In case you were in any doubt, this past year taught us that the rules for success moving forward won’t be the same as those from the past. This is particularly true in transportation management. In research we recently conducted in partnership with Transporeon, we asked over 300 shippers, carriers, and other transportation stakeholders from around the world how much room for improvement they believe still exists in the way transportation processes are designed and managed. What was their response? What are the top desired outcomes for shippers and carriers moving forward? And how can technology help achieve these outcomes? Those are some of the key questions I discussed with Stephan Sieber, CEO at Transporeon, during a recent episode of Talking Logistics.
Lessons Learned by Shippers and Carriers in 2020
The year 2020 is likely to go down in history as a turning point in how shippers and carriers approach transportation management. I asked Stephan to share what lessons they learned during this transition. Stephan suggested that 2020 really had two phases—before and after COVID-19 took hold. The way forward, Stephan says, “is all about real-time insight and the ability to act.
“Insight is more than real-time visibility,” Stephan continues. “It is also having a real-time understanding of the market and then being able to act on that insight. Because the world has gone through unprecedented change, volatility, and ambiguity.
“Our customers reacted in different ways when the virus first struck in March and April than when the second wave hit. Initially, they were just trying to survive. In the second wave it became a much more dynamic step-by-step process of moving forward. Understanding capacity and pricing indices and adapting transport assignment strategies in the short term became much more important. For example, we’ve seen a much greater use of the spot market versus contract carriers due to the uncertainty in the market. Responsiveness, flexibility, and adaptability have become much more important.”
Room for Improvement in Transportation Management
In the survey we conducted with Transporeon, almost two-thirds of respondents said there was significant room for improvement in transportation management. I asked Stephan what some of the symptoms of this are.
Stephan notes that multiple surveys show that despite advances in visibility and transparency, there is still considerable waste and idle capacity in the system. For example, in North America, 20% of the 17 billion operating miles driven in 2019 were run empty, and there are similar statistics in Europe [see research report for more details and sources]. Drivers also say they spend 2.5 to 3 hours per week in detention or waiting time. There is also an environmental impact when you also look at the missed opportunities to reduce COs emissions.
“The European road transport market is about 200 billion euros per year,” says Stephan. “If you say there’s 25 to 30 percent waste in these processes, that translates into 60 billion euros of waste per year, and similar statistics apply in the US. There is substantial value we can capture if we can get our act together and solve this problem.”
In the survey we asked shippers and carriers what their desired outcomes are in attacking these problems. I asked Stephan to elaborate on their responses.
Stephan notes that, “Everyone agrees that better real-time visibility to demand, rates, and capacity would help. But shippers, carriers, and 3PLs have slightly different views. For shippers, it’s mainly about getting their stuff to their customers quickly and reliably, whereas carriers look at it from the perspective of how they can eliminate empty miles and wait times. But they all want to eliminate manual effort, paper, and broken communications. This calls for digital tools and platforms, and the network effect the research report calls for.”
The Power of the Network
Following on from Stephan’s comments above, I asked him why the network effect is so important. He says, “With the network, everybody has instantaneous visibility and access to the data. This is critical in the volatile market in which we are living, so all parties can collaborate across the entire end-to-end process. Digital platforms allow shippers and carriers to take advantage of this real-time data and insights to adapt their assignment and sourcing strategies, as well as down at the tactical level of dock scheduling, for example, in a collective effort across the network to drive down waste.”
How Technology Enables the Network Effect
I asked Stephan how technology enables the benefits of a digital transportation network. He describes it in terms of multiple levels of interaction between technologies and services, and agreed-upon rules and standards, to form a community that can best match demand with capacity. Likewise, Stephan discussed the possibilities going forward to turn digital transformation from an obligation to an opportunity to improve business outcomes. For all of Stephan’s insights and advice on these topics and more, I encourage you to watch the full episode and download the research report for additional context. Then post a comment and share your own perspectives on this topic.