It’s been a rollercoaster year for just about everyone in the logistics industry, and Freightender CEO Pieter Kinds is certainly no exception. Since the start of the year, the Dutchman has re-branded his company, navigated the troublesome waters of the pandemic, and increased his company’s workforce by over 200%.
- This article first appeared on https://trans.info/en
With Freightender now gearing up to unveil its new TendrX platform for carriers seeking new business, we spoke to Pieter to pick his brains on a variety of pressing topics, including the current state of the logistics sector, freight tenders, mini-bids, digitalisation and visibility.
Hi Pieter, thanks for taking your time to speak to us at Trans.INFO. First off, 2020 has been a challenging year for most of us, let alone for a CEO of a logistics company. How has this year been for you so far?
Pieter: Well, first and foremost, we changed the name of the company in February from Tendertool to Freightender.
Admittedly, we didn’t know what to expect at first, because back then we basically had two products lines – freight sourcing and an RFQ management platform for forwarders, which means that forwarders can manage their incoming tenders with our platform.
However, it turned out to be a real blessing because basically tendering stopped – everyone was thinking „Ok, what do we do now?”, but then it picked up again, and at the same time, the interest in the forwarder product became really strong because forwarders knew they needed to digitise.
After a month or so, the interest in freight sourcing also picked up and we saw that there were quite a lot of companies that really had a big need to tender – their volumes just basically exploded.
Today you see more and more companies looking to make use of the market, to take the opportunity to see how they can benefit from the changing dynamics. So, in general, to describe how things went for us, we had around 5 people in February and now we have 12.
Given that many companies have been making people redundant this year, it’s great to see you’ve been able to do the opposite by hiring more staff.
Pieter: Yes, it’s quite amazing; we were of course on a growth path before Covid hit, as a cloud-based provider in the digitisation of processes, but this [the situation caused by Covid-19] just accelerated it. Having said that, we have seen some loss of business because some customers decided not to tender eventually. This was particularly true of the customers that were really hit by the crisis.
I estimate that we missed around 200,000 euros in income, but, on the other hand, new companies did become customers. We do nonetheless see some stress in cash flow as companies pay later – that’s definitely an issue.
Do you feel that public awareness of logistics issues has increased since the start of the pandemic?
Pieter: Well, definitely for a period of time when there was no toilet paper! Of course, more awareness has been created, and people that were not so conscious about it are more conscious about it now.
But, you also have to realise that in many companies with sizeable logistics operations, even within such companies people often have no clue what logistics is, for example in the sales or finance or other departments of the company – let alone the general public. So of course, when someone is presented with their Amazon package or whatever package on time, they know that logistics has a big impact on their customer experience. Also, when there are shortages in supermarkets people understand logistics is important.
I think it has faded away [awareness of logistics in the public], though I do believe that logistics has become more important as a part of the whole customer experience. I see logistics also as a direct procurement category in companies, but it is often seen as an indirect category, which is wrong because it directly impacts your product. So in that sense, logistics has become way more important.
Some managers have nonetheless seen that if logistics is poor in their company, and you run into a crisis, then they are powerless as they cannot push their product out. That’s why many companies have been raising their budgets to invest in digitalisation and streamline their logistics processes.
As we speak, there is considerable uncertainty regarding how the economy will look in 2021. How is the affecting freight tenders?
Pieter: It is affecting companies, we do see that companies come back and need to do something. So, what they’re doing is they either extend rates and do a tender in January, but at the end of the day you need to tender – so they will do it even if they have lower volumes.
They still need to do the tender process because they are being asked by people, „So what about our logistics set-up? Is it shifting, is it more or less, expensive? We have less volume, so what have you done about it?”
So you need to have an answer to the question, you either extend it, or keep the same rates, or say no, „we have more volume, so we need to go to the market”. If you have less volume, you can maybe also change, you could take the view, for example, that you have less volume but 20 carriers, so maybe you can give that lesser volume to 5 carriers and get a better deal.
So you need to adapt to the growth as it happens, and I think that is going to continue once companies realise that they need to be very agile and very close to the market. They need to see what’s happening and make sure they don’t pay too much or run the risk of their carrier going bust because they didn’t get enough volume – so there’s also a risk management element to choosing your partners.
Back in April you wrote about serious amounts of impending overcapacity. How have things developed since then?
Pieter: When you look at road, there’s definitely overcapacity, but those dynamics also depend on each country.
For example, you have the driver issue in Germany, where drivers will soon retire and be on their pension, so there will be a driver shortage. And then you have the situation with Brexit, will there be overcapacity, undercapacity? We basically don’t know. We’ve also seen borders close in some European countries like Poland and others, so it’s very hard to see how these dynamics will change things. You have both local as well as general issues to take into account.
That said, the demand is there. We work mostly with customers in food and electronics for example, and still have a lot of business and a lot of need for trucks.
Talking of borders, the EU have just announced their plans for bringing clarity to borders and travel arrangements, while lorry drivers have also been made exempt from quarantine. How important is it for Europe’s borders to open up again from a logistics point of view?
Pieter: In general for logistics it’s very important to have open borders. That has always been the case for trade; free trade is immensely important for keeping things going. I’m a big fan of that, and I don’t get the fact that we are still living in Europe with local legislation that basically interferes with the bigger European picture.
Everything is interconnected, and things have become easier because of that [EU single market legislation], but in general logistics has become more complex because whatever a country does, whether it is Poland that introduces some legislation or Spain, it always affects everybody.
