The Robots Can’t Come Fast Enough!

automation

When an English weaver’s apprentice named Ned Ludd allegedly smashed two stocking frames in 1779, his actions inspired a movement known as the Luddites, workers who destroyed machinery that they said threatened their jobs and livelihoods. More than two hundred years later, professionals across the economy are nervously eyeing headlines trumpeting automation, and wondering to themselves – are robots coming for my job next?

In logistics, this trend is especially pronounced. Every day, more and more conventional freight forwarding task move online, and robotics advances could eliminate humans from the warehouse floor in the next decade, trucks will one day drive themselves, and drones could handle those complex last-mile deliveries.

All that justifies some nervousness, but there’s a lesson to be learned from those 18th century rebels, and it’s certainly not the one that Ned Ludd and his followers would have expected, because just as the industrial revolution created scores more jobs than it created, automation is part of a larger socio-economic trend as well, one that we’re just beginning to grasp.

It turns out, those robots aren’t “taking” jobs. Instead, they are filling a role created by the very technological advances that brought them into existence.

If this is all starting to sound too philosophical for a logistics article, don’t worry. It’s actually as simple as remembering that those “advanced” looms in the 18th century Britain were actually part of a bigger picture. New machinery like the looms allowed companies to manufacture more textiles, at cheaper prices, opening the market to consumers who otherwise would not have purchased textiles.

That same dynamic impacted pretty much every market. Sure, certain trades such as the people who crafted horse buggies saw their sales decline, but that was around the time that technological advances made car manufacturing and sales possible. And now that people were buying cars, there were suddenly millions of new jobs to fill. That meant hiring people to build more roads, gas stations, bridges, the list goes on…

This isn’t a history lesson on the industrial revolution, but those lessons are worth bearing in mind as we turn to robotics, and fit them into a broader trend of artificial intelligence, the internet of things, and e-commerce.

Computers Changed The Game

The job market evolves in response to purchasing decisions, and how those products are purchased. With e-commerce, it is often said that the brick-and-mortar store front moved into people’s homes, via their computers, but that’s only part of the equation. The storefront also took the form of logistics companies because rather than interacting with a clerk, consumers started dealing with integrators, forwarders, and last-mile delivery companies.

Here’s where it gets interesting – the decline of brick-and-mortar actually created jobs, by the millions! In the US, the Progressive Policy Institute found that from December 2007 to May 2017, e-commerce created 397,000 jobs in the country, while at the same time, traditional retail only shed 76,000 jobs. That’s a net gain of over 300,000 jobs.

In Europe the picture is identical. Amazon announced that its expansion into Europe would create 15,000 new full-time jobs in 2017. That puts the European-based workforce of the US retail giant at more than 65,000 by the end of the year (2017). That’s just one company. In trucking, the continent is facing a looming labor shortage, while consumers are increasingly opting to click, rather than walk.

On a global scale, the logistics market is expected to grow from US$8.18 trillion in 2015 to US$15.52 trillion by 2023, growing at a CAGR of 7.5 percent from 2015 to 2024. In volumes, that’s a market growth from 54.69 billion tonnes in 2015, to 92.10 billion tonnes by 2024, growing at a CAGR of 6.0 percent over the same period.

Simply put, the current labor pool can’t meet that sort of demand, and automation is the only way forward.

So, What Happened?

Advances in computer technology spurred a 21st-century version of the industrial revolution, and by reducing the time and effort required to purchase goods, computers allowed consumers to purchase more goods. It turns out people’s aversion to shopping was not just the price tag, but instead, a complex interplay of opportunity costs such as transit to the store, time-intensive return policies, and lack of choice at individual outlets.

There’s a complex and costly logistics response to this new trend, and companies are struggling to meet surging online orders. They’re struggling in a number of ways, but one consistent challenge is providing the manpower to sort and ship those millions of packages that, simply, didn’t exist a decade ago. That’s a whole new business process that needs addressing, and whatever fills that demand will be the first solution there. As 2017 comes to a close, it’s increasingly likely that robots will be the solution.

The industrial revolution certainly came with its fair share of negative externalities, ones that drove home the importance of sound governance and regulations. Hundreds of years later, advances in computing and automation are likely to do the same, but this time around, we’re better prepared to meet the challenges, but to do so, the industry needs to attract talent, and that’s a challenge.

Those hundreds of thousands of workers on warehouse floors across Europe are the first place to start sourcing that talent, and it’s those robots that will make it possible, because soon, logistics companies will be able to use their hiring firepower to attract more qualified workers to take on the growing role of logistics.

The Current and Possible Future State of European Trucking

trucking

Much like life in the ocean where larger fish gobble up smaller ones to continue growing, the trucking industry in Europe is about to hit the merger and acquisition (M&A) feeding frenzy. With a rapidly growing number of high profile deals, there is a possibility for a major shift in the players of the European transportation market.

According to the Journal of Commerce, XPO is among the top of the list for potential buyers with the US company prepared to dip into its reserves to pull off another purchase much like their $3.5 billion buyout of Norbert Dentressangle back in 2015. Conversely, DSV is a quick growing Danish Company that is also geared up to take place in the M&A game.

However, even with the rise in mergers and acquisitions, it is unlikely that it will have a significant impact the highly fragmented nature of the European transportation industry.

