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transportation management companies

Roger describes March 23rd to 29th as “The absolute worst week of my professional career, by far! The aftermath of what happened at Suez Canal was nothing short of a nightmare for us, our customers and their customers. It was pandemonium all the way.” Roger manages $3B of Freight movement for a F500 CPG major.

As we have realized, end-to-end transportation visibility is no more a nice-to-have. As the true impact of frequent disruptions are getting noticed, it has become a strategic priority.

Both Hardware devices and software are used to achieve visibility through location tracking. Here’s our analysis on how you should choose between the two.

Hardware Devices:

The market has been flooded with GPS-based hardware devices in the last few years. Most of these contain components imported from China, are programmed and cased locally, to be sold in retail. Several companies rent these out as well. Wireless and wired options are available, but since most of our clients use market-trucks, wired devices are mostly useless.

When return logistics costs are factored in, wireless devices work out to be prohibitive for smaller truckloads but might make sense for higher per-transaction sizes. One device can at-most do about 5 trips of 3 days each (assuming 30 day months and 3-day return SLAs for the device), significantly restricting scalability and increasing costs. These devices are fairly accurate through, and intelligent, with proactive notifications, SMS-based tracking, visualisations, etc. However, some of this intelligence depends on the quality of hardware used, which pushes costs up further. Moderate resilience is built-in with most of these devices that account for data fluctuations, and extreme physical conditions.

Let’s be clear, though — hardware needs software, i.e., while the hardware has gotten commoditised, the software that runs it (on the cloud) is the differentiator, and the intelligence.

While some of these devices are very useful for fleet owners, and transporters, our focus was on serving the Shipper —to digitise deliveries of all kinds for shippers of all sizes. With its relatively high costs/transaction, and low scalability, only a specific kind of (larger) shippers were able to afford these devices: hardware just didn’t cut it deep enough. We had to explore other options that worked for smaller and medium-sized shippers as well.

Software-based tracking:

The case for software was very strong. Low per-transaction fixed costs, very high scalability (zero cost of download, ready to plug and play) and accuracy, and high and increasing intelligence.Software Applications are also super resilient — one had to consider only battery and data consumption, and not the resilience of the device itself, since that belonged to the user. Apps also worked with most android phones, ensuring compatibility and a seamless user experience. Since scalability and resilience were high, at a low per-transaction cost, this seemed like a definite winner!

Reality check

Let’s be clear, though — the software needs hardware, i.e., smartphones, to function. Our view is that app-based tracking is the future, because:

Smartphone Penetration is high, and growing rapidly.

While the numbers paint a decent picture, I think geographical differences also play to our advantage in the trucking market. Whenever I pitch to a prospective Client who is skeptical, I love conducting an experiment with them: I suggest that we step outside the air-conditioned meeting-room, onto the streets, and check how many truck drivers have smartphones — this number has never been less than 8/10, till today (6/10 with internet connectivity).

Our approach to Location Tracking To tailor location-based services for our clients, we ask them four questions:

  1. What is the minimum % of shipments that you NEED location data for? (i.e., does coordinating a few specific shipments take up a majority of your time?)
  2. How much are you willing to spend/transaction?
  3. What degree of accuracy is important?
  4. What degree of control do you have on your supply? (i.e., do you own the vehicles, do your vendors own their vehicles, or do your vendors/you source from the open market?)
Hardware makes sense when you need accurate location data for all shipments, and have a sizeable budget. The investment in hardware will pay off if shippers own their own trucks, or have contracted owners who operate only for that shipper.

The software works best when you are comfortable with (not all, but) a growing number of shipments being tracked accurately, are not willing to spend a lot, and can control/influence your supply. The software can also supplement hardware — so your per-transaction costs are reduced, while maximising the number of shipments tracked.

Interestingly, there is a third bucket of shippers— who need location data for all shipments (but accuracy is not crucial), don’t have a sizeable budget, can influence their supply, but cannot pass on costs to them. Here, hardware doesn’t work because it’s too expensive, and the software doesn’t make sense because it leaves out a significant number of transactions (the effort spent on tracking is equally distributed, and so tracking a few shipments doesn’t reduce the time spent on coordination significantly).

For these shippers, the Pando application periodically urges transporters to find out the location of the truck (offline) and update it via the in-app chat-bot, notifying the shippers and the receiver proactively. You’d be surprised at how well a little reminder works.

Consequently, our approach to Location Tracking is a combination of three sources, converging to one user experience:

To know more about this, contact us.

Article By:

Nitin Jayakrishnan

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