With the rise of e-commerce, is the European trucking industry falling behind in this technological revolution?
Imagine a large manufacturing company called Challenger United.
Challenger United uses a variety of transportation services: domestic and international, national and international, LTL and FTL, by sea, air and land.
The company has an annual logistics budget of €250 million per year, half of which is spent on European FTL transportation, which consists of 300-350 full truckloads per day.
Challenger United has already modernized its operations and has taken the initiative to consolidate its network of carriers, from 200 carriers to 50 companies, some of which use subcontractors.
What could go wrong?
How will Challenger United be notified of problems on the road?
How do they plan and forecast their supply chain?
More importantly, how will they combine modern manufacturing methods with their outdated logistics partners?
Just like in the past, if there is no truck, Challenger United has to call someone named Joe and ask when the truck will arrive. Joe may also not know when this will happen, regardless of his answer of “in 15 minutes.” With more than 300 uploads a day, that’s a lot of phone calls — and a lot of uncertainty. This is no longer acceptable.
What is the modern solution?
Challenger United cannot continue to operate without the benefits of real-time visibility into its end-to-end supply chain. By investing in technology and IT, logistics companies can help improve customer efficiency by providing data directly.
However, this only changes the problem, without solving it. If the 50 logistics suppliers operate with their own unique IT systems, instead of contacting 50 people, Challenger United needs to integrate their supplier IT solutions with their own. A level of integration that may not be economically viable for an IT team already under budgetary pressures.
This will not be possible unless an intelligent digital interface is developed, used by shippers and transportation providers. Fortunately, someone has already done it, and it has worked – congratulations to our partners like Sixfold, Project 44 and others for developing this next step in modernizing our trucking industry.
This interface is useful for shippers – because although Girteka Logistics is based on digital technology, today we cannot handle EDI or API applications for several thousand customers simultaneously.
A fragmented and old-fashioned industry is ripe for digitization
Challenger United faces more challenges than just real-time visibility. They need to address coronavirus, Brexit, the EU mobility package, driver shortages, demands on headcount, cost cutting and more.
In the world of logistics, many shippers still often write a separate email for each transportation order.
When Challenger United’s global purchasing team purchases computers, company vehicles or new factory equipment, they typically encounter industries with 5 to 10 global suppliers that together represent 80 to 90% of the global market share.
Land transport and European logistics are not.
The European trucking industry is highly fragmented, with over 90% of companies operating fewer than 10 trucks and only 1% of companies operating more than 50 trucks.
Challenger United can choose one of the top 10 global freight forwarders, if they decide not to work directly with a trucking company.
These companies mostly prefer the light truck model, and have a combined market share of only around 10.8% of road transport in the EU. So, even here we have great fragmentation of the industry.
The race towards digitization of the logistics industry
Our industry – the trucking industry – is old-fashioned. Imagine if Uber had to manually facilitate everything behind the scenes, matching all those cars, drivers, and passengers. It won’t be Uber. The industry they disrupted would be the taxi. Our industry is not Uber. No digital platform, and no freight forwarder, can change this alone.
We are old-fashioned in almost all aspects of transportation. Trucks, trailers, employees, the entire logistics industry is adopting digital technology at a much slower pace than other industries, which poses a huge risk to all market players.
On an average day, Girteka Logistics has 2,200 departing trucks and 2,200 arriving trucks, imagine the amount of stops for fuel, rest, navigation, communication with customers, arranging documents, laws and regulations to follow, and much more that is required to do so. Imagine the IT requirements and resources needed to implement this seamlessly.
Imagine the challenge of motivating, encouraging, educating and improving the work of 14,000 amazing fellow truck drivers with 7,500 workplaces in the truck cab. Imagine the challenge of having 14,000 truck drivers generally working alone, who are Girteka’s frontline ambassadors in over 30 countries every day.
The question we face every day is can we use digitalization to provide real-time visibility and motivate our driver ambassadors in the warehouse?
I believe that new technology can and will provide safer and more profitable logistics services. I believe our people are the key to our success, along with technology, and I believe technology and innovation are the core of the Shipper’s future success.
Meet our customers’ digital expectations
At Girteka Logistics, we can’t reach our mission, purpose and destiny with yesterday’s technology, which is why we continually invest in the greatest people and the best technology.
The trucking industry – old-fashioned. But Challenger United and others have dreams and expectations of real-time visibility and digitally-enabled transportation and logistics suppliers, and they have expectations of greater capacity from fewer sources.
Innovation and technology will become a catalyst to meet market demand for strategic digital mobility services in Europe. Transport companies play a critical role as data providers, connecting the dots along the supply chain.
How can we deliver not only your goods, how can we meet your expectations?
This is difficult when truck owners are small businesses with 1, 10, 100 trucks or in very rare cases 1000 trucks, potential profitability and willingness to invest in growth, new technology, new business models and environmental improvements remains a major challenge.
Girteka Logistics recognizes the opportunity for continued and sustainable organic growth in our industry, driven by end-to-end digitalization. To serve Challenger United, stay at the forefront of the industry and be a clear leader, we will continue to increase the productivity of our business and streamline our internal operations. Laying the foundations for unparalleled quality in transportation management for our clients.
World Economic Forum analysis suggests there is $1.5 trillion of value at stake for logistics players and a further $2.4 trillion in societal benefits as a result of the digital transformation of the industry through 2025.
How fortunate we are to be working in our industry at this time, when the community and companies like Challenger United are leading, pushing, demanding and supporting more advanced solutions and services combined with a strong environmental focus – and we are so glad we can be a part of this journey.
In your work, do you find digital transformation to be a threat or an opportunity?
Image source: Rab Lawrence
