The Logistics Tribe

The Logistics Tribe

Transcript

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00:00:02: Hello and welcome to the logistics tribe I'm bored felgendreher founder of the logistics tribe and my guest today is Jonah McIntire,

00:00:13: Jonah is the founder of tnx Logistics in a i Base Road Transportation procurement tool that he just sold to transporeon,

00:00:20: I've known Jonah for many years and I've always appreciated him as a very thoughtful Observer of anything related to technology in the logistics and Supply Chain management.

00:00:29: Super smart and opinionated about a lot of things you could call him a contrarian because he likes to challenge a lot of the conventional wisdom on the logistics Tech in particular which is exactly why I invited him on to the logistics tribe.

00:00:41: We went into this conversation without any kind of plan,

00:00:45: and just let the discussion goal where it needed to go and the retrospect that was exactly the right thing to do what you will hear is a wide-ranging discussion on the logistics startups on a districts automation,

00:00:56: digital Freight forwarding on artificial intelligence and Logistics and much more.

00:01:01: If you appreciate thought-provoking perspectives on any of those topics this is the episode for you,

00:01:07: enjoy hello Jonah welcome to the logistics tribe thanks for being on the program in thanks for

00:01:15: really appreciate works there's so much new with you I've seen the news you just sold your company and you have a kid there's some private news some personal news some some business news what's going on with you man what's what's the latest it's all that stuff

00:01:29: it's you know it's family for the first time its,

00:01:33: business old new adventure get to try to do things that we were doing before its small scale is a larger scale so it's all great,

00:01:41: fantastic fantastic you'll always remember this year then for sure this year and last year for sure yeah like we all will do but you're probably in a more profound way than us,

00:01:51: perhaps I'll celebrate it more that's for sure yeah so so so don't take us back you you found a tnx logistics a few years back,

00:01:59: that's the company we just referred to that you sold to transporeon take us back to the time like when did you start the company what was the idea how did you evolve and how did you

00:02:09: decide to have it acquired by transporeon take us back to that time sure so 2016 me and two other people one of whom I had started my previous company with.

00:02:22: Decided that we wanted to build a platform which would ensure sort of optimal matching between capacity Trucking capacity and.

00:02:31: Buyers of trucking capacity and so this was not meant to be Uber for trucks it was it was meant to be more like a utility like a stock exchange type of.

00:02:41: I'll play with something that was we hoped would achieve very fair and stable matches where people felt like.

00:02:51: Okay this is providing valuable service it's optimizing for Community benefit and everybody comes away with just a better result than they could have had before we were really looking at stock exchanges in the kind of transparency.

00:03:05: And liquidity that that created for markets and financial markets and commodity markets,

00:03:12: okay reality was within a year or so nine months to a year we had really nixed that idea and.

00:03:20: And first pivot yeah yeah.

00:03:23: Yeah I think I think this is kind of lesson one for anybody who's going oh yeah startups are about Vision well they're really startups are about.

00:03:31: Opportunism there you you attempt to exploit opportunity a.

00:03:37: To the extent you can you do if you can't you identify opportunity and you know you can tell you,

00:03:43: and you try to build the plane before you fall to the ground you know bird create the parachute before you hit the Earth,

00:03:50: so what we identified was the air and that approach.

00:03:55: Was that there was no path Pathway to achieve scale so I would classify us kind of nut into this naive group that said.

00:04:04: If you had all the transactions of the market you could make them more efficient less it yes,

00:04:10: but until you get there you have to have a pathway that goes from zero to one customer.

00:04:16: And words what is the first customer get out of a marketplace with him get anything.

00:04:21: So we eventually re-equipped essentially we took our skill set and what we knew about the the industry.

00:04:29: And we re-equip towards we're going to give extreme pricing and buying advantage to one side of the market this case transport buyers,

00:04:39: by designing a procurements you know procurement Aid procurement support that would help them get Trucking capacity wasn't going to it wasn't Community benefit anymore it was single-sided benefit.

00:04:52: Helping the buyer and that actually worked so that was 2000 you know we really began that that kind of beginning in 2017,

00:05:01: early 2018 we expanded into Europe early 2019 into the u.s.

00:05:06: 2020 and to Russia and Colombia in South America and early 2021 now

00:05:13: well we were acquired by transporting yeah you started off in New Zealand out of all places right I recall yeah was the rationale for that yeah well you've got the Whiteboard rationale again this I think a lot of startup life is this sort of,

00:05:24: things that look good on white boards compared to reality they'll the Whiteboard rationale was,

00:05:30: we're a small group we don't really have any investment the beginning and we're bootstrapping and there's these there's these startups out there,

00:05:39: that like cargo mattock,

00:05:41: that are saying they're going to do you know this sort of work also and they're in there couple years ahead of us and they're well funded and I think when we started they already had something for million in investment we had,

00:05:53: you know 0 million and and it sounded like yeah yeah so we're going to go to this,

00:06:00: out of the way market no one's watching us we can you know we can essentially be stealth without being stealth.