“Unlike the sudden burst of takeovers and mergers that have dramatically consolidated container shipping in the past two years, increased M&A activity will not reshape a European trucking industry that directly employs some 5 million with around 560,000 registered companies. That lack of transformational change is also evident in the United States despite high-profile M&A activity such as the merger of Swift Transportation and Knight Transportation,” according to the JOC.

Many shippers, especially those that have grown through mergers and acquisitions, have transportation operations around the world, including the United States and the European Union. While taking a standardized approach to transportation management and procurement would facilitate visibility and control, the fact is that the operating realities of each market are different.

“If you look at it from a macro point of view, there are many similarities between the U.S. and EU,” said Jeroen Eijsink, Present of C.H. Robinson Europe in an interview with Adrian Gonzalez of Talking Logistics. “We have a very fragmented carrier market in Europe. Most of the carriers that we work with and haul the majority of the freight have maybe 4-10 vehicles. About 90 percent of the carriers in Europe have less than 50 trucks, so that is not dissimilar to the United States” – he added.

Are the Chinese Rails Taking Away from Road Freight?

It might seem like the China-Europe rail lines might be a point of contention for the road freight industry. As China pushes its Silk Road Initiative, it would seem as though the rail lines would be a big contender for the incoming European freight. However, as more freight comes in via rail, it will be offloaded onto trucks, making road freight even more viable, and therefore valuable, for the European economy.  

With the rail option, once goods arrive at the rail terminal, trucks handle the final leg of the delivery. As such, the new Silk Road is ushering a rising demand for multimodal transportation services throughout Europe. Forwarders such as Geodis, DHL, Kuehne + Nagel and others typically manage the entire process, end-to-end. But, for small to medium size businesses and even smaller forwarders, securing a reliable trucking firm to carry goods to the final destination can be daunting.

Bigger Trucks = Better Hauls

Germany is upping the ante with their trucks, increasing both the payload and overall size which will allow for more freight haulage per load.

“Germany’s decision to increase the length of “mega-trucks” to 25.5 meters (83 feet, 8 inches) and raise the weight limit from 44 metric tons to 60 metric tons is expected to significantly boost trucking’s domestic and cross-border market share in Europe’s largest economy,” the JOC said.

With the increase in necessary road haulage, the bigger trucks could pay dividends, especially as the EU sees more freight coming in from China and moving across countries within the block. As the level of road freight continues to grow there will be even more potential for growth in the trucking community, mega trucks or not.

Is the Driver Shortage a Potential Threat?

As the United States is facing a growing crisis in terms of a driver shortage, is that going to be a similar concern for the EU?

“The driver shortage in the United Kingdom rose by almost 50 percent in the year to the second quarter of 2017 to 52,000, according the Freight Transport Association, and it is set to continue rising as the thousands of drivers nearing retirement age are not being replaced by younger entrants into the industry,” says the JOC.

Germany faces very similar challenges: The majority of freight, 80%, is transported by road within Germany. However, recruiting long-haul truck drivers is becoming harder as more drivers leave the workforce, young workers are not interested in pursuing a career as a truck driver and let’s face it, work conditions are not ideal for many folks. Germany alone is expected to lose about 250,000 drivers to retirement in the next 10-15 years.

While there is a reported shortage of truck drivers, changes are already in motion to help rectify the situation. New regulations are in place to increase the job satisfaction and well being of the driver, which should help to both attract and retain new drivers. Additionally, as automated trucking continues to mature, the EU might turn to automated trucking to fill in the gaps left by human workers.

Suffice it to say, while the European trucking community might be a fragmented industry, it is continuing to grow. As demand increases, so too will the opportunities for trucking companies or potential investors who are looking for an opportunity to branch into a growing market.

What Does Tesla’s All-Electric Semi Mean For The European Market?

Semi truck

Electric trucks present at least two possible avenues for efficiency gains – automation and lower energy costs. With self-driving cars a long way off, it is cost reduction, rather than automation, that makes Tesla’s announcement of a new electric truck, the ‘Semi,’ such a headline grabber. But, on the aggregate level, it is still not clear what impact the California-based company’s electric semi-trucks will have on an industry that is famously fragmented and intensely competitive?

By turning off the pump, Tesla contends, operators will recoup their costs quickly, but it is a bit more complicated than that.

Is The Market Ready For Tesla Semi?

If a trucker travels 100,000 kilometers a year — assuming the cost of fuel is 1.20 Euros per liter – Tesla’s Semi could eliminate tens of thousands of Euros in fuel costs per year, hundreds of thousands over the life of the vehicle. With Europe’s low freight margins, those are the sort of numbers that grab attention.

But on the flip side, electrification is expensive. Deloitte estimates electrification adds around 125,000 Euros to the cost of a heavy-duty semi. That translates into a big up-front investment for operators.

For now, Tesla is only building trucks for the North American market, and limiting orders to the continent, but European companies are interested. One Italian trucking company says that it ordered a truck to bring to Europe through its US partner. Other companies across Europe have expressed similar sentiments.

Shortly after Tesla CEO Elon Musk broke the news, Jerome Guillen, who heads up the Semi program, addressed plans to adapt the truck’s design to meet European regulations. Speaking at the Transport and Logistics show in the Netherlands, Guillen said that the company was working on a solution, but it doesn’t sound like they have all the answers yet, and certainly no concrete timeline. “Once things are good in the U.S. we’ll expand to Europe,” he told the audience.

