Following a whirlwind 5 years, sennder’s recent acquisition of Uber Freight Europe has propelled the company to new heights – bringing them closer to their goal of becoming Europe’s #1 road-trade forwarder in the full truckload segment.
Fresh from securing the acquisition of Uber Freight Europe, we met with CEO David Nothacker to talk about the freight market in 2020 and beyond, sennder’s ambitions, carbon neutrality and driver welfare amongst others.
Key insights from this Trans.INFO exclusive:
● sennder plan to become the largest road-freight forwarder in the full truck load [FTL] segment
● Uber’s technology did not allow the company to get a strong grip of the European Market
● Uber and sennder working on defining API standards for road freight in North America and Europe
● cost of sennder being carbon neutral not as high as previously thought
● sennder currently working on a TMS
● sennder looking at expanding into the UK, Scandinavia and Eastern Europe
● Scania and the other OEMs and big forwarders “will have to reinvent their business
model”
Hi David, thanks for taking the time to speak to us here at Trans.INFO.
Looking back, it’s been a whirlwinding five years since you started sennder. Just what has it been like steering that ship – particularly given the way you have scaled the company during this time?
At the end of my MBA I decided not to return to my career in management consulting. Instead, I moved to Berlin with my MBA classmate to start sennder 1.0. Unfortunately, it took one year to work out that sennder 1.0 didn’t work; we tried to do same-day parcel delivery across regions using FlixBus at the last mile – a crazy idea from today’s perspective. That experience brought me to a very difficult moment in my life in which we went to sign a term sheet for new investors, only to find out five minutes later that my co-founder had decided to leave the company.
After convincing the investor to give me the funds, I restarted sennder with my now two new co-founders and a clear vision to digitalize road freight logistics. Today sennder is a team of over 550 employees with seven offices – it has been an exciting journey!
One of things everyone is understandably talking about is the deal with Uber. How did that come about?
A year ago, I was in San Francisco, where I met Bill, one of the co-founders of Uber Freight. We really hit it off and a couple of months after, Uber reached out to us and said, “Hey, let’s talk about forming a partnership, joining forces”. That discussion took a bit longer than expected but ended up in us acquiring Uber Freight’s European business.Obviously, there are some organisational and cultural differences between the US and Europe.
Do you think that was one of the reasons that Uber [in Europe] became available, as they arguably didn’t have the success that they had anticipated?
That definitely plays a big role, but I think that one of the biggest challenges that Uber Freight faced was that they did not have a tech team that was developing technology for the European market. Just to give you one example, Uber Freight in the US was mainly based on an app, where drivers and owner-operators could accept upcoming loads, and therefore the next transport orders.
In Europe, as you might know, there are a lot of smaller, family-owned trucking companies where the employees do not decide which load to take next. Uber’s technology worked in America but in both Northern and Eastern Europe, using technology designed for the owner/operator just didn’t work – the point of contact is in fact on the carrier side. Therefore, after seeing our technology, which had been designed for the European market, they decided the best way to conquer Europe was to join forces and to focus on sennder’s technology.
I presume there are some technological assets on Uber’s side that you can benefit from as well?
Reflecting on their past experiences and the learning points is extremely valuable for us. Looking forward, the plan is to develop technology and sales products together.
On the technology side, we are already talking about defining API standards for road freight, so that big shippers in North America and Europe have the same way of communicating digitally with forwarders. That’s one example; the other one is on the sales-product side, where we are developing green products like CO2-neutral transports. This will enable enterprise shippers to use renewable fuels with more modern technology.
Just touching on that point, we’ve seen a lot of talk recently about the use of electric trucks and hydrogen-powered trucks. What are your plans for keeping emissions as low as possible?
The technologies that you mentioned are extremely interesting and I’m strongly convinced that over the next three to six years we are going to see large-scale commercial use of these technologies, which will have a major impact on cO2 emissions – specifically rate reductions of over 50-60% compared to the most modern technologies that we have today.
At sennder, of course, like the rest of the market, we do not yet have access to this very exciting technology. Therefore, our current focus is in three main areas.
Firstly, the way we reduce CO2 emissions is by using vehicles that use gas such as LNG and CNG as an alternative, which requires different engines. This source of fuel we use especially with our clients in Northern Italy, as well as the biofuels and biodiesels, such as HVO, that are used in the Netherlands and in Scandinavia.
We are also able to reduce CO2 by using our algorithm to be more efficient in combining loads, thereby reducing ’empty kilometers’ that would have emitted CO2 unnecessarily. If the truck is full, we reduce the CO2 emissions. Nevertheless, we can still see this problem on a smaller scale, if I’m to be completely honest. However, in Italy where we have a big joint venture with Poste Italiane (with 100 million euros in transaction volume), we can really see how we can increase efficiency and reduce cO2. It’s also one of the promises that we made to Poste Italiane when we embarked on the venture.
The third way of reducing emissions is through carbon offset. To have emission-neutral transports, we can offset, which would typically be opportunities to fund projects that reduce cO2 emissions such as supporting a project that plants trees in South Africa for example, which in turn absorbs cO2.
And would you be looking at being carbon neutral or carbon negative in the future?
We are definitely exploring that and interestingly, looking at the analysis, the cost is not as high as I anticipated.
