What is EDI?
EDI (Electronic Data Interchange) is the automated, standardised exchange of business messages — orders, transport statuses and invoices — directly between the computer systems of two parties, without manual input.
The meaning of EDI in one paragraph
EDI stands for Electronic Data Interchange: two companies exchange business documents in a fixed, machine-readable format, so that one system can read and process the other's message directly. Instead of emails with PDFs that someone has to retype, orders, statuses and invoices flow automatically between the systems.
The messages follow an agreed standard — in transport this is usually EDIFACT — so that both parties know exactly what each field looks like. We explain the individual terms in our EDI glossary.
How does EDI work?
With EDI, the source system converts a document into an agreed format and sends it via a secure protocol, and the receiving system reads the message in automatically. In broad terms:
- Creating the message — your system creates a message in a standard format such as EDIFACT, XML or JSON.
- Sending — the message goes to the other party via a secure protocol such as AS2 or SFTP.
- Reading in — the receiving system reads the message in automatically, processes it and often sends back an acknowledgement.
Translating between the format of your system and that of your partner is called mapping — the heart of a reliable integration.
Example: what an EDI message looks like
An EDIFACT message is not meant to be read by people, but with a little explanation it is easy to follow. Below is a simplified transport order (IFTMIN): a shipper asks a carrier to collect two pallets.
UNH+1+IFTMIN:D:04A:UN' BGM+610+ORD12345+9' DTM+137:202610121200:203' NAD+CZ+++Shipper BV+Industrieweg 1+Enschede++7521AA+NL' NAD+CN+++Consignee BV+Havenstraat 5+Rotterdam++3011AA+NL' GID+1+2:PX' MEA+AAE+G+KGM:850' UNT+8+1'
- UNH / UNT — start and end of the message, with the message type IFTMIN and the number of lines.
- BGM — what kind of document it is, with the shipper's order number.
- DTM — the date and time of the message.
- NAD — the addresses: CZ is the consignor, CN the consignee.
- GID / MEA — the cargo: two pallets with a gross weight of 850 kilos.
Each line is called a segment and ends with an apostrophe. Which segments are mandatory and what each code means is set out by the two parties in a message specification. In practice, a transport order also contains loading and unloading times, references and special requirements such as ADR.
EDI standards in logistics: EDIFACT, EANCOM and XML
An EDI standard defines how a message is structured. In European logistics, these are the ones you will come across most:
- EDIFACT — the international standard of the United Nations, with message types such as IFTMIN, IFTSTA and INVOIC. The most widely used in European transport.
- EANCOM — a subset of EDIFACT, maintained by GS1. Common in retail, for example for orders and despatch advices (DESADV) to distribution centres.
- XML and proprietary formats — many shippers and platforms use their own XML, CSV or JSON format. In Dutch road transport, the TLN format (from the Dutch transport and logistics association) is also used.
- ANSI X12 — the North American counterpart of EDIFACT. In the Netherlands you mainly encounter it with American customers.
Which standard you use is usually decided by your trading partner. Two companies that both say "EDIFACT" often still use it in slightly different ways. That is why every EDI connection comes with an agreed specification per partner.
EDI in transport & logistics: which messages?
In transport, EDI revolves around a few fixed flows between shipper, carrier and platform: the order, the status, the invoice and, from the warehouse, the despatch advice.
- Transport order — the shipment with all transport details (IFTMIN).
- Status messages — collected, in transit, delivered (IFTSTA).
- Invoices — automated invoicing (INVOIC).
- Despatch advice / packing slip — exactly what is on its way, often required by retailers (DESADV).
Would you like to exchange these messages automatically with your customers or carriers? Then getting an EDI integration built is the next step. We build and support it to fit your situation, including between your warehouse and transport — see integrating your TMS and WMS.
EDI in retail logistics
If you deliver to supermarkets, DIY stores or large online retailers, you will almost always have to deal with EDI. Retailers want to send orders electronically and expect a despatch advice (DESADV) in advance, stating exactly what is on which pallet, often linked to an SSCC pallet label according to the GS1 standard.
For a carrier or logistics service provider, this means that data from the warehouse and transport must reach the distribution centre on time and in the right format. If the despatch advice is incorrect, a delivery can be refused or delayed at the distribution centre.
EDI vs. API
EDI and an API both connect systems, but they differ in form. EDI works with standardised messages that are often exchanged in batches, and is the norm between shippers, carriers and platforms. An API is real time and on request. In practice, you often combine the two.
The full comparison — with formats and protocols — can be found in our EDI glossary.
Alternatives to EDI
Not every customer or partner can send EDI, and for a small flow EDI is sometimes too heavy. There are alternatives that achieve the same goal: no more retyping.
- An API — real time and flexible, if both systems have one. See logistics API integrations.
- Reading orders from email, Excel or PDF — your customer's orders are extracted automatically and placed in your TMS. See importing transport orders automatically.
- File exchange — a CSV or XML file that is made available and collected via SFTP at set times.
Why EDI?
- Fewer errors — no retyping by hand
- Faster turnaround
- Lower processing costs
- Reliable in production
What is EDI — answered briefly
Is EDI the same as an API?
No. EDI uses standardised messages (often in batches); an API is a real-time interface. They are not mutually exclusive — in transport you often combine them.
Does my transport company need EDI?
If you regularly exchange orders, statuses or invoices with customers, carriers or platforms, EDI saves you errors and time. Your customers do not have EDI? Then their orders can also be imported automatically without EDI. Not sure? Tell us about your situation.
What is EDIFACT?
EDIFACT is the international EDI standard of the United Nations and the most widely used in European transport. IFTMIN, IFTSTA and INVOIC are EDIFACT messages. See also EDIFACT in our glossary.
What does an EDI integration cost?
That depends on your systems and the messages you want to exchange. We map it out in advance — see getting an EDI integration built.
Ready to put EDI to work?
Tell us which systems and partners you want to connect. We will think along with you about the best approach, without obligation.