To begin with, it is important to establish what Tesla’s new truck can and can’t do. The Semi, as Musk explained it, would work well in two scenarios. Its range – well below diesel at 500-800 kilometers, depending on the model – makes it better suited for inter-hub transport. Musk estimates that operating cost will be about 0.65 Euros per kilometer compared to 0.79 Euros per kilometer for traditional semi-trucks so putting it into play on a well-worn inter-hub route makes the most sense from a cost perspective.

That is the sort of transport that larger retailers such as Carrefour would employ to move inventory between major warehousing facilities and such traffic accounts for a huge volume of cargo.

The new Semi would also be well suited for work that involves lots of waiting, idling, stop-and-go traffic, zeroing out energy costs in such situations.

But that is not what a lot of trucks do. Tesla’s Semi would struggle to replace the many thousands of trucks making long-hauls from coastal ports into mainland Europe, and other long-haul routes clocking thousands of kilometers per week. Those are the trucks that freight forwarders rely on to connect their European networks, and that often means getting from a port in, say, Calais to Eastern Europe in one haul. Any electric vehicle eying that range would require an extensive network of charging stations, and the time required for up to three charges.

Conventional trucks are not getting any less competitive either, thanks in part to Germany’s recent decision to increase the allowable length of “mega-trucks” to 25.5 meters, while raising the maximum weight limit from 44 metric tons to 60 metric tonnes. The decision is expected to boost trucking’s cross-border market share in Europe’s largest economy.

The size and maneuverability (or lack thereof) of Tesla’s new trucks also precludes the entry into the fast-growing sub-sector of last-mile trucking, where changing consumer habits are necessitating more, smaller delivery trucks. Whereas a few years ago, integrators could swing through a neighborhood once a day, delivery companies are adding frequencies to accommodate market demand for express shipments. With Amazon launching two-hour deliveries in select cities, that trend will only pick up pace.

Bigger Is Not Always Better

This last mile market is also where electric trucks are going to make the most immediate difference, however, they will not look anything like the vehicles that Musk unveiled at an event in Los Angeles last month. Instead, smaller electric delivery vans or trucks carry out last-mile deliveries from urban hubs, deliver them to drop off points around the city, and from there even smaller vehicles deliver packages to doorsteps.

Smaller last-mile trucks are also better suited for electrification since most of them travel less than 150 kilometers on a route. Manufacturing batteries with that sort of a charge is far cheaper, and with tax incentives in place – France pays out 10,000 Euros to companies who replace diesel vehicles with electric ones – electrification is already making a significant impact on the trucking industry.

There is a place in this model from the foot courier all the way up to Tesla’s massive Semi, one that plays to each vehicle’s strengths.

Finally, it is important to recall the advances that Tesla has made over the years to its popular lines of sports cars and sedans. The company’s latest models already feature software that allows the cars to drive autonomously in some instances, and those occasions are only growing. It’s likely that Tesla is already working a way around most of the weaknesses raised in this article, and there is no doubt that their entry into the market is an exciting development.

AI and Blockchain: The Future of Shipping

blockchain

The technology that envelops the world is changing and growing at a more rapid pace than we’ve seen since the inception of mass manufacturing. When we consider that the methods and technology involved in shipping and the supply chain have changed little over the past several decades, these new technologies are setting the stage for a new industrial revolution.

While automation in both manufacturing and delivery practices are certainly adding their own weight to the situation, the newest players to the scene are Artificial Intelligence (AI) and Blockchain technology. Both will change the way we look at the supply chain as well as how we consider logistics.

What is Blockchain

“In May 2017, Deloitte tweeted that 10% of global GDP would be built on top of blockchain applications. This huge and ambitious claim was made because of the transformative nature of the technology and the effect it will have on society. For logistics and transportation, it will have a bigger impact promising to shake up the $8T industry,” according to FreightWaves.

Blockchain technology is a progression of interlinked data. Simply put, blockchain is a database. It can store both records and value of transactions. One of the differences between blockchain and the standard way of tracking such information is that blockchain can store exponentially more valuable information in every step.

Any manufactured item, for example, can be traced down to its various components at any step of the way. It shows when and where the components were produced, the conditions in which they were shipped, and the value at which they were purchased. All of this information is then compiled, stored, and associated with the product through its entire journey from manufacturing floor to the end consumer. This provides invaluable information and raw data for manufacturers, shippers and consumers alike. What’s more is that it doesn’t apply to just manufactured items, but can be applied to any facet of production, manufacturing, or transportation.

Of course, with such an intricate digital history, security is an obvious concern, especially given the rise of cyber attacks. One of the distinct benefits of blockchain is that it lends itself to security giving peace of mind to both user and customer alike.

“One of the biggest benefits to shippers is that blockchain technology guarantees security, transparency and authenticity to wary customers. It promotes standardization, minimizes fraud, and enables accuracy and consistency of each shipment. It could also help overcome delays and errors, resulting in more streamlined and efficient supply chain management,” says the Annual Third Party Logistics Study.

How the Industry is Adapting to Blockchain

Blockchain has become something of a buzzword for the industry. As time progresses, blockchain is finding it’s way into more and more conversations and conferences.

atlas B1nQJsFyM@2x - AI and Blockchain: The Future of Shipping
Source: The Atlas

Simply put, it’s getting to the point where companies simply can’t ignore the technology as a passing fad. However, while the rate it’s mentioned is on the rise, many company executives are still on the fence about bitcoin and blockchain. Here are a few takes on blockchain from various companies.