00:06:06: Now the reality is two things one those guys like they folded I mean a lot of the people we were worried about they just don't exist anymore and then the sense that they were never really as much of a threat as we thought they were and then the second is.

00:06:20: New Zealand does not indicative of the rest of the world so it was not it from that perspective it was kind of a.

00:06:28: A poor strategy what we did do down there though is we Face some of the most.

00:06:34: Tech resistant no end users that you can you can find,

00:06:40: anywhere and so the what they did instill in US is this absolute perfectionism when it comes to minimizing ux friction for the end user so the end users in,

00:06:53: at that time we were kind of eventually said okay look we're going to make this Fisher-Price meets Logistics it's going to be,

00:07:00: colorful it's going to be easy to use dead simple enjoyable experience for the end user because they any friction at all and they'll walk away

00:07:10: wow so you went through the School of Hard Knocks down in New Zealand yeah if you can make it in New Zealand you can make it anywhere when it comes to ux I guess yeah least with ux Dara the The Challenge from a business perspective is.

00:07:23: They're just talking I mean they're there.

00:07:25: Like I love New Zealand doing the wrong bike I've got ya good experience there was still have customers there but there are 4 million people you know they're there,

00:07:36: their Market is smaller than most of the,

00:07:39: major Urban like it Berlin right the Berlin Trucking Market is probably larger than the national New Zealand Market.

00:07:47: And so that that is the challenge of.

00:07:50: There's just not enough business to make if you win it doesn't matter and if you lose you know you lose and you go out of business so it was really a tough.

00:07:59: I think it's start in retrospect we should have.

00:08:02: Stayed and major markets like EU and US focused but but we did I think we came out Scrappy strong you know.

00:08:11: Like you said if we can succeed with those users that we can succeed for sure with us and European users,

00:08:18: yeah it looks like you made quite a bit of Headway in quick fast expect expansion when you talk about all these countries that you expanded since we last talked I which was probably like two years ago or something yeah good good run there yeah sure yeah yeah yeah we're pretty,

00:08:31: press pretty proud of being able to expand to these most.

00:08:35: Supply chain software companies or any company for that matter sort of dies on the shore of the next Market they succeed in one market and then try to expand and then die.

00:08:47: Kind of on the beach and it's hard you know it's you took her to a meeting and they say great so who else you work with you see no one.

00:08:54: No I need your country no one that matters to you and Okay so.

00:08:58: Your it's not tested there's no social proof where your staff will they're all overseas to okay yeah it's A Hard Sell I was happy to be able to do it

00:09:08: and then and then add to that that the the sort of significant differences between the trucking Market in your versus u.s. for example does it play a role and that business yeah or not yeah night and day

00:09:17: there's a there's more there's more difference than there is similarity truly you talk to me about some of those what are the most obvious ones that are we stood in your way

00:09:25: the stuff that well the stuff that stood in our way,

00:09:30: which is maybe different than the larger constellation of different of how they how they aren't the same,

00:09:36: but the stuff that was particularly important to us was the composition of the market in Europe if you talk about Road Transportation procurement you have shippers procuring from forwarders.

00:09:47: But it's Ari Shivers procuring from Logistics providers most of whom are very proud of their asset holding so think of a Wahlburgers agritech.

00:09:58: Major companies DB Schenker and.

00:10:03: If they do anything in terms of subcontracting on words they call it forwarding and it's a minority of their business.

00:10:10: And no one no one is very very few companies in Europe are straight ahead.

00:10:16: Branded for door because they're sort of a negative connotation like it's a non value-adding middlemen.

00:10:23: Now in Auto and it's obviously as in all other Industries Europe isn't Europe it's a constellation of like 35 economic region sure.

00:10:34: Different laws different language all that now us the composition of the market is of very large very healthy segment called brokers in Europe you would call them ship forwarders.

00:10:46: U.s. its Brokers and they've got an established like digital ecosystem through load boards and through visibility tracking and whatnot,

00:10:55: where everyone knows the spot price for example within a certain range because it's just it's just kind of publicly accessible data.

00:11:04: Through these through these tools and there's there's a yeah it's just a more competitive mature larger.

00:11:12: Market for Road Transport

00:11:16: and then Along Comes transporeon so talk to me about how that came about and how do you fit in now into that organization which been around for quite a number of years right I mean I've already explained forward

00:11:27: yeah 20 years yeah it's been around yeah so so I think,

00:11:31: transport you and kind of key fit with us is this I think there's a this quotation about startups are trying to achieve distribution before incumbents or can achieve innovation.

00:11:46: And if you look at the way that we were positioned against transporeon,

00:11:50: transporeon if we were to sell against them which was kind of starting to happen already and if it wasn't happening it would have happened in the next 6 months for sure is transporting would enter the room and say.

00:12:03: You know we have 70,000 carriers in our Network it's a it's an established dominant platform for communication around the logistics topics.

00:12:13: And we would enter the room and we would say we have you have to bring your carriers to us like we don't have an established Network.

00:12:21: And you're going to have to bring your tears to us you're going to have to force it so you as the buyer going to have to say no this is the only way you can get my my shipments and yet.