We are still finalizing this analysis to take this exact decision, hopefully very soon. To me the best and easiest way to achieve carbon neutrality is to offset the carbon. We are now talking about a 3%, maybe 4% in additional expense onto the transaction volume. That’s why we are looking at a way to optimize all our projects and push alternative fuels. This is our ambition and we are trying to define a strategy to achieve this goal.
Talking of future ambitions, given your growth in recent years and the acquisition of Uber and other entities, people are now looking at sennder and thinking how far they can go. What are your ambitions for the company in the next 5 years?
Our ambition is to become the largest road freight forwarder in the full truck load segment, with at least a billion, ideally 1.5 billion euros in revenue. We also aim to expand and succeed in segments that are next to the full truck load segment, such as less than truck load [LTL], as well as leveraging technology to serve different customer needs – for example via a carrier transportation system or TMS, which we are currently developing.
Do you have your sights set on becoming another ‘household name’ in the logistics industry by being right up there with other German companies like DHL and DB Schenker?
We are already competing with them today. However, our ambition is to become the largest in Europe, at first with the truck loads, but then we are definitely going to play in their league and eventually overtake them not only in terms of revenue but also in the technological sphere and naturally profitability.
In terms of your expansion in Europe, where are you looking to make inroads?
I think we will definitely see continental champions in road freight. In Europe specifically, I believe there will be two continental “champions” because in every continent, as I discussed earlier [regarding Uber], the market is a little different. In order to win in Europe, we shall follow the strategy of decentralizing our sales and operations teams by building offices and local teams. We want to expand this process further. Why? Well, at the end of the day, logistics is still very much a relationship driven business – you still have to connect with people, you have to meet them and look them in the eye.
For example, we sometimes get sausages from our carriers for Christmas as a thank you, which just shows how close and personal that relationship is. We certainly have to go local; we have to build these relationships in the different markets in order to be a pan-European Champion, which we have every possibility to be. That’s why today we have seven offices across Europe, our latest opening is in Amsterdam and early next year we will open in Wroclaw.
When it comes to other offices in addition to Berlin, the next targets are the United Kingdom, Scandinavia, as well as some other Eastern European countries such as Romania and potentially Ukraine. These are countries that are extremely interesting for us in the next two, three years. Beyond that, we can think of going even further east.
In many people’s eyes, the coronavirus pandemic has acted as a catalyst for the digitalization of supply chains. Are we going to see any revolutionary changes come our way in the next few years?
I hope so – the working from home approach is one of them. I think the pandemic has shown that it works. The way we are going to work and the way we are going to interact will definitely change. I think we can see that already today as we learn to adapt to the situation.
That said, if you ask me what technologies over the next five or ten years will fundamentally change the industry, they will probably not be facilitated by COVID-19.
One possible future development is the possibility of manufacturers building their own self-driving trucks, thereby grabbing themselves a share of the freight market. How could companies like sennder react to such a change in the market?
That’s what excites me most about logistics. My background is not in logistics, I ended up in this industry by chance, but I learned to love it. One of the things that excites me about the future is exactly the technology that you mentioned – autonomous trucks. We can debate whether it will take five, ten or 30 years for autonomous trucks to come, but I think that we all agree that they will arrive before cars.
The interesting point is not whether it will take five or ten years to happen or whether traditional trucks will operate between the highway and the warehouse, but that the industry will fundamentally change.
Over the next 20 to 30 years a lot of small, family-run carriers will have to evolve or find a new role compared to what they do today. This also means that truck manufacturers such as Scania will potentially lose those customers as small trucking companies will be able to buy a truck, hire a manager and a driver and optimize costs by changing oil at the nearest stop.
Then, exactly as you said, Scania and the other OEMs and big forwarders will have to reinvent their business model. Will they only produce the assets? Will they produce the assets plus the autonomous technology? Will they sell an operations service, e.g. one euro per kilometer? Or will they be a full forwarder and take care of the loads?
I think nobody has yet answered this question and there’s probably more ways in which the OEMs and the other players can evolve themselves, but there’s one thing that I’m sure about and that excites me is that this change is happening. We at sennder can have a major impact on future generations; there are two things that can play a key role in this new period, or transition to a new industry setup. One is the new technology to efficiently operate autonomous and nonautonomous assets. The other thing that we’re doing is building customer relationships to fill autonomous and nonautonomous assets.
Just to finish, I thought we’d touch on something on a human level. At the moment some countries such as the UK are experiencing driver shortages amid a spike in demand for deliveries, while drivers are heroically putting themselves at risk by working in environments that could expose them to covid-19. However, some forecasts predict that there could be mass redundancies in the new year as demand subsides. Do you think the industry needs to take action to avoid an image-damaging case of workers who helped us through the crisis being left unemployed and in financial trouble?
I think it’s the responsibility of all of us to make that happen and to take action. We see today that a lot of truck drivers have left their jobs because they were underappreciated.
When we realized at the early stage of the coronavirus crisis that we suddenly had this over supply of capacity, as a lot of factories, especially in the automotive industry, had shut down their production, at a certain point we said that we were going to work only with small trucking companies, not with large fleet owners. We imposed restrictions on our systems to ensure that we only work with smaller companies, accordingly, building relationships and partnerships with them.
If you talk to some of the carriers who work with us on a regular basis, what we don’t ask of them is to support us only when things are tricky for us, for example in peak seasons like Christmas, but also in January and February – we try to distribute their work in a fair way between them and our strong partners. This is something that we focus on at sennder, an initiative. It’s something that comes from us and as managers we do all we can to do things in a fair manner.