Richard Peretz, CFO of UPS: “Yes, when you think about the potential of blockchain, we see a tremendous amount, not just in the areas [president Jim Barber] talked about, but also even in how customers and suppliers, our customers who are fulfilling, transact. And so we do think there’s a lot of potentials there.”

Jensen Huang, CEO of NVIDIA: “Cryptocurrency and blockchain are here to stay. The market need for it is going to grow, and over time, it will become quite large. It is very clear that new currencies will come to market.”

Tracey Travis, CFO of Estée Lauder: “At this point, in none of our retail establishments do we accept bitcoin. We certainly do follow blockchain and what’s going on with that, and we’ll continue to assess that going forward as that evolves.”

According to the 3PL logistics study, the biggest hindrance to blockchain implementation is that most people simply don’t understand it well enough to see its potential. In fact, 67 percent of shippers don’t have enough information to make a decision on it as of yet. While only 3 percent of shippers believe that blockchain is going to be a game changer, 13 percent of the respondents are still sitting on the fence, watching the early movers to see what they come up with from the new technology.  

Debunking Artificial Intelligence

Artificial Intelligence (AI) is the other emerging technology that’s making headlines, perhaps because it’s among the most controversial. When people think of AI, they think of the sci-fi stories in which the computers and AI rise up to overthrow humanity. To that end, many people on the production level of the manufacturing and shipping industry take this to mean that AI will replace humans and that automation will displace human workers. While automation might displace some jobs, a completely automated system just isn’t practical. There will always be a need for human workers, albeit with some different skill sets that what they have now.

Rather than the rise of machines that are bent on replacing humans, consider AI as an analytics superpower. With the capability to process more information quickly, drilling it down to a more manageable size, companies can harness the power of big data to make better and more informed decisions for their supply chain.  

In these terms, AI is simply a more sophisticated piece of software that can be used to analyze incredible amounts of data and turn it into something more useful. For example, if a company comes across incomplete shipment data, that can cause some considerable issues. If they had some of the values such as the weight or density, but not the dimensions, tracking down the rest of the data can be a time eating nightmare. With AI, however, the software can look at past shipments and how they behaved and came up with a correct deduction about the missing data. Couldn’t people do this? Of course, but not quickly or easily. It would take a large team with an intricate knowledge of the industry and companies they’re working with to do something that can be drummed up in short order by a computer.

Once you get past the stigma surrounding AI, it’s easy to see that it’s simply another tool. One, that can bring the power and benefits of big data to the forefront of the industry.  

Predicting the Future

Ask any manager who has the job of maintaining an inventory about what they’ll need in the future and they’ll laugh about grabbing their crystal ball. Sure, you can make an educated guess, using information from previous years as to what you’ll need this year, but it’s still little more than an educated guess. However, when you combine the raw data storage of blockchain and the computing and analytic power of AI, you’re able to narrow that guess down considerably. This is just one of the possibilities for the future of the transportation industry. However, it will come down to each company’s decision on how to embrace this digital era that will be the defining factor.  

 

Taking The Hassle Out Of Managing European Road Freight

Digitalized Logistics

Highly fragmented with an estimated 500,000 carriers, the European road freight market is fraught with inefficiencies.  Booking, tracking and monitoring shipments as small as one pallet to even a full truckload across Europe can be time-consuming for shippers. For carriers, optimizing utilization as well as receiving payment in a timely manner is always a concern.

With the advent of technological advances, it is estimated that there are about 180 digital providers competing against traditional logistics providers to assist shippers with changing requirements. However, according to a survey conducted by Herzig Marketing Kommunikation and the Association of Transport Economics and Logistics North Rhine-Westphalia, more than two-thirds of freight forwarders can only keep pace with digital developments in the transport and logistics industry. Sadly, many lack the time and expertise to utilize digital advances.

Be that as it may, Marcus Hover, Deputy Chief Executive of the logistics association VVWL commented, “Companies must be careful that they do not lose the connection.”

Indeed, connecting and managing relationships while maintaining efficient practices are important for the logistics provider. Thankfully, for shippers and carriers, that ability has become easier by solving road freight hassles. We are InstaFreight, a digital forwarding company. We ease the pain for both shippers and carriers by creating a seamless, transparent way to book and manage freight. In other words, we serve as a trusted brand for both the shipper and the carrier.

Digitizing Road Freight Shipments

Phone calls and spreadsheets have long been the tools for booking and managing freight; however, these tools have become antiquated in today’s environment. Not only are they time wasters but they also become increasingly inefficient as distance, language and cultural differences are factored into freight movements.

Our solution solves these inefficiencies by providing a unique platform for shippers and carriers to collaborate. Full-truckload (FTL), less-than-truckload (LTL )as well as general cargo services are offered on the platform. Shippers can place freight shipment orders online and receive offers immediately. With just one click, shippers can then accept the movement.

Benefits

The trucking industry is facing many challenges including declines in the number of drivers and fluctuating rates. Our solution provides 24/7 available freight capacities at fixed rates. The fixed rates are determined by the use of algorithms that calculates a competitive market rate.

