In the supply chain without simple modifications, companies are paying for air transportation

The global supply chain crisis will not end soon, but considering the transportation situation as a temporary event caused by a pandemic is a bigger problem, according to executives from major truck and refrigeration companies. I’m missing out. The actual solution is that the global supply chain is long inefficient, requires a better model (a model that incorporates climate change as a significant risk and business mission), and takes years to build. You need to understand. You need to understand that getting the best vehicle transport company is important.

How inefficient is logistics? Oren Zaslansky, founder and CEO of Flock Freight, who creates algorithms to maximize truck load, recently told CNBC Disruptor 50 Summit that ports across the United States are addressing long vessel wait times. I told you that there aren’t enough tracks. Luggage that eventually hits the road as “full” when coming off a freighter often has ample free space in the trailer of the freight truck.

Currently, there may be 10 trucks ready, but only one driver is available, and one-third of those trucks are nearly full. According to Zaslansky, this means that customers are “paying for air transportation,” which is nothing new in this area.

Flock Freight’s business model fills the gap between 60% and 70%, commonly defined as “full” in the freight truck business, and uses a proprietary algorithm to load trucks through the concept of shared truck loading. Make it 100% full (think Airbnb). For trucks). This helps solve the shortage of truck drivers, but FlockFreight looks at the supply chain from a much larger perspective. All of the air transported produces unwanted greenhouse gases. That’s a lot of free space that unnecessarily adds to the challenges of global climate change from the $ 1 trillion or more cargo sector. Flock Freight estimates that a shared truck loading solution will reduce carbon emissions for “less than truck loaded” cargo by up to 40%.

Flock Freight was the first company in the freight industry to pass the B Corporation certification process and had to overcome some preconceptions about its purpose. FlockFreight will be the first to become B Corporation (a company that has a business model designed to balance goals and interests and is continually evaluated by indicators related to workers, customers, communities, governance and the environment). When I applied, the launch of Logistics was refused.

“You’re a bad guy, producing greenhouse gases and burning fossil fuels. Why are you applying?” Zaslansky recalled what the reviewer said.

Flock Freight described a model that uses algorithms to make trucking more efficient, and briefly described trucking as a key to sustainability when Zaslansky is needed.

The company was certified BCorp in June 2020. became.

Having spent most of his adulthood on trucks, Zaslansky has focused a lot on truck driver shortages and supply chain struggles, but these are not new phenomena for industry savvy people. Stated. The long-standing problem of reaching the point where there are too few million truck drivers on the road has just entered the stage of “extreme variability.”

The underlying problems that lead to air transport need to be resolved even after this serious global transport crisis has passed. “What we didn’t understand in the last 18 months was to align those things in time and space,” said Zaslansky.

Billions of dollars are being invested to remove empty space from the logistics economy.

Flock Freight has completed a $ 215 million Series D funding round led by SoftBank Vision Fund 2. This has boosted retail investor valuation to more than $ 1 billion, reflecting the rapid growth of the pandemic economy during the logistics upheaval.

Supply chain fluctuations have created the opportunity for Flock Freight, which ranked 42nd on the 2021 CNBC Disruptor 50 list, and the company has grown approximately 13 to 14 times since January 2020. “We don’t expect it to slow down,” Zaslansky said of recent growth.

Softbank led its last investment in the company within a year, at which time FlockFreight needed to provide growth forecasts. Providing “big numbers” when private companies ask Softbank for money was part of the test, and Flock Freight “exceeded them. We far exceeded all the predictions we gave them. “He said.

That’s not all among start-ups looking for better ways to manage trucks on the road. Former Amazon executives have launched a convoy and are ranked 12th on the 2021 Disruptor 50 list. Convoy estimates that 80% of all freight dollars are spent on trucking and 35% of mileage is “waste”, or 72 million metric tons of CO2 equivalent emissions.

There are also Uber Freight, Next Freight, and KeepTruckin, all of which offer new cargo models with different approaches to long-standing problems, but trucks aren’t the only logistics chokepoint that is increasing investment.

Lineage Logistics, the world’s largest refrigeration company and responsible for protecting many of the food supply chains of the world’s largest food companies, including hostesses and blue diamonds, is also raising a lot of money. It has reached $ 5 billion in the last 12 months due to aggressive acquisitions of companies to add to its global refrigeration network.

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Kevin Marchetti, co-executive chairman of Lineage Logistics and co-founder of private-equity fund Baygrove, said that over the past year, all but one real estate investment trust and all but four have been funded. He said it was more expensive than a private company. We bought 50 companies and entered 15 new markets.

Lineage Logistics was ranked 17th on the 2021 CNBC Disruptor 50 list.

At the CNBC Disruptor 50 Summit, Marquetti says the problems currently occurring at the largest ports in the United States, from the west coast to the Gulf, the east coast, and Asia, can eliminate waste and do more. He said he emphasized why it was so important. Efficient in the supply chain.

The line is not only on the link between warehouses and trucks in the supply chain, but with a $ 500 million acquisition, it is now the owner of the largest refrigerated rail vehicle in the United States. It leads to a reduction in carbon dioxide emissions and helps alleviate the shortage of truck drivers.

Neither logistics executive expects the supply chain to recover soon. Marchetti said the replenishment of the economy and the promotion of the holiday season were “crazy” as demand surged after the peak of Covid. He thinks he can solve the problem, but it takes 6-9 months.

That view is shared by Zaslansky, who said supply chain issues will probably continue into the second quarter of next year. Until then, he said, “it will be the Archetypal Old West.” “It keeps banging …. It takes at least 6 months just to bang the whole thing,” he added, and there is always the possibility that a pandemic or natural disaster will push that prediction.

“We literally live in the shipping Armageddon,” Uber Freight chief Lior Ron recently told CNBC’s Jim Cramer about “Mad Money.”

Economists recently said the problem “will last until 2022” and “worse before it gets better.”

Zaslansky is less supportive of short-term problems than rebuilding its supply chain to be durable in the long run. In trucking, and for global logistics, he said it meant changing the rules of the game. Instead of “repetitive” changes to traditional supply chain models and modest efficiency improvements, he said, “create entirely new rules.”

As B Corporation, most of Flock Freight’s new rules are based on building sustainable businesses. The easiest way to do things in trucking, such as a truck driver charging a device in a rest area and idling in a diesel-powered vehicle, needs to be revisited.

Flock Freight has partnered with Carbonfund.org and has agreed through Carbonfund.org to offset 100% of the carbon emissions of its shared delivery service with carbon offsets and pay the shipper’s costs. Logistics companies reduced carbon emissions by 4,127 metric tons in 2020. This year, we will use offsets to reach net neutrality for shared truck loads, offsetting 20,000 metric tons of carbon emissions.

However, as the only certified B Corporation in the freight sector, building a more sustainable supply chain is a major business goal. The company’s BCorp. Maintaining certification not only “keeps them honest”, but also “creates other products” that have contributed significantly to FlockFreight’s recent growth. And in order to remain a Benefit., “We must be able to prove that with data on sustainability and growth,” Zaslansky said.