished for conducting business with a competing supplier.
6. The contract is heavily rules-based instead of principles based.  Put differently, your relationship does not leave room for innovation.
7. The supplier has convinced you that the success criteria for your relationship should be a multi-year agreement that provides a set amount of capacity at a predetermined price with a few easily manipulated performance metrics.
8. Part of the sales pitch from the supplier is how they are going to optimize your solution.  Bonus points if there is an AI Bullsh***er leading this pitch.
9. You are forced to use technology that is an order of magnitude worse than competitive technology outside of the walled garden.  Bonus points if you have to change your password every 30/60/90 days.
10. The supplier is run by bureaucrats.

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Breaking Down the Walls

The more ‘optimized’ the solution is within the walled garden, the more likely it is to fail (think about that one).  Walled gardens are harmful to the logistics ecosystem because they confer too much power to a small number of companies.  They stifle innovation, lack interoperability, limit customer options and make the system as a whole more likely to fail.  

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While this article hasn't explored it, the walled garden phenomenon isn't limited to the supply side. There are also substantial walled gardens on the buy-side - and we acknowledge that a relationship between two equal entities can sometimes yield positive results. However, CloudSort is not in the elephant husbandry business, so we'll leave those relationships to the pricing consultants and opposing legal teams.

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While walled gardens may offer short-term benefits for individual companies, the long-term success of the logistics and transportation industry relies on our ability to collaborate, share data securely, and innovate collectively. As we move forward, it's crucial for industry leaders to champion interoperability and open standards. Only by working together can we unlock the full potential of our interconnected global logistics network.  If nothing else, we strive to help organizations discover that…. 

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The best logistics solutions exist outside the walled gardens, not inside. 

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