As a result, the platform ensures that no hidden costs occur and also allows the shipper to track the status of the shipment in real time from order all the way through final delivery.

We work with carefully selected carriers throughout Europe. For our carrier partners, orders are received online and via mobile app so that they can respond quicker to requests. In addition, carriers are able to optimize their utilization levels, thus improving efficiencies, fuel savings and more. Lastly, and a big positive for carriers and shippers alike, is the ease and quickness in payment. InstaFreight handles payment and ensures that carriers are paid within 72 hours after the completion of a shipment. In turn, shippers are assured their freight is handled by happy, satisfied carriers.

Interested in learning more?

Check out our website to learn more about how we can help shippers and carriers efficiently book and track road freight shipments. Also, be sure to follow the latest updates on our Facebook and LinkedIn page.

7 Ways E-commerce is Revolutionizing Trucking in Europe

7 Ways E-Commerce Is Revolutionizing Trucking

With the boom in Europe’s e-commerce industry (expected to be worth 602 billion euros by the end of 2017, a growth of 14% compared to 2016), the transportation industry has had to respond in quick and creative ways. New opportunities in trucking and shipping abound. E-commerce is driving up demand for more localized, efficient and digitized transportation systems.

Take Black Friday and Cyber Monday, for example. It is no longer just the mainstay of American shoppers. Once viewed from afar as the climax to the American online shopping year, a time when Hasbro Nerf guns, Sony Playstation VRs, and other popular items fly off virtual shelves to the tune of $100 billion US in online sales, the contagion has spread to Europe. ”The prime movers of spreading Black Friday to Europe are the three big A’s: Amazon, Asda (part of the Wal-Mart group), and Apple,” explained Jacob Albino and Laura Eyring from Luiss Future Marketing Leaders. UK shoppers spend about £2bn while Germans about €1.1bn on Black Friday alone. November 24 and  November 27 are two of the busiest days for online shopping in Europe, with Black Friday sales have grown 124% over the past four years. November 27 is Germany’s busiest day of the year. In the UK, France and the Nordic Countries, it’s Black Friday.

European and German e-commerce firms are scrambling to get ready for the big days. Those companies that possess high levels of supply chain flexibility (the ability to respond to changing customer/ logistical needs) have the potential of becoming real forces in the European SME space.

Here are seven ways e-commerce is transforming trucking. The way ahead is definitely not like anything we’ve seen before. The future of new transport service solutions in the age of e-commerce is now.

  1.     Shift in consumerism – Driven by busy lifestyles, consumers expect more. Affluent, urban millennials are the most likely to shop online. Delivery convenience is a big factor. The desire for instant gratification is changing freight patterns. Same-day delivery – even if a premium has to be paid – is uber-desirable.
  2.      Small and big packages – The trend with the growth of e-commerce is towards smaller shipment sizes and higher frequencies in delivery. But e-commerce today is such that it is not only about small parcels anymore.Customers feel more comfortable ordering large items (furniture, treadmills) with the ease of an app or from the comfort of their home, in increasing numbers. With larger orders come add-on service requests  (help with installation, etc).
  3.      Shorter lengths of hauls – Moving product from suppliers to distribution centers and moving product from distribution centers to stores and/or consumers requires lightning speed to keep up with e-commerce growth. Online European retailers are actively looking into ways to shorten lengths of hauls.
  4.      Localized distribution centers and warehouses – Understanding this, more warehouses are being built. “Delivering more parcels to Europe’s already highly urbanized population will force retailers and delivery providers to drastically expand their warehouse space in high-rent urban environments. This will be necessary to meet increasing customer expectations around the speed of delivery and minimize last-mile delivery costs by placing inventory closer to customers’ residences,”write Nicolas Shields and Jonathan Camhi in The Business Insider.
  5.     Tracking is more and more crucial – Digital freight forwarders like InstaFreight have always known that freight data transparency is important. With Track and Trace, an overview of shipping details is readily available 24/7 to the shipper – for both, deliveries and returns.
  6.     A new fleet – Independent contractor drivers, consolidated loads of multiple shipments, and less-than-truckload (LTL) carriers are experiencing a surge. Big rigs are becoming less popular, at least for “last-mile” deliveries to urban destinations. We can expect autonomous vehicles, refrigerated vehicles, drones and electric trucks to assume more prominent places in this “new fleet” as well.
  7.     Borderless space – Surging cross-border online orders is being facilitated by fewer transaction difficulties across borders. “Last year, 33 percent of online shoppers in Europe purchased abroad,” notes E-commerce Europe, “with Luxembourg, Russia, and Switzerland (each over 60 percent) topping this list.”

Why InstaFreight Is Right For the Times

Digital 3PLs like InstaFreight are right for the times. They understand the shifts in consumerism, convenience, and the speed customers require and expect from marketers. E-commerce fulfillment managers do not have the luxury of time to look for the right carriers with competitive prices, keep in touch with chain of contracted, sub, sub-sub contracted carriers and to track orders by phone.

Although some e-commerce companies have had a hard time competing with Amazon,  personalization is key to staying in the game. InstaFreight’s high-touch and digital approach helps e-commerce firms stay close to their customers and succeed! Begin your journey with us today!

Challenges SMEs Face in Selecting Transportation Providers

challenges

Top Challenges

Think fast. What are the top 5 challenges facing Europe’s small and medium-sized businesses today when selecting transportation for their goods?

