Bhushan Kaki is our head for Logistics e-Marketplace. With more than two decades of expertise in the logistic industry, he has been an active participant in studying the rapid changes occurring in the e-marketplace for the last few years. Bhushan shares his insights on the dynamics of the Logistics e-Marketplace.
While freight exchange platforms have existed for over a decade in logistics, there is a surge in the number of cloud-driven marketplaces matching demand and supply in a digitally seamless manner. How do you see them evolving further?
Primarily acting as demand and supply boards, marketplaces have come a long way. Digitizing logistics processes of price discovery, tendering, e-bookings, and service settlements are some of the crucial changes.
The current systems focus essentially on matching demand with supply, but the future lies in enabling technologies such as AI, ML, Blockchain, predictive analysis, probabilistic algorithms engine to provide on the fly custom-tailored data insights to a user for informed decision-making, offering a comprehensive analysis of spot rates, thereby reduced costs, achieve better service levels, enhanced efficiency, better control over cargo movement, maximize and resource utilization.
For instance, in the US, empty miles are estimated to range between 14 -20% resulting in a loss of around $3.3 billion in 2016 for empty runs. An estimated 80 billion km are used by empty trucks. In India, with over 5.6 million trucks, of the average 80-90 trips that each vehicle undertakes in a year, capacity is under-utilized to the extent of 30-35% on the return leg with the same scenario playing across multiple geographies.
Marketplaces that are quick to adopt emerging technologies could have a first-mover advantage. The present process of matching demand with capacity is lop-sided, in the sense, the freight cost is driven by the shipper who has multiple options to select a vendor with the lowest price. Lower freight costs need not necessarily translate into lower cost of the final product. Efficiency levels, access to tracking cargo, vehicle movements, ease of documentation, competence in terms of cargo delivery timelines, risk mitigation measures related to cargo safety during movement. All contribute to a way to the pricing of the final product being moved.
Our solutions address this scourge by using technology to match demand with capacity (as against the traditional pricing), ensures capacity optimization for the service provider (including identifying profitable freight) and optimized costs for the shipper, building trust between all stakeholders.
Last year has been a year of lessons and challenges for the Logistics industry. Did the marketplace models change or espouse during the pandemic?
The pandemic has a significant impact on supply chains, leading to several logistic major reshaping their operating models and increasing their efficiency and resilience.
There was a direct impact on the industry with the labour shortage, fragmented supply lines, patchy information infrastructure, capacity under-utilization, increased freight rates. E.g. in India, the outbreak led to a shortage of drivers resulting in piled up containers across multiple ports.
The market was further solidified by friendly government policies which upsurge the need for transparent, flexible, and easily adjustable logistics services fostering the foundation of digital brokerage platforms matching the logistics industry’ different demands, bringing digitalization to the forefront. The role of fulfilment centres and intermediate warehouses are also likely to evolve with a major thrust on on-demand warehousing in the next 3 -5 years.
The e- Marketplaces provide centralised information on rates services of different logistics providers and digitally tailored to meet the needs of each customer. These intelligent marketplaces (measuring freight averages over time) are evolving to potentially digitalize the entire end-to-end logistics process of the supply chain. Logistics providers can actively participate in these platforms, ensuring their services not only remain price competitive but highly flexible with optimized utilization.
There are two aspects to a logistics e-marketplace – Freight exchange and Logistics Control Tower. Most models present focus on Freight exchange only. Can you elaborate in Control Tower and how it makes the e-marketplace a holistic platform?
The e-Marketplace as a platform connects service providers and service receivers in a single frame marketplace. It functions more as freight exchange platforms, where price discovery plays a crucial role in connecting stakeholders for shipment orders. However, beyond this, stakeholders engaged in the trade are involved in executing other activities related to the shipment which more or less stays out of the scope of the marketplaces.
Though some marketplaces allow limited tracking at critical milestones, complete visibility on the shipment is still elusive cargo has to necessarily pass through multiple stakeholders. This is further compounded by the fact that corporate functions in siloes and their view of the shipment is restricted primarily to their jurisdictions.
The Control Tower kicks in to complement the marketplace bringing together different functional perspectives in a single window. It ensures ease of tracking cargo across multiple stakeholders and multimodal movements, ease in generating and sharing documents and data electronically with multiple stakeholders in real-time, enhance cooperation with stakeholders, integrate with different stakeholders in the supply chain negating disparities in data streams across multiple legacy systems. It aligns responsibilities and ensures data is read in the same way across organizations. It assures improved data quality amidst updated data in real-time. It is available to the users to take corrective action for any impending bottlenecks bringing clarity and uniformity to all stakeholders.