How to platformize the future of logistics

How to platformize the future of logistics

How to platformize the future of logistics

During our discussion with Philipp Ortwein, CEO and Co-Founder of Instafreight, he shared a great deal of information regarding the impact of a digital platform strategy on a highly fragmented sector.

Instrafreight is now one of the largest B2B logistics platforms in the European logistics industry. With an emphasis on road cargo, instafreight connects clients’ increasing transportation needs with carriers’ transport capabilities. They embarked on an incredible journey since their first MVP in 2016 to today’s platform, which has about 2000 merchants on the demand side and 25.000 transportation businesses on the supply side.

The underlying issue in logistics currently is the sector’s “offline structure,” which results in substantial inefficiencies generated by vacant truck runs of 25-30%. Instrafreight attempts to modernize the whole workflow through a digital infrastructure as well as the execution service from shipping order to carrier payment.


Kicking off the data flywheel


The traditional chicken-egg challenge, which Instafreight had to face, is a fairly frequent difficulty when creating a platform business. To resolve the issue of whether to onboard the supply or demand side first, they began with a more manual approach. Initially, they just opted for the best carrier to handle a particular shipment at the lowest possible cost and with the greatest possible performance.

The platform’s overall expansion process resulted in an improvement of operational procedures by “aggregating a lot of volume and data, which then enables you to do the matching better, to have more carriers in your platform – to basically kick off this flywheel even faster.”

As a result, Instafreight stores its data centrally and combines incoming shipment inquiries, such as the kind of cargo and the destination, with a formula derived from previous shipments to select the best carrier. Once the carrier has accepted the package, his tracking data is gathered in the other direction. With this procedure, Instafreight is able to increase transparency across the supply chain and establish a self-optimizing detection algorithm.

Another important consideration is the digitalization of the evidence of delivery. Rather than just mailing the signed piece of paper, Instafreight provides a simple option to scan or picture it and upload it later.

At the end of the day, all of this is incredibly efficient data management.

Promoting sustainability via effective logistics


Instafreight can have an influence on sustainability in addition to digitizing the forwarding sector. Philipp suggests many methods to this subject.

1. The ability to track the fuel use and emissions of all of the trucks is the platform’s first major benefit.

2. Philipp also discusses the empty truck runs that are common in the industry. It is conceivable to “bring down this by like five or ten percentage points, where there’s a lot of co2 emissions that you can actually lower, right?” by efficiently combining loads and planning routes. Moreover, by handling long-distance shipping by trains rather than trucks, emissions can be decreased.

3. The third possibility mentioned by Philipp is LNG, or liquid natural gas fuel, which may be used to replace diesel fuel. The issue here is that driving on LNG reduces truck ranges greatly, and the allotment of related gasoline stations is not very extensive.

By delivering “effective route optimization on a whole other level,” you may assist shippers who place a high value on sustainability. A platform is the best option in both cases.


One last piece of advice


Philipp provided us a lengthy response when we asked for his one piece of platform leadership advice and we guess this was among the most important insights:

I believe this is incredibly crucial to understand, because you're like actually revolutionizing how you do business, you need to be very clear what problem you're trying to solve with developing a platform.

Thank you Philipp for the great conversation and insights. The complete episode can be listened at your favorite podcast provider.

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