Digitalisation of Freight

Transcription

1 Title Digitalisation of Freight A critical review

2 Table of Contents 1. Recent Investments in Freight Digitalisation 2. Digital Business Models Segmentation & Examples 3. Technologies 4. Challenges & Opportunities 5. Critical Review 6. Cagefight Predictions Factfactory.ch 2

3 Digital Initiatives & Investments How much money is being invested in digital players? Digital Initiatives and Investments

4 Recent Investments in Freight Digitalisation - Jan 2012 to Sep 2017 Factfactory.ch 4 Source: Boston Consulting Group, Feb 2018

5 Digital Business Models Segmentation and Overview Digital Business Models

6 Digitalisation of Freight - A critical review Segmentation No Standard = Different Segmentations Factfactory.ch 6

7 Segmentation - A simplified approach Our approach to segmentation Factfactory.ch

8 Freight Digitalisation - Still a moving feast HOWEVER, freight digitalisation, remains a moving feast! Looking at one segment of business models only, takes it too short. There are hybrid models already today, eforwarders trying to look like marketplaces, and efficiency service SaaS providers that have an agenda beyond providing software solutions. Learning from the data of their customers. Same caution for transport mode or market scope, those focusing to solve trucking in the US today, might tomorrow be entering the airfreight space. Factfactory.ch

9 Technologies The hammer of the 21st century. Technologies

10 Technologies Big Data Analysis IoT Artificial Intelligence & Machine Learning Blockchain Technology (we can do a 2 hour session on that subject alone) Advanced Communication Tools, e.g. Conversational Commerce > However, most technologies to digitalise freight, are available since 10+ years. e.g. WWW, cloud & mobile computing, API, etc. Factfactory.ch 10

11 Technologies - The Science Fiction Section Just 3 examples Autonomous vehicles Imagine, you are a road haulier, efficient disposition and management of trucks, drivers and cargo were your strength today. 3D Printing Imagine, your core business today is urgent spare part shipments. New transport modes, e.g. Hyperloop Imagine, you are a regional cargo airline. Factfactory.ch 11

12 Digitalisation of Freight - A critical review Challenges and Opportunities for Digitalisation Challenges and Opportunities

13 Challenges & Opportunities Challenges Opportunities People Speed Standards Efficiency Frontend vs. Backend Target market growth B2B vs. B2C Transparency Broadness of the business Factfactory.ch 13

14 Challenges - People - Focus & Change Management People "My concern, however, is that decision makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future. Professor Klaus Schwab Founder and Executive Chairman of the World Economic Forum Factfactory.ch 14

15 Challenges - Lack of Standardisation Lack of Standardisation Optimisation in silos Some examples: China Customs - System Unification eawb Progress, 7 years = 50% UNECE / EDIFACT Successor? ISO digital payment standards Administrative cost Courier shipment vs. Freight shipment Factfactory.ch 15

16 Challenges - Frontend Focus vs. Backend Complexities FRONTEND Focus vs. Backend COMPLEXITIES Many disruptors have a Frontend focus, while backend complexities are the true challenge and source of inefficiency. Customer Digital Platform and Interface Analog/Digital Fire Fighting VENDORS / SERVICE PROVIDERS / CARRIERS Factfactory.ch 16

17 Challenges - Business to Business Particularities Business to Business Particularities Many ventures try to apply B2C models to the B2B driven freight industry. Some key differences: - Decision Maker not always the same person as the user. B2C - Convenience for a company is different than for a consumer. (e.g. Interface) - Legal, Risk, Data security play a different role. Factfactory.ch 17

18 Challenges - Broadness of the Freight Spectrum Broadness of our business The overall freight business has a comparably high complexity through different transport modes, different market particularities, specific legal regulations by country, commodity, transport mode, packaging, measurements, etc. The global point to point matrix, is close to infinite. A comprehensive solution is hard and it is easy to get lost in complexity. Factfactory.ch 18

19 Opportunities - Speed Speed Better data, better information, faster and better informed decisions. Instant quotations, instant feedback. Factfactory.ch 19

20 Opportunities - Efficiency Efficiency Efficiency comes right down to cost. Administrative cost of handling a shipment is still too high today. Courier business is the benchmark here. Factfactory.ch 20

21 Opportunities - Target Market Expansion Target Market Expansion Digital Sales, enables global selling of services that a company provides. Internationalisation without or with minimal physical footprint. Factfactory.ch 21

