Supply chains are not only digitising, but they're also becoming more automated. One area that has been slow to go digital is cross border trade between countries - how can you be sure your shipment doesn't contain anything besides what it says on the tin, or your new supplier is legitimate??
A company called Ultra helps customs authorities inspect goods flowing through their centers by using AI and data driven solutions already implemented in its software program for about six years now; I invited Ram Ben Tzion, CEO and co-founder of this startup-company onto the podcast so he could share his insights regarding where things stand today.
We had an excellent conversation talking about the genesis of Ultra, how it is moving from just helping customs agencies to more generalised supply chains, and where they're going next.
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There are about 900 million TEUs containers moving around globally, every year. And if you have, additional supply, there's huge demand for it. And only a fraction of these shipments is actually inspected today. So government authorities, customs officials, need to oversee all of this flow of cargo, and they only have the ability to inspect between 1 to 3% of consignmentsTom Raftery:
Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi everyone. Welcome to the Digital Supply Chain podcast. My name is Tom Raftery and with me on the show today, I have my special guest, Ram. Ram, welcome to the podcast. Would you like to introduce yourself?Ram Ben Tzion:
Hey Tom. Thank you for having me. So my name is Ram. I'm one of the founders and the CEO of a cool start-up out of Israel called Ultra.Tom Raftery:
and what does Ultra do Ram?Ram Ben Tzion:
So we're doing something fairly small. We're changing the way that global trade is regulated. But to be more specific, we started Ultra 2016 to connect the digital and the physical world because every product or company or an individual has a digital identity in the public domain, online and social media, and a range of mobile apps. And what we've set to do was to link the two identities. And by doing so, we are enabling a set of services or solutions for different regulators to make sure that the people that you do business with or the people that you hire or the people that you work with are trustworthy. So this is Ultra. We've been around for just over six years now, almost a hundred people based out of Tel Aviv, Isreal.Tom Raftery:
Okay. And. What kind of customers do you have today and do you foresee having in the future?Ram Ben Tzion:
Today working mostly with government agencies and regulators of trade, customs agencies, port authorities, and looking into the future, we believe that our solutions are relevant to supply chain operators, logistics operators, carriers. Pretty much everybody who's moving cargo around the world and needs to do so with the full visibility into the different links along the supply chain.Tom Raftery:
Okay. And can you give me a typical use case for a customer you have today?Ram Ben Tzion:
So we have a set of customs agencies in emerging economies, Latin America, Africa, Southeast Asia, and over there they're facing a huge challenge of making sure that whatever comes in is properly declared. numbers, right? If we look into global trade, there are about 900 million TEUs containers moving around globally, every year. And if you have, additional supply, there's huge demand for it. And only a fraction of these shipments is actually inspected today. So government authorities, customs officials, need to oversee all of this flow of cargo, and they only have the ability to inspect between 1 to 3% of consignments. That means that over 95% of goods go in as declared and inspected, and that brings in a very large set of challenges, first of all, to make sure that nothing bad comes in.Tom Raftery:
Mm.Ram Ben Tzion:
Drugs, weapons, illicit goods, substances, a lot of time and attention is allocated to this challenge. But what about the poor quality products that are coming into the country? The food and food supplements, the medicine, the textiles, the quality assurance is challenging. And last but not least, people are paying, importers are paying duties or taxes based on the declared value of goods. So, while some people are legitimate, honest, importers, there are quite a few people that would rather not pay duties. Every government is losing money as well as having a challenge to enforcing its trade policies because of the problem of inspection and what we're offering our customers for the first time is the ability to conduct not 1, not 2, not 3%, but a 100% inspection, pre-arrival based on digital data and automated analytics. And this is really revolutionary because now you don't need to open the container or you don't need to conduct an X-ray scan. You can just automatically vet the shipping documentation to see if something is abnormal. I can give you a few examples.Tom Raftery:
Please.Ram Ben Tzion:
So, have you ever asked yourself, where do salvaged vehicles go?Tom Raftery:
no, no, no. I haven't, I, I mean, I've seen a few salvage yards with lots of vehicles stacked on them. Yeah.Ram Ben Tzion:
So ultimately some of them will become scrap metal, but a big amount of the salvage vehicles will be, I would say cosmetically touched up and shipped overseas. Pre-owned vehicles are a huge, huge industry where vehicles are sold from the United States, the eu, Japan, and other developed economies to, Africa and Latin America. We are seeing a huge number of these salvaged vehicles being sold as pre-owned good condition vehicles, and no existing test will ever pick it up. So you have a Honda SUV going from the US to Latin American customer of ours, and it's actually salvaged. So no airbags, no abs, no safety systems on the vehicle, and we are the only ones who can pick it up because it's reported online by the insurance companies. Another use case, another example of the same type of, of public safety. Over the last two and a half, three years, we've all been consumer forced to be consumers of personal protective equipment, and we believe that a K N 95 mask is the best protection out there. Who knows what's a K N 95 standard mask and who actually enforces the standards of quality in these KN95 masks. So when we talk about personal, protective equipment, it could be gloves, it could be robes, it could be masks. There has been a surge in manufacturers, mainly in China, and nobody knows. Are they legitimate? Are they trustworthy? Are they within the quality standards? Well, we know because we have visibility to Chinese specific company registration data that tells us. Is this manufacturer certified and allowed to produce such equipment? We've seen so many cases where masks, gloves have been of poor quality and our ability to raise the flag before the shipment arrived to port, allow the customs authority to conduct a lab sampling test and see that these are actually not, meeting the conformity standard. So that's another very typical use case. And last but not least, mis-declaration or undervaluation of goods. So as I earlier mentioned, duties are defined by the declared value and the classification of a product to a certain category. The HS category, eight or 12 numbers that states what is the tax rate you need to pay for a product. And we are seeing that honest mistakes are always in the, benefit of the importer. So it could be, office furniture that is undervalued at 10% of its actual global value. And we check with global sources to provide an independent verification of the price. We are seeing a lot of food and food supplements that are priced at a fraction of their cost. And these things add up to a huge amount of lost revenue to government. So without naming a specific country, I would say we've concluded a, an evaluation period or a test period with a large U European economy, one of the largest European economies. And in that test, we have been given a sample data of that customer processed in our systems, and we came back with our findings. And in the sample data we were able to find lost revenue of 27 million euros. Would you like to take a guess how much this adds up on an annual magnitude to that specific customs agency?Tom Raftery:
I'll go with around billionRam Ben Tzion:
2.8. 2.8 billion Euros. Annual loss. Because of the fact that when you only check 1% of cargo, you end up losing a lot of money. Are we eliminating fraud? No. Are we completely stopping all revenue leakage? No, but the fact that we provide a new visibility to a hundred percent in itself creates a tremendous amount of growth in tax collection, and this is why ultimately we are offering something that is not just revolutionary in operations, but also very valuable to everybody along the supply chain. So the government benefit is obvious, but also consumers. By doing or implementing digital inspection, you not only increase government collection, but you also expedite the clearance process cuz every thing is digital. You don't need to touch the actual container and you know who is the legitimate well known, well reported container. And it could be out of the port within hours instead of days or weeks. So the importers benefit, the government benefit, consumers benefit because all costs are ultimately transferred to the consumers. So I think that by bringing a new capability to conduct digital vetting, pre-arrival, we are affecting or optimizing the clearance and and vetting process in a way that is beneficial to all parties in the transaction. They obviously are losers, and these are the people that are either corrupt or fraudulent in their behavior.Tom Raftery:
Okay. I would say it would be great if you operated with the Spanish government, just because A) customs clearance in Spain is ridiculously slow and B), the stuff that I bring in from outside Europe to Spain, I generally get overcharged on customs rather than not being charged enough. So it, you know, it would benefit me that way as well, because I'd be paying what I should be paying, not overpaying it. They seem to overcharge me every time I bring something in,Ram Ben Tzion:
So I would agree without a specific reference to a given customs authority, we came off, a very, I would say, compelling event for us, which is the World Customs Organization Tech Conference. It's an annual event held in Maastricht Netherlands this year, and over there we were privileged to see what is considered by a global organization, the future of customs. And there was a very interesting pitch by the head of innovation of Dutch customs are considered to be amongst the leaders in the world. And he spoke of a future where all inspection, all vetting will be done pre-arrival based on data and in a way that is fully automated. And we were sitting at the audience together with my, uh, my friends and my team from, from Ultra. And we were looking at each other saying, well, that's not the future. It's actually here. So while we are relatively a new solution, a new offering to the market, governments adapt slowly. They understand the need to innovate slower than the private sector. They understand the value of efficiency slower, but once they do, it becomes a standard. So what I foresee for the market as well as us, is within five years time every customs agency will have a digital vetting capability, not necessarily Ultras, although we are the only one currently offering. But in five years, everybody will have their own capacity and it will impact you and me and my children who are buying online on a regular basis because we will get our goods, quicker, cheaper, and far more reliable in terms of where we're sourcing our products from.Tom Raftery:
Cool and what's the genesis of the company? I mean, what, what's the, the startup story behind it?Ram Ben Tzion:
