Introduction industry. And fortunately, the advent of new

Introduction

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.

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Need for Logistics marketplace

First, 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 gases

 

 

 

 

 

 

The marketplace model for trucks:
Truck aggregation

Road 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
aggregation

There 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.

 

 

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