Logistics for suppliers, transporters or brokers. The Logistics

Logistics is an industry that has always been very dynamic. Starting from ancient war times of Roman and Greek empires (when military officers known as ‘Logistikas’ were assigned the duties of providing services related to supply and distribution of resources) to the modern day high tech logistics, the industry has changed constantly for providing right things at right place on right time, which is the ultimate aim of the logistics industry. And fortunately, the advent of new technologies has made these changes both implementable and feasible. The latest trend in this everchanging industry is: marketplace model. The logistics market place is evolving and certainly its future seems bright. This article explains the logistics marketplace and truck aggregation model, describes its benefits, challenges and future directions. The scope here is limited to aggregation of trucks, but the aggregation of sea and air transport vehicles is out of scope of this article.Need for Logistics marketplaceFirst, it’s important to understand the need for the marketplace model in logistics. And for that, it’s necessary to understand what a marketplace model means.The Marketplace model:The marketplace is simply a space where buyers and sellers meet and trade with each other. In today’s context, the physical meeting space is replaced by an online platform in form of a website or mobile application. The marketplace model is a win-win solution for all. The consumers receive the convenience and discounts, and the sellers receive additional business from the customers across the nation or world. The marketplace provider generally receives some commission from sellers. However, there can be other modes of revenue generation like subscription fees, listing fees or lead fees.Logistics market includes all the activities of the supply chain, as shown below:With the increasing demand of global transportation, the conventional logistics model is both insufficient and ineffective. The global logistics industry was around 8.2 trillion USD in 2015 and expected to grow at CAGR of 7.5% to reach 15.5 trillion USD according to a report published by Transparency Market Research. And the marketplace model is the perfect solution for solving this growth puzzle.Marketplace model is gaining eminence in the logistics industry. This is due to increasing participation of buyers and suppliers due to very competitive prices of transportation, improved access by customers and scope of exploring new markets for suppliers, transporters or brokers. The Logistics Marketplace provides freight owners, transporters and clients the convenience of connecting in a short time. An online marketplace has simplified the transportation process across the globe.How Logistics marketplace works?The diagram below shows a simple architecture for a logistics marketplace:Some practical applications of Logistics marketplace:Transportation marketplace:In transportation industry, the trucks are often partially or fully empty within the delivery routes. The marketplace model can solve this problem. Trucks or other transport vehicle owners can post their details on the marketplace. The customer or consignment owner can also post their requirements on the online platform. After that, transporters can place their bids based on it. Using the empty or unused space ensures optimum utilization of resources. This can result in a good amount of cost saving and reduction in the emission of carbon dioxide to make a positive effect on the environment.Warehouse marketplace:Many warehouse owners lease their space to other companies. At the same time many companies prefer to rent a storage space than owning it. A warehousing marketspace can provide a platform for both the parties. Maximum utilization of warehouse space can solve the problem of shortage of storage space due to increasing population of the world.Material handling equipment marketplace:Material handling systems contains a huge cost of installation. Rather than owning an entire material handling equipment like dumpers etc. companies may opt to take on lease, and the owners can provide equipment on rent. This marketplace can solve a huge problem of capital intensive material handling industry.In similar way, there can be marketplaces for other elements of logistics like packaging, information or data management. Nowadays, data storage space marketplace is also getting popular.Some key advantages of a logistic marketplace:· Optimum utilization of the available capacity like truck or warehouse space· Huge cost benefit to the customer· Realtime tracking of the movement of the freight· Increased transparency in the system using robust IT system· Reduced pollution because of reduction in emission of greenhouse gasesThe marketplace model for trucks: Truck aggregationRoad transport is still the biggest mode of transport in the world. In India, the road transport accounts for around 50% of the freight traffic*. And the truck is the mostly used road transport vehicle throughout the world. Trucks are available in various sizes but it’s impossible to order a truck that completely matches to the transport volume of the customer. That’s the reason why Truck Marketplaces are gaining popularity.Current market scenario: Truck aggregationThere are many start-ups coming up in this space. Some of them are shown below:All of these start-ups are working towards the truck aggregation. Apart from them, there are many innovative start-ups working in the field of logistics innovation. One such example is Rivigo, which is working towards concept of relay drivers. These start-ups show a growing demand in the Truck aggregation industry. However, there isn’t any big MNC company working in this field.Challenges for logistics marketplace and truck aggregation:Though the logistics marketplace seems a great problem solver for current transportation industry, there are some challenges which must be resolved in order to make it a successful model.Economy of scale: Being the operational intensive business, the marketplace can be successful is its having large number of service providers and customers. So, expansion and onboarding the new transport providers and customers is a big challenge.Multiple goods together: The transport model used mainly depends upon the nature of goods and financial factors. Hence, this model can’t be used for products having opposite nature for example, normal vs cold transportation.Robust IT system: Creating a robust IT system is a challenge for a new start-up due to lack of funds. As the marketplaces works mainly on the data analytics, creating a perfect algorithm is really a challenge.Future directions:As a continuously changing industry, the logistics is evolving. Logistics market place and truck aggregation are growing with involvement of latest technologies. The marketplace model has huge advantages but also brings some challenges, which can be overcome with sound strategy and seamless execution. Future logistics will be of driverless cars and drone delivery. Amazon has already done pilot project for drone delivery. It is to be seen how the marketplace model help in that scenarios. But overall, marketplace model can solve several issues faced by traditional logistics industry and make logistics better.