European digital freight industry post Covid-times: What's next?

The coronavirus epidemic has changed the European road freight market after it wreaked havoc in 2020. Transport Intelligence research showed in May 2020 that COVID-19 would wipe away any potential for growth in the European road freight market during 2020. The crisis caused by the pandemic looks set to be deep but also transformative. 

We talked to European industry experts from Spain’s digital freight platform Ontruck and France-based supply chain transportation visibility provider Shippeo to understand the economic impact of the pandemic on the global transport and digital freight industry and what are the plans beyond.

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Dealing with the pandemic

Dealing with the demands is not an easy job, especially during the pandemic like COVID-19. Talking about the COVID-19 crisis, Inigo Juantegui, Ontruck CEO says, We started observing the first signs of corona in January/February. We also began making arrangements early on for the possibility of working in a remote work model, which gave us a headstart compared to some European companies.

Luckily, when the moment arrived to initiate a company-wide work from home setup, our teams and managers felt confident and well prepared in adapting to the situation.” In terms of business perspective, he adds, “The demand undoubtedly fell in some sectors, however, it was not as bad as we had anticipated. Also, we saw that the drop in activity did not affect all markets (Spain, UK, France, Netherlands) and all sectors in the same way.

Our mindset quickly became focused on supporting our shippers and carriers in any way we could, and to best accommodate their needs as the situation developed. We also observed a spike in last-minute cancellations as factories and warehouses closed temporarily, as a result of this our Customer Service team were working at full capacity to help our clients find solutions.” Recently, Ontruck, a digital road freight platform also announced its expansion connecting strategic logistics hubs across Western and Central Europe.

As per the company claims, this international activity will facilitate exports from Spain into Portugal, France, Germany, Benelux and Poland and imports from across Europe into Spain and Portugal.  Commenting on the event, Rika Christanto, COO and co-founder of Ontruck, said: “Understanding the evolving needs of our clients has been the most important factor in helping us to scale our offering, and we now have significant platform synergies by leveraging the marketplace technologies we have developed for regional transport into an inter-European service to deliver the same world-class service into a long haul product”.

Fortunately, the company’s proprietary research into local freight markets combined with their first-to-market innovations now puts them in pole position to continue catering to the evolving needs of a post-COVID supply chain. 

Shippeo witnessed 204% YoY revenue growth

On the other hand, Shippeo witnessed a 204% YoY revenue growth in the first half of 2020 despite COVID-19 pandemic.  The transportation visibility provider now has the fastest-growing customer base in Europe as businesses seek expertise on end-to-end supply chain visibility and resiliency within the complex European market. The French company also compiled its live supply chain recovery map based on the current transport movements around more than 3,000 European warehouses and factories.

This provides real-time monitoring of which logistics hotspots in Europe have the most inbound & outbound activities and how things are evolving per sector.  In this regard, Lucien Besse, COO & Co-founder, Shippeo says, “We had three different situations – food retailers, whose volume had gone up compared to before, the usual businesses which were unaffected by COVID, and automotive & building materials industry, who of course, deeply suffered from COVID. We provided some extra care for them to make sure that they can be in the right situation to restart the activity after COVID.

It is also important to be in a position where you can absorb the high peak of demand that we see with our customers today. To summarise, Shippeo was positively active for half of the customers and for some of them we had to provide some extra care.” 

Image credits: Shippeo

Funding and hiring during the COVID crisis

Last month, the Spanish startup also raised EUR17 million led by OGCI Climate Investments (OGCI CI). According to Inigo Juantegui, the company will continue to be very disciplined on spendings and investments.

Right now, the Madrid-based company is investing in supporting and training people, best service to clients & carriers, and Core technology and analytical capabilities.  About the funding, Inigo Juantegui expresses, “The financial markets slowed significantly during the COVID lockdown. Nevertheless, we reached out to many investors and worked hard to connect with those who we felt were aligned in our long term vision of delivering sustainable transport solutions and who would likewise be prepared to support us through the inevitable ups and downs that come with scaling.

For our line of business, where upfront investment in technology and scale is necessary, fundraising is very much a continuous process. Thankfully we have a strong relationship with our existing and potential investors and are in constant conversation with them so that we can collectively make decisions regarding future funding rounds and when they make the most sense for the business.”  Amidst COVID-19, Shippeo has hired 16 people, working on a remote basis. “It was quite a journey.

We just realised that it was a good time to accelerate because the demand was so high that we had to accelerate, said Lucien Besse.