Coincidence. Just like every good, just like every good story. So, if I ever had a profession, or something that I aspired to, to be, it was a football player, but that didn't really turn out well. Because I wasn't that good. And in, in Israel everybody's drafted to mandatory military service and I was channeled into the intelligence community. And I've learned to be excited about the need to, uh, solve puzzles by bits and pieces of information that you put together and uncover a new reality. And that is what all five founders of ultra have in common. We are all veterans of this intelligence community. Some of us technical, some of us more operational in nature, and we were convinced that we had the ability to create a capability when we started a company in 2016 that will be tremendously valuable for background checks or vetting of individuals who are applying for banking services and for employment. At day one, we have taken a conscious decision that we wanna stay on the good side of tech. That means that we don't wanna do anything that is intrusive. We don't wanna be involved in hacking or any other sort of espionage. We wanna bring data in a new way that will knock new capabilities or new opportunities for people to trust each other. And we have created our first version of the product that is today out there in the market in february, 2016, and we have taken a very unusual path for a startup, and that was use our own money. So we didn't raise capital. We were bootstrapped from day one. We've created a capability. We went to the market and we got lucky. We got our first contract within two months and have grown off our revenues ever since. So in an economy or a tech economy or a startup environment, it talks about growth at all costs and profitability doesn't matter. It was always strange for us because we have grown off our own funds. In late 2019, early 2020, we were supported, or we were lucky to be chosen by a fund, a venture capital, out of Canada called Oz Ventures. They saw the potential in the trade business. They realized that what we're doing to do background checks for people will also be applicable for companies and cargo. And they've invested into the company to expedite our growth and they are our partners since. So, Ultra is a startup company, but atypical, it's a company that was self financed, that is profitable and it's growing because the applications to what we do are almost infinite. And when we speak of trade there is a current concern about the ability to enforce the ever-changing trade regime, with regards to sanctions.Tom Raftery:
Yes. Mm.Ram Ben Tzion:
every supply chain manager now needs to become an investigator or an enforcement agency needs to make sure that the cobalt mine from, the Congo is legitimate and the batteries sourced from China are legitimate. And the shoes sourced from Sri Lanka are legitimate to a very complex and opaque set of challenges, and we see our technology as the enabler of a fully automated K Y B or supply vetting process because all you need to do is just give me the address and the name of the manufacturer and I will give you a full visibility into the company and its presence. Is it a real company? Does it have offices, employee? It's trade history, what do they do? Is it really a manufacturer of masks and gloves? Or maybe it's something else. And last but not least, we have visibility into court, uh, records and criminal records from a very wide set of jurisdictions. So, you know, if the company that you're about to do business with has ever been associated with or involved in illegitimate activities. The fact that in just under five seconds I can say, is this supplier posing a risk of violating sanctions or posing a risk of criminal activity or posing a risk of just being a scammer is something that I believe will go beyond governments and will be applicable to many other organizations, enterprise, business and logistics operators.Tom Raftery:
Cool. And so Ram, where is all the data coming from for this?Ram Ben Tzion:
It's all out there. It's all publicly available. So I will give type of a segmentation to the different data types. First of all, there's the internet websites, millions and millions of them. And they're accessible if you just know how to pull the thread or the strings and put them together. Then a wealth of information on social media because it is the world's biggest outlet. And the third type of category would be proprietary databases or industry specific data repositories that we've worked hard to identify and then procure data from. So some of the information is publicly available. Other assets are things that we buy. Our ability to put them together is what makes us different.Tom Raftery:
Because you must have massive data lakes. How are you, querying those data lakes so, so, efficiently?Ram Ben Tzion:
So we have two key capabilities. One is the data aggregation and then the data analysis. The data aggregation is actually using the internet as our data link. That means that everything is done on demand or querying is done in real time, and we pull the threads because in the world of data, everything is interconnected and one item is linked to another, and we pull all of them in an iterative process within seconds. Then you need to use artificial intelligence to have the ability to analyze the result and say, is this within norm? Or is this abnormal? So we are aggregating information currently, I think it's more than 3000 unique information sources. In 10 seconds, we're able to say, is this within norm or is there a risk of more than 156 different fraud patterns? So two core technology assets, data aggregation and data analysis.Tom Raftery:
Interesting, interesting. There's new legislation coming into force in various, countries of Europe requiring companies to make sure that there is no slave labor in their supply chains, for example. Is that something that you can help with as well?Ram Ben Tzion:
