In recent months, few business functions or industries have experienced as much unprecedented disruption as transportation and logistics. Global supply chains were disrupted, local groceries and e-commerce sales surged, and it became obvious that the industry is ripe for restructuring and innovations. Moreover, logistics seems to have finally drawn due attention of the general public, and now it’s much easier to understand why the transportation side is of such importance. In this post, we will discuss the state of logistics today, cover some examples of its development, and reflect on its prospects and the overall future.
First of all, what is logistics? The origins of the term can be traced back to the military where it was used to describe the movement of supplies and equipment to troops in the field. Today, however, logistics has a much broader sense and refers to the process of coordinating and moving resources from one location to some desired destination. The resources may be anything—people, inventory, materials, and equipment.
Logistics management can involve several components such as fleet management, inbound/outbound transportation, demand planning, inventory management, order fulfillment, etc. In general, logistics is an indispensable component of e-commerce businesses and other enterprises whatever their size. Fast and efficient delivery is an underlying factor of both online and brick-and-mortar businesses. It is for this reason that many have tried to enter the logistics industry and fill in some particular niche. The most popular model of such a business usually includes some innovative technology—or at least digitalization of some sort—and as little capital expenditure as possible.
Let’s consider some of the ways startups are innovating in logistics.
Firstly, logistics models are usually quite antiquated on the national level. In Ukraine, for example, national post Urkposhta proved itself quite inefficient in recent decades, and so an alternative solution Nova Poshta was founded. Nova Poshta is a private Ukrainian postal and courier company that offered fast delivery and pleasant user experience which was just the opposite of what Ukrposhta could boast about. Terms of parcel delivery diminished severalfold, and it boosted business development as well as general customer satisfaction. In simple words, such a model implies taking the existing solution as a model and making it more efficient.
The next type of innovative solutions in logistics refers to the creation of a technological platform to connect the stakeholders. UberEats and Glovo are great examples of companies operating under such a model. Either company is essentially a marketplace for restaurants, couriers, and consumers. Restaurants provide their menus, consumers order dishes, and couriers deliver the orders. Such a solution is beneficial to all the parties: restaurants can get more revenue from additional orders, consumers can get tasty food in the comfort of their homes or workplaces, and couriers can earn extra money.
Even today, in the age of technology and innovation, there are still a lot of countries with conservative logistics that lacks efficiency and convenience. But inefficiencies and thus needs vary significantly from country to country (or region to region) depending on traditions and existing alternatives. That’s why innovative solutions are not the same in different geographies.
For example, one country may lack efficient B2B collaboration in transportation, so the parties have to pay more for courier and delivery services while also having no efficient services at their disposal. In such a region, a B2B solution with reasonable pricing and convenient terms would be perfect for the parties. Another example may be a country with the need for timely and hassle-free goods transportation. Here, a startup offering decentralized transportation of goods via some minivan drivers—basically the models of Glovo and BlaBlaCar combined—would be very much in demand.
At Idealogic, we are bullish on solutions that employ sharing in logistics. It drives down the costs, optimizes usage of resources, and allows small independent parties to earn more thus increasing their welfare. We believe that the logistics industry is ripe for sharing innovations as there is both demand and possibility for realization. Now it’s progressive entrepreneurs’ turn to come up with interesting ideas—the rest is on us. 😉