The “Sourcing Challenge” OR “Find me a Truck Challenge”

The transport industry is extremely disorganized and complex, making it particularly challenging to identify reliable transporters for commercial purposes. Since shippers must get vehicles on schedule, they rely largely on fleet owners & brokers.

The demand for vehicles is strong, making it challenging to source them on schedule, especially during peak times like month ends and holiday seasons.

On the other hand, although there is always a supply of trucks, corporations prefer to work with dependable partners. The difficulties for any shipper, therefore, lie in finding a truck they can rely on while still staying within their budget and scheduling constraints.

This is what we call the “Sourcing Challenge” !!

The problem has been attempted to be solved in a variety of ways by various startups, such as using the “Relay System Model” to run vehicles over long distances and assist shippers in achieving predictability, visibility, and availability of trucks. However, given the infrastructure and cost challenges in India, it becomes difficult to achieve the level of efficiency we seek.

The “Optimising Returns Model” is another approach taken by startups to address the “Sourcing Challenge” for Shippers, but it comes with its own set of difficulties when it comes to geography-based optimization. Returns can be efficiently optimized for a particular city or region, but when the geography range is expanded, particularly to remote areas or Tier 2, 3, or 4 kinds of locations, it becomes challenging to arrange for returns. Additionally, it is quite challenging to establish and optimize the demand-supply variation and match the sort of trucks that are needed to make this model work. On paper, it’s simpler to say than it is to do.

The “LaaS (Logistics As A Service) Model,” or as a tech-enabled logistics company, is another approach that many entrepreneurs have tried to address the Souring Challenge. In this model, startups dependably and efficiently offer trucks on demand. According to the strategy, the startups own the cargo and guarantee on-time delivery, earning healthy margins for each journey. This is an example of a startup that is more like a tech-enabled logistics play, where the difficulty of sourcing is still present and does not go away. I’ve observed numerous tech-enabled firms gradually transitioning from tech-only businesses to “transporter” or “logistics companies” in this kind of equation.

The “Marketplace Model”, is the favourite model of startups who like to see the world in a very simple way, i.e. demand on the left side and supply on the right side, and they sit in between matching the demand and supply.

This model has been perfected in the B2C space by Ubers and Olas. However getting it right in B2B has seen so many challenges that this space remains unexplored. In this model, the solution providers have arranged a good network of transporters based on certain criteria and they provide them to shippers as needed. Even in this case, building the volume of “trusted supply” is challenging, with so many routes and truck variations, building the supply side is again a major challenge.

The Indian market is not uniform like the western markets. India as a country is not uniform, geographies, culture, weather, landscape everything is different, so the model for standardization of the Indian logistics sector should also take these variations into account. Thus, the perspective of “One Model fits all” for standardization should change to “One Platform fits all” i.e. build a set of models that can be applied across different scenarios instead of pushing a uniform model across the logistics space.

At CargoFL, we are building a world-class, top-notch, cloud-based Operating System for Logistics. With 350+ customers (both enterprises & transporters) using CargoFL tech to digitize their logistics & supply chain functions, we are marching towards building the essential blocks of technology that will eventually evolve into a pure tech play in logistics. We believe that the logistics industry should be viewed as a varied collection of extremely agile business models that can only be managed or synchronized via an advanced tech ecosystem, and at CargoFL, we are aiming to create this Operating System.

Though at a very nascent stage, our approach is building a “Tech Enabled Supply Model” that eventually we believe will surpass all the above-said models and lead to solving the “Sourcing Challenge” in a more organic way !!


This article has been authored by Deepesh Kuruppath, Founder and CEO, CargoFL and can be reached at deepesh@cargofl.com

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