Absolutely. First and foremost, I would like to say that we think such legislation is super important and super relevant today. I dunno how many of our listeners are aware of the fact that Covid has actually had a negative impact on child labor and forced labor. Schools were shut down because of Covid and many children had to go out and start working to feed and provide for their families. So it is a, a terrible reality where millions of of children are affected. And while all the information is out, there nobody's really asking or acting to stop it. And while the current legislation is definitely a move in the right direction, and we certainly hope it'll help ensure a more responsible supply chain and sourcing, it is first and foremost the responsibility of a government to enforce its own trade policy. So I would expect the customs agencies to say, we are doing everything possible to make sure that no ill-sourced goods, enter the country. And then yes, we do empower our users, our customers, and in the future it will be different supply chain operators to conduct such vetting. Because the information is out there. You can't expect a, trade manager to spend all day on Google trying to go back and forth finding who is sourcing cobalt from which African countries and to which subsidiary in China it is then channeled to. But if he was able just to put the name on the invoice and get a yes no indication, that will make life a lot easier. So yes, we do have the ability and yes, we believe it's a move in the right direction, but again, I believe that the most important part is the responsibility of governments to enforce their own trade policies.Tom Raftery:
Sure. Sure, sure, sure. And we're heading into a world as well where uh, organizations are going to be required to check the carbon footprint of their supply base as well. Is that something that you can right now, or that you're planning on supporting?Ram Ben Tzion:
So that's a very interesting and exciting idea that I didn't think of until not long ago when a nice gentleman offered the idea of trying to extrapolate the carbon footprint of a manufacturer based on some publicly available information, the location, the energy consumption, attributes of a specific, industry, as well as the grid or the electricity manufacturing, footprint. And then how do they ship their goods. So, it is a brilliant idea that just adds an additional layer to digital vetting. The information is there. Once there is a question, we will know where to source the answers and provide it in a very accurate and automatic manner. So yes, I do think it's a viable concept and it's an applicable idea in the future of our products.Tom Raftery:
Fantastic. Fantastic. And you're welcome for the idea. I'll, uh, , I'll expect a commission in all sales withRam Ben Tzion:
Absolutely, Tom, you deserve royalties from this oneTom Raftery:
So where to from here? Ram?Ram Ben Tzion:
back to work. The fact that we have a good idea and the fact that we have, a solid technology that is applicable makes us responsible to deliver, and that means get the product and the awareness wide and far enough for us to make an impact. I expect that, as I said, in five years, capabilities such as ours will be applicable almost everywhere in the world. And what I would like for us Ultra to be able to do is to provide this capabilities to at least 30% of global trade. That means millions of shipments every day, and by doing so, we will unlock tremendous value to our customers and to our investors, and ultimately create a more trusted, safer, and more secure, interconnected economy. Because although today we are seeing a drawback from interconnectivity or globalization, ultimately the forces that drive consumption are global. And the ability of technology to bridge the gap of trust and visibility is essential, and I believe that our future is the ability to give the thumbs up when you buy or source something, that you're doing this from the right place and the right counterpart.Tom Raftery:
Yeah. Yeah. And I, I think that swing away from globalization is kind of a pendulum thing. Anyway. That'll swing back and swing, the other way and swing, you know, it, it's one of these things that kind of comes and goes in time and, you know, it'll start to come back again. I, I'm. Pretty sure.Ram Ben Tzion:
I agree because we're used to the comfort of buying a lot of things, not necessarily things that we need at the comfort of our home from our smartphone, and that cannot be localised.Tom Raftery:
Yeah. Yeah. No, absolutely. We're coming towards the end of the podcast now, Ram. Is there any question that I haven't asked you that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?Ram Ben Tzion:
What does it take to create something so new, unique, and innovative? And the answer are people that have the desire to achieve the impossible repeatedly. And that's what we've been fortunate to create in Ultra, not just myself and and my partners, but we have a team of individuals that try and do something nobody's ever done before. And it doesn't matter if you're in the business of trade or logistics or if you're in the business of tech. At the end of the day, if you wanna have an impact and create value and unlock new capabilities, you need the people with you wake up in the morning and try to create something of significance. And I'm blessed and fortunate to have such a team with me, and this is why I have the confidence to say that in five years we're going to be protecting and securing a fairly global trade. That's quite a big statement for a small company out of Israel.Tom Raftery:
Nice, nice Ram, if people wanted to know more about yourself or Ultra, or any of the things we discussed in the podcast today, where would you have me direct them?Ram Ben Tzion:
Two places. First of all, back to your podcast on a regular basis, and then they should share it with your friends. Ultra dot global. That's what we are.Tom Raftery:
Okay, fantastic. Uh, Ram, that's been really interesting. Thanks a million for coming on the podcast todayRam Ben Tzion:
I appreciate it, Tom. Pleasure.Tom Raftery:
Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, simply drop me an email to TomRaftery@outlook.com If you like the show, please don't forget to click Follow on it in your podcast application of choice to be sure to get new episodes as soon as they're published Also, please don't forget to rate and review the podcast. It really does help new people to find a show. Thanks, catch you all next time.