The emergence of the logistics platform
Since the onset of the pandemic in early 2020, the logistics supply chain industry began to struggle. Due to restrictions on air travelers in most countries, air transport was the first to reduce its regular scheduled flights, which disrupts air transport shipments. Then shipping had its own problems; ships had to dock longer out of the ocean as the ports were operating at half capacity due to the alternating work schedule of its workers. The problems have been compounded with increased demand for container capacity by Asian manufacturers due to explosive e-commerce demand. As a result, ocean liners were not quick enough to return empty containers to Asia, creating a backlog in the supply chain and increasing prices for the industry.
International transpacific shipping costs have increased significantly over the past two years. For example, the cost of moving shipments from Southeast Asian regions is $3,000/container to the United States. It gradually increased every two months and reached USD 11,000/container in December 2020, an increase of more than 300% in more than a year. The cost reached $16,000 to (US-West Cost) and $19,000 to (US-East Coast) in major ports in December 2021. Domestic transport to the final destination, for example Atlanta, costs $26,000/ container. Imagine, a container with 1,000 items from Asia to the United States with a shipping cost of $3.00 had become $26.00/item. This is why inflation has been exceptionally high.
The logistics company (carrier) has been operating an offline business method for decades. Operating a business in an offline environment makes operation and administration slow, expensive, and non-transparent. Quotes provided by carriers included too many itemized charges, making analysis difficult for shippers. Charges at origin and destination vary by carrier. Shippers who want five quotes must contact five different local carriers, which takes approximately 2-3 days for a quote to be delivered. Businesses using an offline business method lack efficiency and lag far behind those that have adapted to technology. We now live in an online world where platform news, social communication and shopping happen in an instant, and businesses should use a technology platform to its advantage.
Shippers who participate in the logistics hub would be able to analyze available carriers at the origin and destination. Logistics service information is correctly displayed and all questions can be answered directly by the carriers through the platform’s chat function. With just a few clicks, shippers will be able to confirm shipments to carriers with transparent detailed services: pricing, schedules, documentary requirements at origin and destination. Once the shipment has been accepted by the carriers, a work order and a recall notice are issued by the platform to alert all stakeholders. A shipper who paid $26,000 from Jakarta to Atlanta in an offline environment would only pay $22,500/container in the platform business model.
Internet technology is an important factor in our daily lives. The relationship between carriers and their shippers is now more interactive with direct communication. A platform with its algorithm embedded in scanning would speed up and minimize manual carrier operation and paper administration. The delivery status in Bangkok can be viewed instantly by the shipper in Amsterdam. The identity of the truck and driver is available to shippers in Tokyo so they can track them before the shipment is released. Digital proof of delivery in Los Angles is transmitted to the carrier in San Francisco to expedite billing and confirmation of shipper’s acceptance. Warehouse space becomes easily searchable through the selection of warehouse operators available where the platform operates. Decision-making is faster with less human involvement and operation becomes simpler.
We are now able to do almost everything with our smartphone, and it has become our identity and trusted 24/7 companion. Anyone with a smartphone can create products and sell online from anywhere in the world. There are now more people who have joined Global Digital Market as buyers or sellers, which is driving the demand for logistics services. A platform that fits into the Business-Consumer trend will open up new channels and bridge the transition from traditional systems would attract many followers. The integration of the logistics industry with Internet technology will benefit all parties involved. Barrier-free, Jakarta shippers can make a seamless transaction to select a carrier in Jakarta and Atlanta via smartphone or computer with just a few clicks. Companies that fail to catch up with digitization and automation will lose development growth to connect to the online world, which demands direct interaction, competitive pricing, and consolidated services.