EDI vs API: Which is Right for My Business?
Gain supply chain efficiency with the right connections
The ability to transfer data quickly and securely between systems is critical for managing a supply chain. Without it, basic business functions such as quoting, tracking and invoicing have to be completed manually — taking up valuable time that could be spent on more strategic tasks. But while most people agree integrations like EDI and API are vital for this type of data exchange, not everyone agrees on which is best for business. And the debate will likely continue for some time.
Discussing EDI vs API in the logistics industry
Electronic Data Interchange (EDI) was introduced to the transportation industry in 1965 when it was used to send trans-Atlantic shipping manifests. The industry quickly recognized the applications of EDI and adopted the technology to automate processes across the supply chain — helping reduce operational costs and remove the risk of human error in data exchange. And EDI remains integral to the industry. In 2019, the global EDI software market size was $1,547.2 million, with logistics taking up a large percentage of the market share. It’s projected to reach $3,451.3 million by 2027, and the logistics segment is expected to grow during that time.
These projections may come as a surprise to those who expect EDI to be replaced by API for most business functions.
Application Program Interface (API) emerged in 2000 — 35 years after EDI — and rapidly gained popularity. Cloud-based rather than computer-to-computer, APIs are designed to be easy to use and fast to set up. The ability to transfer real-time data to business partners without the time and cost of EDI makes APIs an attractive option for businesses that want to get up and running quickly. API also makes it easier for businesses to invest in technology advancements like AI and blockchain since the software can quickly be adjusted to support those systems.
However, because API doesn’t currently have the same level of standardization as EDI, some businesses may prefer to use the legacy technology. EDI’s ability to handle mass amounts of data also contributes to its longevity in the industry, though it has some drawbacks of its own — particularly with the time and resources required to set it up and make any future changes.
See how the two compare in this chart:
|Implementation speed||21 days||2-3 days|
|Transaction type||Batch files||Individual files|
|IT resource requirements||Extensive||Limited|
|Industry standardization||Highly standardized||No widespread standards|
Choosing the right option: EDI, API or both?
While API is frequently seen as the better and easier option, EDI is still a relevant solution. Fortunately, the answer doesn’t have to be one or the other. Most businesses can benefit from implementing a combination of the two. This provides the best of both: the speed and flexibility of API with the long-standing reliability of EDI. The decision comes down to what you’re hoping to accomplish.
If you’re looking to:
- Invest in future technology. API easily connects with new tech platforms.
- Integrate with legacy IT systems. EDI uses communication protocols that may be easier to integrate with older internal or partner systems.
- Get set up quickly. APIs are activated through an internet connection and can get set up within days.
- Transfer mass data. EDI is designed to send and receive large amounts of data at one time.
- Receive real-time information. API transmits data in real-time individual increments rather than in batches.
Your logistics provider can work with you to find the right solution for your situation and ensure you have the correct systems in place for each integration type.
Get connected fast with ArcBest
The right technology makes it easier to do business. And ArcBest is here to help. Connect your systems through EDI, API or our other technology offerings to keep track of important shipping documents, automate routine tasks, gain better insight into your supply chain, and more. By implementing the best options for your business, you can simplify your logistics processes and get back valuable time.
Explore our supply chain solutions or download our technology overview to learn more.