If you guessed

  • Profitability and cash flow
  • Finding a carrier with the capability to meet specific logistics needs
  • Lack of flexibility and insufficient number of carriers/capacity
  • The “incompatibility of information systems between shipper and 3PL” and
  • Difficulty in finding reliable carriers to assist with expanding into new markets and meeting future growth requirements;

you would be right. These are some of the main factors listed in 2018 Third Party Logistics Study and Challenges of Outsourcing Logistics to Third Party Providers.

The Dilemma

Owners of small and medium-sized European businesses know that cost management and strong carrier services are major factors related to profitability. Make the wrong decisions and your shipment will be delayed or damaged. Make the right decisions, and your business will be wildly successful. Indeed, 58% of all SME owners declared that reducing costs is their main priority for 2017 in a poll conducted by Liberis.

“Small firms are trapped in a vice of rising business costs, which is squeezing margins [and] choking growth,” stated the authors of a study by Make It Cheaper and the Centre for Economic and Business Research.

More than two thirds (67%) of firms surveyed have seen their profit margins significantly impacted by rising costs (by at least 22%) over the past 3 years, with the spike in transport costs being the greatest of all.

By definition, SMEs have less than 250 employees (medium-sized firms) or less than 50 employees (small-sized firms) in accordance with the definition established by the European Commission. They cannot command the same competitive advantage in business partnerships as larger multinationals.

Without the same shipping volumes as large firms, SMEs face a compromised ability to negotiate with carriers for truly competitive transport prices. Smaller contracts, smaller cargos, and irregular frequency in cargo shipments.

Not only are SMEs less capable of enticing partnering firms into attractive, “custom” deals to meet their logistics needs, but the imperative on SMEs to cut costs is greater, too.  “Although the popularity of smaller businesses is increasing they still struggle to battle against large chains and the online market, with struggles only continuing to get worse as the popularity of online shopping grows,” states Rob Straathof in “Challenges Facing SMEs for 2017.”

The Solution

What if SMEs could instantly access a large database of vetted transportation carriers who are searching for loads? What if a dynamic relationship could exist that thrived on nimble, flexible relationships between carrier and SMEs? “20% of 3PLS and 6% of shippers are currently using some form of “Uberization of freight”, according to the 2018 Third Party Logistics Study.  41% of 3PLS and 30% of shippers plan to use such a dynamic relationship in the future.

The hidden solution for SMEs is reversing the need for economies of scale by consolidating buying power. With load matching, Uberization, and digital freight forwarding marketplaces,  SMEs are finding ways to harness their unique vantage points. No longer do small volumes put small firms into an asymmetrical power position relative to bigger buyers.

These solutions allow shippers to find not only carriers but capacity, allocate loads, then simply point and click to confirm and pay for the shipment. The phenomenon is putting SME’s in the “driver’s seat”. For companies such as the typical family-owned hardware shop in Frankfurt or the mid-sized manufacturer of pallets in Mannheim, it is like they suddenly have their own fleet. Not only that – it is like the owners’ fleet is comprised of 4000 trucks, not just 40.

What InstaFreight Offers

By freeing up carrier concerns, InstaFreight enables SMEs to overcome their list of challenges. InstaFreight is a digital forwarding company for B2B customers, facilitating speedy and uncomplicated processing of freight transports.

In addition to overcoming export volume issues, there are many other benefits that follow when using InstaFreight services. SME staff are able to focus more on their core competencies, freed from the time to negotiate prices at length (InstaFreight offers instant, competitive rates). SMEs tend to improve customer service levels, as they become more equipped to meet customer expectations with guaranteed timely deliveries.

Reliability, enhanced flexibility, continuous availability, effortless handling of company and sector-specific requirements (such as the need for a tail lift truck, or the handling of fragile goods like chemicals or bottles) are further benefits.

Capacity issues are addressed too. “New load-matching apps […] unlock the excess capacity now hidden due to logistics inefficiencies and origin/destination imbalances, and […] help offset the growing shortage of hundreds of thousands of truck drivers in the United States and Europe,” states Birgit Andersen in Forbes.

Finally, because InstaFreight is a “one-stop shop” for road freight, SMEs are equipped to handle burdensome regulatory and language barriers, drawing on the benefit of a Europe-wide network of providers to overcome obstacles to expansion.

The Way Ahead for Europe

The European Union recognizes that the challenges SMEs face are challenges Europe must face – as SMEs are the “backbone of the economy.” They represent 99% of all businesses. SMEs have created a total of 85% of new jobs in the past five years. The Digital Transport Days Conference, held by the European Commission, the Estonian Presidency of the Council of the European Union, and the Directorate-General for Mobility and Transport (DG Move) in November 2017 highlights the importance of “discuss[ing] and discover[ing] potential solutions to major issues facing the transportation industry for passengers and freight. By going digital, these industries could become safer, more sustainable, and more efficient”. Ventures such as InstaFreight is the way forward. Europe is consciously finding ways to digitalize the freight industry to improve efficiency.

Find out how InstaFreight can ease the challenges that your SME is facing today! It only takes seconds. Take the leap and book a transport today!  