For example, fruit is being produced here [in Spain] but cannot always go to other places. Also, Poland is really a key logistics place for Eastern Europe as a distribution country, as a production country, so it can have a big impact on everyone. So when you don’t have the integrated decisions there will always be a big impact, which is why we need uniform legislation.
Another theme that’s come up during the pandemic is of course digitalisation. Understandably, there is much talk at the moment regarding how digitalisation can strengthen and streamline supply chains. That said, are there any other concrete means that can be used to streamline logistics processes?
Pieter: Generally, when we talk about logistics specifically, there are many things you can do to be more efficient. Digitalisation may not be the next buzzword after blockchain or artificial intelligence – the reality is that there are a lot of things not being done efficiently in logistics.
I’ve been working for 17 years in freight and the interesting thing about most carriers in Europe is that they have their own way of calculating rates, and there is no uniform standard on how to do this. So you may ship the same products and they are shipped by different carriers. Also, one carrier charges by loading metre while another does so per kilo and another per pallet, and so on and so on. You need to take all of this into account; there are also different extra cost items that can be charged on a different basis.
So this is something that can actually be streamlined, and that’s the complexity of making things global – you have so many different ways of handling things that add complexity to a global supply chain. But you don’t even need to have digitisation for that [streamlining], you just need to just apply logical thinking and say at the beginning of the process, „Ok, we need to have one rate card for all of our road carriers, and one rate card for all of our air forwarders”.
But often this is not being done because those are often shared responsibilities; you have the people that carry out, the people in operations, the people that are responsible for contracting, for procurement, and they all have different goals. For example, procurement doesn’t have a good understanding of how bad contracts affect operations. So nothing really gets done, and nobody sits together with the carriers and says, „Ok, how can we make this more efficient”. This is not really a big topic, and carriers sometimes also like it that way because it means they have more freedom in invoicing what they want – they can get away with creative invoicing let’s say.
What do you think of the idea of using so-called, ‚mini-bids’ as a means of securing better rates? Is it an approach that pays off?
Pieter: I think it’s great, I’m a big fan of it.
Let’s look at it in a very black and white way by thinking of a conventional bid in the past. Typically we’d say that everything is calm in the market and everything is going well, so we’ll just do our regular once-a-year, every two-year tender, and then we make a selection of the carriers and then we move on. But that’s not the case in the world that we live in today.
We live in a world where everything changes, and we have an inflexible setup. So you can have multiple scenarios whereby mini bids can help you with changing conditions, either on your side, the carrier’s side, or the market side. Mini-bids allow you to go quickly to markets, and see what the market is doing to be able to get the right pricing.
How key is visibility via the use of a TMS and other systems? Is it something that all logistics companies should incorporate?
Pieter: The main advantage people mostly talk about with visibility is that you always see where your freight is, and if there are potential delays and so on, and you can act upon that.
In general, I’d say this is something that’s very good to have, but the question is if you need to have it operational in real-time to act upon developments. How important that really depends on your business. Secondly, if that is not so important, you can have it as business intelligence, and use the full visibility to track back and see how the performance was.
That is of course very important, and a lot of companies offer real-time visibility and the possibility to always know what is where. Even so, I don’t think it applies to everyone, and sometimes I get the feeling that it [visibility] is overrated when you look at the way it is being discussed and pushed. At the same time, of course, you want to see the performance and you want to understand how you can improve things. That data and visibility is in that sense very important.
With regards to visibility, can you ever have „too much” data?
Pieter: Well, the data is only as good as you have ability to use it. If you have time-critical shipments, of course visibility is super important. You need to know, you need to take action and you need to have automated actions to come out with that visibility. When we talk about pharma and vaccines and so on, it’s super important – it’s great when you have technology that can support a full chain and take action on perishable goods etc. This is very valuable.
But then, these companies also have the infrastructure to act upon it because otherwise they will lose a lot of money. Or they will have to make claims and so on. But if you look at visibility from a business development point of view, I’ve often seen customers over-ask on business intelligence – they get all the data and then they don’t do anything with it.
So you have to act upon the data and say that you’ll use it, because even if somebody uses it, and then actually takes the information and analyses it, the question is – can they make a change with that data? Because then you need to put that data back into your organisation, and say „Hey, this what we’ve seen, if we change this or change that we can save 5% on this and that.”
Looking forward, where do we expect to see growth in the logistics sector?
Pieter: I think certainly we’ll see growth in parcel deliveries, that’s an obvious one I think. In fact, I even saw some research the other day byPitney Bowes which says that parcel deliveries are going to double in the next few years. That’s definitely a change in behaviour in the way people will shop.
I think air cargo prices will remain high, because of the lack of belly freight in passenger aircraft, and that won’t come back soon, so they’ll be a problem with air freight for a long time. So we don’t see or do any tenders for air right now. Again, it’s a changing dynamic but I think I’ll last a long time. A lot of companies simply cannot afford air shipments, so they need to look for something else, whether it be road or rail.
I definitely foresee the possibility that rail will be much stronger, for ocean we need to see what will happen with volumes. I also think companies will start to think about shifting their production to reduce the risk of their supply chain being disrupted.
And finally, to end on a positive note – given the year you’ve had, you must be optimistic about the future of Freightender?
Yes, absolutely! We are working on something called, TendrX, which should be up and running by December, which will be very interesting. We are also increasing the number of functionalities on our current platforms as well, so there’s a lot of interesting things going on.
We are talking to a lot of different companies that want to tender with us now and in the coming years. It’s an interesting time and we are on an upward curve at this moment in time.