26.5.2021

How digitalization is revolutionizing the logistics industry

Corporate News
How digitalization is revolutionizing the logistics industry

David Nothacker, our CEO and co-founder, was a guest on “Beyond Digital - the hy podcast with Christoph Keese” from hy – the Axel Springer Consulting Group. It’s a weekly podcast hosted by digitalization expert Christoph Keese that explores what digitizalization means for companies, industries, people, and societies. Check out the episode archive (in German) and read additional short interviews (in German and English) here.

In the podcast, David walks listeners through the ins and outs of the 21st century logistics industry, explains why road freight is ripe for digitalization, and dives into exactly how sennder is up for the challenge. Listen to the podcast in German by clicking above. For non-German speakers, we’ve put together the following English-language recap.

On why so many trucks drive empty, and how sennder’s digital solutions can help

The road freight industry is extremely fragmented and traditional. It’s full of small companies that are poorly connected with one another and are still communicating in a very old school way: planning via Excel tables and whiteboards and updates via telephone, email, WhatsApp, text message, and sometimes even fax. This results in inefficiency and unnecessary CO2 emissions. Our mission at sennder is to modernize this underdigitalized industry.

A third of the trucks you see driving on the highway are completely empty, and 50-60% are not loaded to capacity. This is due to the fragmentation of the market. 70% of all the trucks in Europe belong to companies that own fewer than ten trucks. For example, a driver in Germany might drive to Spain with a load. But he doesn’t know anybody who can offer him a load in Spain. He does, however, know someone in France. So he drives from Spain to France with an empty truck, picks up a load in France, and then drives back to Germany.

Because digitalization in this very fragmented market isn’t that far along yet, capacities can’t be used efficiently. So you end up with these empty kilometers. This has obvious effects on CO2 emissions. The logistics industry is the third-largest CO2 emitter in Europe. There is a lot of room for optimization here.

But beyond empty kilometers, we also have the issue of trucks that aren’t filled to capacity. This is often due to a reliance on analog planning. But customer preferences also play a role. Customers prefer speed and flexibility over efficiency. So often a truck will drive half-full because it needs to arrive at a particular time.

On tech adoption in the European road freight industry

sennder has been successful precisely because the market is so old school. Our biggest challenge is getting people to use our technology - tech adoption. We talk to small carriers who have been in business for 20-30 years, who have been doing their jobs for decades without an app or a digital platform. But digitalization has become more and more present over the past few years, and COVID-19 has accelerated the discussion. More small companies are trying our technology. And once they’ve used it once, they understand how helpful it is, and they keep using it. But getting them to that point takes time.

sennder Italia is our most successful office. We’re already profitable there, two years ahead of schedule. Thanks to the joint venture with Poste Italiane, we are the biggest FTL freight forwarder in Italy when it comes to the domestic market. This means we can push our technology more. We don’t have to ask each individual carrier to try our tech. Instead, they come to us and ask what they have to do to work with us. I even get LinkedIn messages from small Italian companies sometimes.

On the dawning of the autonomous trucking era

It's not like we'll have a complete shift to autonomous trucking in the next 2-3 years. Autonomous trucks will first be used only on the highway for long distances. Highway entrance to highway exit. Maybe there will also be a separate lane for them. So we’ll still need small trucking companies that pick up the trailers from the highway and bring them back and forth to the warehouse. We’ll continue to have trucks driving back and forth between the highway and the warehouse for at least the next 20-30 years.

On whether sennder is a technology company or a logistics company

We’re a mix of a tech company and a logistics company. We still have to support both sides of our business, i.e. shippers and carriers, in their tech adoption. But we’re developing in the direction of becoming a full-fledged tech company. That's why we launched a SaaS solution where we sell our platform, our tech, just on its own. We’re no longer just a freight forwarder. Freight forwarding will always remain at the core of our business, but our tech is far enough along now that we can also move into SaaS.

On how the road freight industry can help fight climate change

The opportunities are enormous. It’s clear that we have to get away from diesel. The future of the transport industry is decarbonization. In addition to the role digitalization plays in improving routing and reducing empty kilometers, we offer advanced fuels like HVO and B100 in certain markets that can reduce CO2 emissions by up to 90%. Our role is to get shippers to commit to a certain percentage of green loads, and then on the other side we need to help the carriers make the switch. We support them on costs and guarantee order volumes.

We’re already fairly successful at reducing empty kilometers in Italy. The numbers aren’t significant enough yet in other countries because we don’t have the order volume. But we’re working on being more efficient. We can combine loads from several customers in one truck and reduce its empty capacity from 30% to 10%, for example. We’re already doing that well in some sub-regions, but we need to grow a bit more before we can do it on a larger scale.

It will take 5-7 years before we have complete green solutions, but in the meantime we can focus on optimizing our digital solutions to reduce CO2 emissions.

Follow “Beyond Digital - the hy podcast with Christoph Keese” and listen to the full interview in German HERE.

If you’re interested in learning more about sennder, our culture, and open positions, go to our career site HERE.