How The Freight Industry is Benefiting from Digitalization

Freight Forwarder Digitalization

Innovations are essential to any industry in order for them to thrive, evolve, and meet continually changing consumer expectations. With more and more disruptive companies entering the global market, the general consumer is becoming increasingly familiar with convenience and efficiency. They expect a product to not only provide value, but just as importantly, they expect it to arrive quickly and at the best price available online.

With rapid-fire deliveries being a demand, rather than a simple desire, the freight industry is undergoing some serious changes and innovations to make it happen. One of the most significant innovations is the digitalization of freight forwarding processes. New startups have the ability to shake up the playing field for both shippers and freight forwarders. Unbound by the old ways of thinking, these new companies can hit the ground running. This is a good thing for innovation as it allows flexibility, creativity, and competitiveness within the industry which can benefit traditional companies significantly.

“It’s because they’re addressing pain points that affect everyone in their industry. In the marketplace of ideas, innovation often yields maximum benefit to all stakeholders: businesses, consumers, and investors. So if you ever hear, ‘That’s the way it’s always been’ as a reason for why an industry operates as it does, you can safely guess a startup is coming along with a major innovation in tow.” says CoLoadX.

“The logic is simple: if innovators like Amazon, Convoy, Transfix, and others are focused on solving “last-mile” delivery problems, then it’s obvious that someone is going to have to solve the “first-mile” problems of logistics,” they added.  Shippers and manufacturers need to get their product out quickly. Not only does this require a more efficient supply chain, but it also creates a happier end customer. Take a look at the European construction companies, for example. Their supply chains have been changing and, more than ever, they need to have access to materials in a timely manner to do their jobs. They don’t necessarily have the luxury of waiting for a truck to come whenever available to deliver materials.

Bottling companies and breweries also bring about different challenges. Beer needs to be shipped carefully to avoid spoilage. Retailers need to be able to send back expired bottles to ensure freshness.  Therefore, with today’s technology, logistic service providers can help companies track such sensitive activities quicker, more efficiently, and without incurring high costs.

Industry Pain Points

In order for the industry to run more efficiently, addressing pain points are essential. Digital solutions enable traditional freight forwarders to address some of the industry’s troubles and help their customers perform more efficiently. Some of these pain points include:

  • Time and money lost on brokering capacity and rates
  • Manage peak seasons
  • Finding carriers for orders that their trusted carrier network is unable to cover

This is, of course, by no means an exhaustive list. There are a number of industry-wide pain points such as visibility, flexibility, and agility that will always need to be improved upon!

Merging the Old and the New

It might seem like the disruptive digital companies, are out to wipe out the traditional forwarder, but that couldn’t be further from the truth. After all, with the rise of freight forwarding, it will stand to reason that business will be easier to drum up. In fact, InstaFreight was specifically designed to fix the above pain points and create smoother processes in a sensitive and logistically focused industry.  

  • Traditional freight forwarders can find extra capacity whenever they need 24/7
  • May capitalize on technologies’ miscalculation of freight rates and access well-paying jobs
  • May find loads to better utilize their trusted carrier network
  • Can step into new businesses such as B2B or B2C consolidated cargo movements
  • Can utilize extended consolidated cargo network
  • Improve customer satisfaction by using high tech technologies to better track and trace deliveries
  • Can pass on/enjoy benefits such as payment of invoices within 72hrs

InstaFreight’s solution provides the much-needed visibility in all freight movements. It also takes on the administrative tasks that are involved allowing businesses to focus on their core business, serving their customers.

Redefining European Road Freight – Consolidating Freight

Consolidating Freight

According to the Eurostat office, in terms of tonne-kilometers, the European road freight transport market was at its highest point in 2015 since the 2012 decline. The market increased 2.2% from 2014 and is expected to gain additional growth in 2016 and 2017 because of improving economic conditions and the growth of e-commerce.

The Changing European Road Freight Market

However, as noted by Hans-Jorg Hager, former board member of DB Schenker at the 2015 DVZ-Cargo Symposium, “One-way traffic and part charters are increasing. This makes it difficult to find profitable opportunities for solid, comprehensive production networks.” While Mr. Hager was speaking in reference to the one-way utilization of trucks, it is an issue all road transport providers face throughout Europe, and as a result, customers are impacted by unnecessary high rates and extended delivery times.

As such, freight providers are optimizing traditional hub and spoke networks to one that includes various bundling concepts across Europe in order to create a Pan-European network. Ewald Kaiser, Chief Land Transport for Schenker AG observed at the 2015 DVZ-Cargo Symposium that the cargo industry was in a ‘sandwich position’ between the parcel business and part load networks. He said, “Volumes are moving increasingly in neighboring countries and niche markets.”

Indeed, business-to-consumer (B2C) and business-to-business (B2B) deliveries are colliding for freight providers. Groupage and logistics provider, Cargoline has observed this change. According to its managing director, Jorn Peter Struck, B2C deliveries now represents 12% of his company’s business and continues to rise. However, B2C shipments often cause more effort. On average, freight providers have to call 1.5 to 2 times per shipment only to make a delivery appointment.

Consolidating Freight

As freight providers invest in network optimization, one option for businesses to consider is freight consolidation. A practice that’s been around for quite some-time; however, due to lack of visibility in shipments and labor-intensive processes it has not been a viable option for some businesses.

The idea of consolidating freight is the distribution of various orders, typically from businesses with several orders per day, which are destined to numerous destination points in a particular geographic region. Within a consolidated load, one customer may have a single pallet whereas another may have five pallets that need to be delivered within a geographic region all on the same truck.