22 Opportunities - Transparency Transparency Not only on price and service offering. However customer ratings, bring a qualitative measure to the industry. Factfactory.ch 22

23 Critical Review Quo vadis? Critical Review

24 Critical Review - Disruptors vs. Incumbents Disruptors - need to disrupt Incumbents - need to adapt + Well capitalised often VC backed, scale focus + Low Entry Barriers (Software world) + Greenfield approach + New organisation models possible + Challenger advantage - Learning curve - Awareness and brand building - Operational Know How - Underlying Data Problems remain a challenge? Starting asset light, but might change? + Experience & deep understanding of complexities + Exception Management Expertise + Big Data + Geographic Footprint & Coverage + Established Brand Name and Reputation + Technological solutions can be copied + Assets & carrier capabilities - Geographic Footprint & Coverage - Existing organisation models under pressure - Challenges of changing large organisations - Legacy trap / Mindset Factfactory.ch 24

25 Critical Review - Disruptive Change or Evolution? Others have tried earlier, but failed or became niche solutions. Buying cargo is an old business model and never really worked sustainably. Customer loyalty in B2B is a different game than B2C. Source: Agility Factfactory.ch 25

26 Critical Review - Initiatives of Incumbents Incumbents are catching up, so if the only innovation is a nicer customer interface, they will adapt fast. Smaller forwarders are able to buy eforwarder packages moving their offering online. Factfactory.ch 26

27 Critical Review - Long-term value of a Technological Advantage? In a SaaS world, where technological advantages are difficult to protect, is longterm technological leadership possible at all? Will not at some stage a level playing field in terms of technology be achieved among the surviving disruptors and incumbents, making technology less of a competitive factor? Factfactory.ch 27

28 Critical Review - The Timeframe for Change, a key question Change of customer CUSTOMER / SHIPPER / BUYER requirements Freight Forwarder vs. Stickiness of legacy issues eforwarder Supply Chain Consultant How long will it take? Digital Market Where is the tipping point? CARRIER TIME Source: Fact Factory - Digital industry outlook TODAY Factfactory.ch 28

29 Critical Review - The Ethical Debate Man vs. Machine debate Regulation of online services & TAXES No doubt, a fully automated Supply Chain, based on available and foreseeable technology would be more efficient than what we have today, but will this be desired? Same quandary arises for many other industries. Factfactory.ch 29

30 Critical Review A lot of room for scepticism but make no mistake, the industry will change significantly and the cage fight of freight digitalisation is on. Factfactory.ch 30

31 Cage fight Predictions Future? Cage fight Predictions

32 Cage fight Predictions 1. Until the introduction of beaming, the physical transport of goods will be required. The carrier is needed and he can focus on that, but the way he sells and services will change. Carrier s will go into direct sales. Factfactory.ch 32

33 Cage fight Predictions 2. Vendor driven marketplace platforms will fail. Factfactory.ch 33

34 Cage fight Predictions 3. The future of freight will be even more buyer driven. Factfactory.ch 34

35 Cage fight Predictions 4. Simple, non value adding resale will be hard. However where we add value, we do not need to be afraid. Factfactory.ch 35

36 Cage fight Predictions 5. Every forwarder will become an eforwarder. Longer term they will split between two roles: Carrier (asset based) and/or Supply Chain Consultant (know how based) Factfactory.ch 36

37 Cage fight Predictions 6. Robots might buy from robots: Procurement automation. Factfactory.ch 37

38 Cage fight Predictions 7. Relationship sales will further deteriorate. Sales will become consulting and exception management will be the key differentiator. Factfactory.ch 38

39 Cage fight Predictions 8. Higher efficiency will need less people. Factfactory.ch 39

40 Cage fight Predictions 1. Physical transport of goods will remain required. 2. Vendor driven Marketplaces will fail. 3. The future of freight will be even more buyer driven. 4. Simple, non value adding resale, will be hard. 5. Every forwarder will become an eforwarder. 6. Robots might buy from robots. 7. Relationship will further deteriorate. 8. Higher efficiency will need less people. Factfactory.ch 40

41 The End Thank You Fact Factory GmbH Ruben HUBER Tel / rh@factfactory.ch Website:

42 How can we help on your journey? Fact Factory is a team of logistics industry, change managers, process and technology experts, that focuses on exciting projects at the intersection of strategy, internationalisation and digitalisation. Factfactory.ch 42