Digital challenges for the European trucking industry
You can read this article in 8 minutes
With the rise of e-commerce, is the European trucking industry lagging behind this technology revolution?
Imagine a large manufacturing company called Challenger United.
Challenger United uses a variety of transportation services: inbound and outbound, national and international, LTL and FTL, by sea, air and road.
The company has an annual logistics budget of 250 million EUR per year, half of which is spent on European FTL transportation, which consists of 300-350 full truck loads per day.
Already modernizing their operations, Challenger United have taken the initiative to consolidate their carrier network, from 200 transport companies to 50, some of whom use subcontractors.
What could go wrong?
How will Challenger United be notified about problems on the road?
How do they plan and forecast their own supply chain?
Most importantly, how will they combine their modern manufacturing methods with outdated logistics partners?
Just like in the past, if a truck is not there, Challenger United has to call a guy named Joe and ask him when the truck will arrive. Joe may not know when this will happen either, regardless he replies, ‘in 15 minutes’. With over 300 loads per day, that is a lot of phone calls – and a lot of uncertainty. This is no longer acceptable.
What is the modern solution?
Challenger United cannot continue operating without the benefits of real-time visibility of their end-to-end supply chain. By investing in technology and telematics, logistics companies can help improve customer efficiency by providing data directly.
However, this only shifts the problem, without resolving it. If the 50 logistics suppliers operate with their own unique telematics systems, instead of calling 50 Joes, Challenger United needs to integrate their supplier’s telematics solutions with their own. A level of integration that would be economically unviable for an already budget squeezed IT team.
This would not be possible unless a smart digital interface was developed, utilized by shippers and transport providers. Luckily, someone already did this, and it works – congratulations to our partners like Sixfold, Project 44 and others for evolving this next step in modernizing our trucking industry.
Such an interface is beneficial for shippers – because even though Girteka Logistics is digitally driven, today we could not handle EDI or API applications for several thousand customers simultaneously.
A fragmented and old-fashioned industry ripe for digitalization
Challenger United face more challenges than just real-time visibility. They need to tackle COVID-19, Brexit, EU Mobility Package, driver shortage, demands on headcount, cost reductions and more.
In the world of logistics, many shippers still often write a separate email for every single transport order.
When the global procurement team of Challenger United buy computers, company cars or new factory equipment, they typically face industries with 5 to 10 global suppliers that combined account for 80 to 90% of the global market share.
European road transport and logistics is NOT like that.
The European trucking industry is highly fragmented, with more than 90% of companies operating less than 10 trucks and only 1% of companies operating more than 50 trucks, that’s ultra-fragmented.
Challenger United could select one of the 10 biggest global freight forwarders, if they decided not to work directly with a trucking company.
These companies most often prefer a truck asset-light model, and they only have a combined market share of around 10.8% of EU road transport. So even here we have significant industry fragmentation.
The race to digitalize the logistics industry
Our industry – the trucking industry – is old fashioned. Imagine if Uber had to manually facilitate everything behind the scenes, match all those cars, drivers, and passengers. It would not be Uber; it would be the industry they disrupted, a taxi. Our industry is not Uber. No digital platform, no freight forwarder can on their own easily change this.
We are old fashioned in almost all aspects of transportation. Trucks, trailers, and employees, the entire logistics industry is adopting digital at a much slower pace than other industries, at great risk for all players in the market.
On an average day Girteka Logistics has 2 200 truck departures and 2 200 truck arrivals, imagine the amount of stops for fuel, rest, navigation, customer communication, having the documentation in order, laws and regulations to follow and much more needed to do this. Imagine the IT requirements and resources needed to implement this seamlessly.
Imagine the challenge how to motivate, encourage, educate, and optimize the work of 14 000 amazing truck driver colleagues with 7 500 uniquely located truck cabin workplaces. Imagine the challenge with 14 000 truck drivers who generally work alone, who are Girteka’s front line Ambassadors in 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 at the warehouses?
I believe new technology can – and will deliver safer and more profitable logistics. I believe our people are key to our success, combined with technology, I believe technology and innovation are at the core of future shipper success.
Meeting our customers digital expectations
In Girteka Logistics we can’t reach our mission, our goal, our destiny with yesterday’s technology, that’s why we continually invest in the greatest people and the best technology.
The trucking industry – is old fashioned. But Challenger United and others have dreams and expectations for real-time visibility and digitally driven transport and logistics suppliers, they have expectations for more capacity from fewer sources.
Innovation and technology will become a catalyst to meet market demand for strategic digital transportation services in Europe. Transportation companies have a critical role to play as data providers, connecting the dots along the supply chain.
How can we deliver not just your goods, how can we deliver your expectations?
This is difficult when truck owners are small companies with 1, 10, 100 or in very, very rare cases 1000 trucks, then the potential profitability and appetite to invest in growth, new technology, new business models and environmental improvements remains a big challenge.
Girteka Logistics recognizes the opportunity for continuous, sustainable organic growth in our industry, driven by end-to-end digitalization. To serve Challenger United, stay ahead of the Industry and be a clear leader, we will continue to increase our business productivity and streamline our internal processes. Laying the foundations for an unrivalled quality of transportation management for our customers.
World Economic Forum analysis indicates that there is $1.5 trillion of value at stake for logistics players and a further $2.4 trillion worth of societal benefits as a result of digital transformation of the industry up until 2025.
How lucky we are to work in our industry at this time, society and companies like Challenger United are leading, pushing, demanding and supporting the acquisition of more advanced solutions and services combined with a strong focus on the environment – and we are so happy that we can be a part of this journey.
With your business, do you find digitalization is a threat or an opportunity?
Photo credit: Rab Lawrence