Author: Ali El Atrash, Co-Founder and COO at Trella.
COVID-19: Pulling Logistics into the Fast Lane | 4 Key Principles
The recent outbreak of the coronavirus is one the most disastrous of human health threats in recent history. With more than 2M official cases recorded worldwide, death tolls approaching that of the 2009 H1N1 flurry and more than 150,000 lives lost over the past 3 months – it is indeed, quite scary to say the least. On the back of this outbreak, the world is fearing a recession far worse than the Great Depression, almost a 100 years back and potentially more destructive than the Global Financial Crisis of 2008. According to the IMF, the cumulative output loss over 2020 and 2021 could be around 9 trillion dollars, with contraction in global GDP by 3% YoY.
There has been a lot of content circulating around the silver-lining, the hopefulness, the awaited economic bounce-back and a general optimistic view around the after effects for the economy – irregardless of the bleak outlook and pessimistic predictions. Aside from these projections, we have facts to use for guiding reference points – and the one fact here we all know for sure, is that the economy will recover, hopefully faster and stronger than ever before.
With logistics being a key enabler for any economy, we have identified 4 key activities and principles that can pull trucking and logistics into the fast lane for change. These activities will help spur industry changes challenging incumbents to increase the overall market efficiency, induce a step change through a cross-over into tech, encourage government collaboration for more concrete long-term planning, and investing in product and tech to alleviate health and safety pressure off the streets to help further flatten out the curve.
1. Logistics providers will need to cross unchartered territories for efficiency gains.
Very much like the economy, the logistics sector has been hit with a drop in truckload freight volumes and in transportation rates. This is led by skittish consumer demand, worker shortages, port congestion, and road and access restrictions that are causing massive disruptions to reliability and availability of supply. Despite the industry slowdown, it is very clear that the overall impact is uneven with examples like the Food and FMCG sectors seeing a big surge in demand in relation to the ever-so-shrinking construction sector.
Many logistics managers today are taking a step back – diving deeper into their companies’ cost centers for general fat trimming, efficiency opportunities are being heavily scouted for. Integrating advanced third-party logistics companies (3PLs) in many businesses will take on higher strategic importance if it is proven that they can better control costs during these critical times. Due to the high fragmentation, inefficiencies plague the trucking industry, driving an unnecessarily high-cost base on the back of minimal network effects and economies of scale. If logistics providers really want to survive this cost-leader-win-all mindset catalyzed by the outbreak, they must join forces and aggregate their efforts, supply base and speed up their tech adoption to manage that targeted scale. The question, however, is: Are once-competing logistics providers willing to work hand in hand, putting short-term gains aside – or is this fragmentation here to stay?
2. Trucking providers must adapt faster to change spurred by the COVID-19 outbreak.
Road freight has seen minimal change over the past 100 years or so – with only a handful of advancements across developing markets and almost none across emerging ones. The industry is quite traditional, mostly paper and phone-based with minimal digitization efforts being put forth by incumbents.
On the back of the national lockdowns enforced by governments, all logistics players are now forced to run operations with a minimal physical presence, loading and off-loading times are tight and supply is a lot more difficult to find and match. Accordingly, trucking providers must adapt to the new way of doing business – a lot faster than they ever had before.
Trella is at the forefront of this step-change, with operational pillars disrupting the industry’s status quo, leveraging technology and the power of its 20,000 carrier network, to better service shippers during this time of crisis. We are moving a lot faster with E-Invoices and Digital PoDs for shippers, expediting our Track and Trace carrier adoption, fully transitioning into digital payments and doubling down on our live support. Our shipper partners are onboard, adapting to this new norm for logistics, becoming our strongest advocates for this new movement and step-change in the industry.
3. Logistics companies need to better cooperate with governments and policymakers.
The biggest potential change-makers and the most influential stakeholders in the logistics industry are none else but governing entities and policymakers that invoke supporting regulations for said change. The government has rapidly reacted to the COVID outbreak with temporary regulations around cash liquidity restrictions, with the aim of curbing the virality through lower cash circulation – flattening the outspread curve. However, these restrictions have paralyzed cash-heavy industries, such as ours, given the closed-loop nature of the current cashless infrastructure. That is why, it is more important than ever to collaborate with policymakers during these critical times for better sector-wide initiative coordination.
Now is the time for conversation starters around digital payments at toll stations, data sharing for stricter safety management, carrier financial inclusion, more predictable and transparent road fee charges, digitization of receipts and general documentation at ports and key hubs amongst other pressing key opportunities.
4. Carrier partners are the true heroes here – obsessing over their needs is a must.
There is a globally mandated lockdown and everyone is taking extreme personal precautions to protect themselves, their families and loved ones from the COVID-19 pandemic. On the frontline however, we have millions of carriers moving cargo throughout the entire world, so that we can enjoy the availability of these essential goods at the comfort of our own homes. Without these carriers risking their lives day in day out, our economies would have been paralyzed at the jugular. We wouldn’t have been able to ship ventilators, sanitary material and food over to everyone in need – and the situation would have been a lot worse.
To facilitate carriers’ day to day operations during the current pandemic, we need to build products that reduce their risk while they frontline our operations. Digital products in the logistics industry drive less human interaction by nature, allow for digital cash payments to reduce physical cash exchange and replace the current, interaction-heavy, paper-based infrastructure. Scaling this across is nearly impossible if we, as an industry, do not commit to doubling down on our tech and product investment to speed up the development of this complex infrastructure – and we need to move fast here.
At Trella, we built a product that is guided by carrier needs, that makes their lives easier and their day to day operations significantly smoother. Their economic view is a lot more predictable as well with end to end transparency into historical transactions and provides a lot more visibility into future economic opportunities. Even though we still have a long way to go, we truly believe that for us to continue stepping up here, we will need to listen a lot more closely and continue obsessing over the relationship we have with our carrier partners.
The COVID-19 outbreak has become a major change catalyst for many traditional industries, from retail to banking – from logistics, to education. It really is, now, an ideal opportunity for players in such industries to make use of the situation – pulling into the fast lane for change, coming out of this stronger than ever before. We, at Trella, are committed more than ever to take charge of the situation and double down on our commitment to better serve our partners, communities and team – coming out of this faster and stronger than ever before.
“It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”Charles Darwin
On behalf of the entire Trella team,
Ali El Atrash