Strategic partnerships to overcome transport management challenges

Since January, Shippeo has welcomed several new large international brands. Recently, the company also announced new strategic partnerships with TMS solutions provider Alpega and leading supply chain logistics consulting and 4PL services provider 4flow.  The collaborations aim to make it easier for customers to overcome transport management challenges by leveraging deep TMS integrations, making it easy to take advantage of real-time visibility’s many benefits.

In terms of challenges, Lucien Besse, says “The challenge regardless of COVID pandemic is the visibility over transportation. It’s all about giving more visibility to the customer along with the delivery information. With the increasing fragmentation of the transportation market, more & more shippers are in search of a very simple way to collect real-time data from a large number of carriers.

But at the same time, there is a lot of what I would call operational challenges that you have to face because of this lack of visibility.”  About the different challenges, Lucien Besse, explains, “Right now, we are witnessing an increasing demand from B2B customers especially during COVID since the order from e-commerce platforms has risen. The second challenge was the shortage of resources.

For a lot of customers, we had very limited staff within the warehouses or the shops. As a result, it is important to organise yourself to make sure that the truck arrives at the right time. Another challenge is related to the increasing demand for paperless transportation.

In the transportation industry, there are lots of paper signatures involved. As a precaution, we introduced digital tools to make sure that we can digitalise the documents of transportation to make sure that you don’t have to go out of the truck and sign etc.”

Will the supply chain industry cope up? 

The coronavirus outbreak has had a major impact on global freight markets. Most importantly, the European road freight market could shrink by almost 20% this year.

However, as the economies begin to emerge from the emergency phase of the pandemic, there are various questions looming around the supply chain industry. One of them is, will it cope up?  To this, Inigo Juantegui, clarifies, “While aggregate demand across Europe is expected to drop this year, there do remain sectors experiencing a surge in activity such as groceries and household consumables.

On the supply side of the market, certain risks should be taken into consideration, certain risks supply-side constraints, with some truck drivers needing to stop working for safety reasons or due to family concerns. There are also layoffs/ERTEs in the logistics sector given the soft demand. Even if the economy rebounds quickly, periods like this can deeply impact the many small and medium-sized transport firms that make up the logistics ecosystem.”

He continues, “At Ontruck, we are well prepared to survive this crisis. One of our advantages has been our tech-first business model, which has allowed us to continue serving our shippers with virtually no downtime. Thanks to strategic contingency planning, our entire team was able to begin working from home within one hour.

Our service levels have stayed intact and we have stayed in close contact with our shippers and onboarded many new companies in the last 3 months. We also continue to release new features and develop products at a rapid clip.” On the other hand, Lucien Besse from Shippeo added, “We have created a live map where we monitor in real-time as we speak of the recovery of the supply chain industry.

It has the ability to differentiate based on different industries – automotive, paper, plastic construction, building materials, food and beverages, non-food retail, etc. The first thing that we’ve seen is that most of the sectors went down really fast. And probably the most striking thing is how fast these industries decrease in terms of supply chain activity.

By the end of March, most of the industry started to recover slowly, but it took them more than six weeks to carry out the normal activity. If I have to say based on the indicators that we have today, the supply chain is running at 70% of its normal capacity. But there is still a long way to go.” 

Future trends!

Talking about future trends, Inigo Juantegui, says, “No one quite knows what the long-term impact of the COVID-19 crisis will be for road freight.

If past crises are any guide, moments of crisis tend to accelerate trends that were already underway.”  According to shippers and carriers, some of the trends include – More diverse & flexible supply chains, more transparent supply chains, going paper-free, and increased environmental consciousness.  Lucien Besse, on the other side, says, “First, need for collaborative tools and platforms.

I think that will be accelerated by remote working. The more you work remotely, the more you need collaborative tools to be able to collaborate within the company internally and externally. Second is the paperless transportation.

Reducing the need for paper in the transportation industry with electronic documents, automated processes, etc. Thirdly, the need for predictability, as in need for a short term forecast, to be able to know what’s going to happen not in a year from now, but a week or in a day. We need to form short term predictions to make sure that we can mitigate the risk that is going to come.” 

As a short term goal, Shippeo will continue to invest rapidly on the IQ bot. “We want to continue to invest heavily on our roadmap including more collaborative tools, new modes of transportation, and much more.

We are also expanding quite quickly in new places including Europe, Africa, and Russia.

Main image credits: Ontruck

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