In general, consolidated freight ensures not only a full truckload, and thus reduced rates for shippers, but it also reduces the overhead expenses at a hub by leveraging fully equipped cross-dock facilities. In addition, this process also helps to reduce carbon footprints resulting in fewer trucks on the road and less fuel being consumed.

How InstaFreight Helps

InstaFreight’s solution provides the much-needed visibility in consolidated freight movements. Also, InstaFreight takes on the administrative tasks that are involved allowing businesses to focus on their core services.

The B2B process starts with booking shipments via InstaFreight with the order going to one of the company’s strategic partners, such as Cargoline. InstaFreight is digitally integrated with its strategic partner to ensure  no delays. The consolidated cargo network’s trucks are dispatched to pick up the pallets to take to a hub. At the hubs, the pallets are then consolidated with others and are transported to depots for final mile delivery. As a result, orders are processed and delivered through optimized lead times while providing reliable communications to the end customer.

Furthermore, as noted, visibility throughout the delivery process is provided through InstaFreight’s track and trace tool. Lastly, businesses are assured that the over 3,500 freight carrier partners of InstaFreight are vetted and meet the high standards that InstaFreight has set forth.

The service is available anywhere in Germany and many parts of the EU. To find out more how consolidating freight can benefit your business, contact InstaFreight at info@instafreight.de.

Why Fuel Consumption Reduction Technologies Are Going Unused

Fuel Consumption Reduction Technologies

It is a fact that passenger vehicles significantly outnumber the amount of trucks on the road. However, it is the trucks that make up the bulk of CO2 emissions. Given that these trucks are responsible for moving a majority of the freight to its final destination around the world, we have taken it to be something of a necessary evil.

Yet with new environmental policies aimed at curbing these greenhouse gas emissions going into effect, as well as the need for the average forwarder spending upwards of 32,000 € per year/per truck, it would seem that new technologies to improve fuel efficiency and reduce consumption would need to be developed. However, there are several such technologies already developed and on the market, the problem is, they are just sitting on the shelf.

The Reasons

Fleet fuel bills can be cut by as much as 5,700 €  per year by implementing these new technologies, according to a report from Transportation and Environment.

The study says, there are a number of different ways to boost efficiency. Many of them being left untouched, leaving a lot of untapped potentials to save money for trucking companies. Part of the issue is that it is simply cost prohibitive for many small trucking companies. While the technologies would eventually provide a solid ROI, many businesses feel uncomfortable investing in them due to high initial costs. Turbo compounding is just one example. Despite the fact that it can reduce fuel consumption by upwards of 3 percent per truck, less than 0.24 percent of new trucks are produced with a turbo-compound engine.

Another example is low resistance tires. According to MICHELIN, the fitment of these tires allows hauliers to save up to 1 liter of fuel per 100 km (a reduction of 2.66 kg of CO2 emitted over the same distance). It represents an average fuel saving of €1,610 during the first life of the tire. To put it in other terms, 20 percent of fuel consumption is based solely on overcoming rolling resistance. That equates to one tank for every five filled. The shocking truth is that low resistance tires are only seeing a 1 percent market penetration, despite being able to be retrofitted on existing vehicles.

In addition to the upfront costs, some other reasons are hindering the uptake and utilization of fuel reduction technology. In some cases, fleet owners simply do not have enough information on the product to understand its full use and function. Combined with a low utilization rate across Europe, the market cost remains prohibitively high.

Alternative Solutions

So if the technology remains blocked by market forces, what else can be done? After all, CO2 reduction compliance is on the horizon and will need to be addressed before companies start facing fines and penalties. In the interim, there is some solution that businesses can utilize now that will help raise efficiency while reducing costs.

Raising Rates

As we talked about it in one of our recent posts, increasing prices would force companies to think more about their logistics and how they utilize their assets. If business slackens, the increased pricing will provide a safety net for the trucking companies. Conversely, companies who are improving their logistics would find that there are more opportunities to make money, whether it be through fuel reduction technologies, improved efficiency of staff or better planning of truck movements.

Utilizing a TMS

Transportation Management Systems (TMS) are a very effective way of improving logistics. Not only does it provide actionable data to reduce dead hauls and empty trucks, but it can improve the supply chain overall. When using a TMS paired with a freight forwarder, it removes a number of concerns that a trucking company would ordinarily have to deal with on their own. Payment, for example, can be an exasperating process for a trucking company as shippers prefer to pay after they have made their money on the freight. For a trucking company, having to wait to get paid on a job ties up capital that can be better spent elsewhere. Using a digital freight forwarder that ensures the trucking company gets paid in hours instead of months means that the trucking company can spend less time arguing and more time getting the job done.

How InstaFreight Can Help

It is true that TMS technology and digitalization of freight forwarding businesses will never actually reduce a truck’s fuel consumption. What it will do, however, is make a trucking company smarter about how it operates.

We at InstaFreight have taken it a step further. We digitalized the management of road freight transportation. The technology matches freight with readily available capacity. As a result, it reduces empty running, trucks emissions and increases efficiency for both haulier and shipper. What used to take a considerable amount of time and phone calls can now be done with just a few clicks.

Find out more about how InstaFreight can help improve your logistics and save you both time and money.