The European Commission has estimated there are approximately 50 million single person-households in Europe where the occupant is aged between 18 and 65. There is actually, believe it or not, the same number of users on the dating service Tinder, although worldwide. Tinder has, to date, identified 20 billion potential matches. That’s certainly quite a number. This translates to 400 matches per user. Note that these are matches, not dates (that would be one too many for most people…). How many of the identified matches eventually end up in real meetings is of course difficult to say, but probably only a select few.
What Tinder does is what so many other digital players are undertaking nowadays, they broker the connection between supply and demand without owning the assets that are brokered. Moreover, both supply and demand are, in the dating domain, extremely “long tail”, meaning that every actor has preferences and prerequisites that are, for all intents and purposes, unique.
Let us switch industries.
There are, also according to the European Commission, roughly 500.000 haulage firms in Europe. Most of them merely own a small fleet of vehicles, most commonly the owner driving his/her own truck. Single person households, in other words. With profit margins often under 2% and with hefty investments to repay, the financial state of many of these firms is anything but sound and pressure is mounting. A haulage company owns vehicles that perform services to shippers. The higher the utilisation of the vehicle, the higher the coverage of the fixed costs. Personnel and investment normally account for more than 50% of the total cost volume, and these need to be paid regardless of the revenue, if any, made by the company. Fuel amounts to 20-25% of the costs.
Our world is marked by imbalances. Wheat is harvested in the countryside whereas bread is consumed in cities. Ore is extracted from mines and the processed metal is moulded into cars on the production line in distant factories. There is a lack of handling capability for containers in most places which leads to the need for terminals. There are uncertainties in the stability of the traffic system, service hours, business processes differ between industries etc. It is not uncommon that these imbalances are handled using the transportation system. From a haulage firm’s perspective, this becomes evident in the fact that the resource utilisation never reaches 100%, since it highly improbable to drive the shortest route, encounter no waiting times and always carry full loads. It is possible to come close, but very difficult.
Enter the matchmakers.
Anna owns a trailer truck. She is hauling a trailer from Helsingborg (southern Sweden, lovely place) to Madrid in Spain. Today, it is possible for her to find a back haul shortly before the unloading in Madrid. The existing services somehow manage to convey enough trust between the large, global giant that needs to ship a trailer from Madrid to Hamburg and the owner-driver Anna from Sweden. They have (probably) never conducted business together before and will (probably) never do so again. It can be described as a date.
In other words: Tinder for freight transport.
But Tinder has, as we all know, some flaws. The simple and scalable utility is, as previously stated, the matchmaking. The date takes place without the involvement of Tinder, and it is here that the analogy with the freight transport industry can be challenged. Matching supply and demand is one thing, performing a transport operation where two, previously unacquainted, parties have to trust each other and enter a “digital partnership” during the 24 hours that the operation requires, and then bid farewell as friends – is much more difficult.
It is all about interoperability, about Anna the truck owner becoming a member of the global company’s digital eco-system for a limited time and then leave the relationship in a well-ordered manner.
The mighty challenge stands exactly here. Not about matching supply and demand, but having successful dates each and every time, often between a ”single household” haulage firm and a multi-national company, quintessentially different, poles apart, the very essence of an unmatched pair. Then imagine what happens when haulage companies become avid serial daters. This is an obvious development, by the way – if the friction and transaction cost for finding and accepting marginal assignments are lowered, haulage firms will increase their volume in this area.
To address this and other challenges, governments on both national and EU levels are spending large sums on projects and initiatives where authorities, industry, academic institutions etc. can meet and together seek solutions. One such EU project is the ERTICO coordinated project AEOLIX. Chalmers University of Technology is one of the core partners. The project is enabling a multitude of supply chain actors to safely, reliably, and securely share crucial operational data. We have, during the last two years, built 12 living labs in Europe where we now are stress testing a multitude of solutions and use cases. AEOLIX has 35 partners, a budget of €16m and runs from September 2016 to August 2019.
As an academic institution and partner, our role in the project is to support the industrial members in their decision-making and to ensure that the solutions developed are based on knowledge and facts.
Author: Dr. Per Olof Arnäs, Chalmers University of Technology, Sweden
Photo: Oscar Mattsson
Per Olof Arnäs has been working in, around, and with the logistics industry since the late 1980s. He holds a PhD in logistics from Chalmers University of Technology (where he now is a researcher) and has also worked as a developer building sustainability tracking systems for the freight industry. His main focus of research is the digitalization of the industry, both how it can be accelerated and also the effects/implications of it. Apart from his research he is a podcaster. His podcast (Logistikpodden, in Swedish) is the largest logistics podcast in Sweden. He will launch his first international podcast, Logistics Rocks, during 2018. He loves the 21st century.