Everything we want today is just a click away. The entire ecosystem is built around getting us what we want in the least possible time and at the lowest cost. As a result, we have seen a rapid proliferation of warehouses, optimally located to ensure that fast-moving products reach their intended recipients as quickly as possible. as well as large scale global sourcing enterprises that are constantly on the lookout for vendors that stock a variety of products such as desk ornaments and the desk they sit on.
Behind all this is a largely undiscovered transport and logistics industry that works quietly in the background to move these packages from one place to another. This, given the demand, occurs at a frequency unprecedented in human history and uses a number of different methods.
Of these, by far the most common is overland transportation – where trucks of all shapes and sizes are used to move packages cross-country or from warehouses to the nearest delivery point. But it is within this stage of the supply chain that inefficiencies exist that urgently need to be addressed.
The scourge of overland transportation is what is referred to within the industry as the “empty mile”—the distance a freight truck has to travel without cargo. In 2020, it alone accounted for about 20% of total road freight transport in Europe. —a number that isn’t much better by all accounts in other countries. Industry leaders describe air as the most-shipped commodity on the planet. Besides not earning the company any revenue every time they return home empty, it is estimated that empty trucks emit 76 million metric tons of CO2 every year.
Carriers are trying to take steps to rectify the situation. Wherever possible, they seek to improve network planning to consolidate shipments into larger and larger containers in an effort to reduce the number of empty containers being used.
But it can only go so far. Some shipments, especially more specialized ones, are one-way only, leaving the trucker with no choice but to return to its original location without the cargo. This is further complicated by the fact that much of the industry today remains painfully conformant – relying on paper declarations and third-party brokers for various stages of the journey. When recorded in this format and arbitrated by third party brokers, it is highly unlikely that any free miles that exist will be able to be monetized. As a result, the demand for empty trucks remains unfulfilled, while trucks keep returning empty.
If you think about it, this is a problem we already know how to solve.
About a decade ago, you would be waiting on a street to hail a taxi, while just a street down below there might have been a long line of empty taxi cabs waiting for fares to similarly find them. We don’t worry about this anymore because mobile apps like Uber and Ola took advantage of the GPS capabilities of modern smartphones to find a way to bring demand (us) to meet supply (taxis). If we can find taxis for humans, shouldn’t we find cargo for empty trucks?
In an article that appeared in this column six years ago, I argued for the “Uberisation” of national transport. “It is difficult to understand,” I argued, “why technologies that have proven so successful in managing movement within cities are not being deployed for trips between them. For example, truck drivers still use the same Why does a cargo trailer have to be carried from the start to the end of the trip. Wouldn’t it be more efficient if trailers were designed for transport using a hub-and-spoke model where trucks drive trailers instead of all the way across country? are carried from one hub to another.
While the particular solution I was advocating for has not been completed, today we have a brand new digital public infrastructure (DPI) in the area of logistics that could prove promising.
Unified Logistics Interface Platform is an Application Programming Interface (API) based data exchange system designed to enable innovative solutions in the logistics sector in India. While its APIs currently only provide basic information – vehicle and driver data as well as eway bill numbers – that can be used to track goods across multi-modal transport services until they reach their final destination. It is possible to see how this digital infrastructure could be adapted to solve the problem of the empty mile.
For example, we can identify all transport vehicles at a given location that are scheduled to return to their home location without loading so that any carrier that uses a truck to carry its cargo to that common destination is looking for, has a set of transporters that they can choose from. If this information is made available through an open API accessible by a logistics provider, it will be possible to find a way to bring demand to meet supply.
Elsewhere in the world, this is a problem that private companies are looking to solve. They are arranging with logistics companies and shippers to bridge the gap between supply and demand.
This is unlikely to succeed in a vast country like India with an unorganized and distributed transport industry. What would work, however, is a population-scale DPI that makes this data accessible through open protocols that private entrepreneurs can use to build solutions that work at scale.
Rahul Maithan is a partner at Trilegal and has a podcast called Ex Machina. His Twitter handle is @matthan.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.
Updated: June 06, 2023, 11:46 PM IST