00:12:32: Our product is going to drive so much value for you that you'll thank us later for doing it.

00:12:38: And so what is interesting is putting obviously is to overlap those where you go alright largest logistic Network in Europe,

00:12:48: probably touches one in 10 Road Transport moves in some way or another and so what let's in other words distribution distribution is there,

00:12:57: and our product that can unlock a ton of value for the for the Road Transport buyer that's pretty cool and there's just there's just simply more value to be created.

00:13:07: By making that pie larger together than there was if we were to.

00:13:10: Also mention you're still on right so you're now an employee of transparency we speak yeah that's right so I can delete this you know this business unit around Thomas procurement so the tnx logistics product is sort of.

00:13:24: Just coming in as a line of business for them.

00:13:28: It's got its own organic you know Standalone targets and it's got the synergistic.

00:13:36: Targets as well okay let's bring value to the existing transport in network and start converting some of them over to a more autonomous style of procurement.

00:13:46: And then there's also this this sort of what do we build next kind of product management aspect which is.

00:13:54: Great given what we know given what they know what's a new line of products that we can bring to the market that,

00:14:02: that no one's seen before exciting times exciting times awesome yeah yeah don't talk to me about all the stuff that you've recently seen in the LogTech space in Europe,

00:14:12: let's start with Road Transportation let's talk about comedies like Center for example that have massive amount of funding.

00:14:19: Unicorn starters you know first German Logistics,

00:14:23: start of the mated to that status and the quite a quite a short amount of time what's what's going on what are you what are you observing right now in the European truck transportation Market yeah I think that

00:14:33: Center Cinders and itching company and you have written some blog posts some public summer sort of private distribution through sub stack,

00:14:43: but I've written some blog posts on them so one thing we have to really give credit to them as they are consummate dealmakers they've grown through a combination of.

00:14:53: Taking funding,

00:14:55: making good deals with shippers to to grow the volume base and through Acquisitions so,

00:15:03: all those thing and obviously the most the sort of the Crown Jewel of the Acquisitions from a marketing perspective was Uber Freight.

00:15:10: Freight right first ever Road right the French French competitor and the noob afraid shortly after yeah made some smart yeah smart purchase of their yeah for sure and and so that's that's really I believe they're their strongest.

00:15:23: Capability as an organization I probably am,

00:15:29: you know I'm a little I'm a little contrarian on the feet the marketing message which is the marketing message is the same for them as it is for Convoy new refrain essentially it's,

00:15:43: we're building a more efficient allocation of you know a freight two trucks,

00:15:49: we're improving the whole you know whole Market in Europe that has a lot of green spin to it that's like reducing carbon emissions in the US its.

00:15:57: They're laggards in that regard they do mention that but the marketing message I think there is a bit a tech washing if I'm honest.

00:16:06: I think I'm more I think I'm more genuine interpretation of this is that they all three of those companies are simply building large-scale forwarding or brokerage.

00:16:18: Businesses in the kind of traditional way that.

00:16:23: Those businesses have been built in the past you know you you win Custer you win shippers usually by discounting compared to the competition sometimes by acquiring wholesale you know an existing business.

00:16:34: Then you operate it and try to achieve some efficiencies and then and then move on.

00:16:41: But it is true that if you're starting something from scratch today and you can build on more modern tech than you were in the past and you are.

00:16:49: Digitalizing that sprays quicker than an incumbent going back to what you said earlier that the old established dinosaurs so to speak they have a lot of inefficiency they have a lot of non Tech stuff going on is that true or is it just also

00:17:01: yeah I think I think it's also I think that's also sort of marketing message

00:17:06: it's great story like this is whether it seems like the white board looks beautiful on this theme you know dinosaurs they're doing things their you it's true if you walk into a forwarding office most of the time,

00:17:20: you could have you could have time jumped from the 1990s to now and not really notice a difference it's still folks with Excel,

00:17:29: lot of paper.

00:17:31: You know the computers are slick are Slicker now they're not the big you know big big thick screens that they were previously but.

00:17:41: Not much as digitized now that said I think there's a couple things that are sort of we should.

00:17:47: We should be contrarian on on this message for it so the first one is.

00:17:53: I think it's probably more more fair to say that if you have such in officience if you have efficiency of tech,

00:18:01: it probably benefits the larger people versus a smaller people so it's a tech startup that can sort of magically match capacity and demand.

00:18:10: They can only do it with a very small amount of volume because they are a small company.

00:18:15: So if there is any use of that technology I would say that a company like sender is doing the following they're using their cash to buy market share,

00:18:23: once they get big like a DB Schenker,

00:18:26: then they can use the matching technology to run more efficiently but they're still in that first stage right now which is there really inefficient like they run it up operating loss while they're buying the market share.

00:18:38: Okay so you're saying that the prerequisite for their model to work is it not enough connect Cloud so meaning of data and not enough transaction of the platform to you Willie,

00:18:49: see the benefits of the of the automation yeah yeah exactly like it if the technology works at all which which I think is another question but like if the tech if there is matching technology that works the way that those companies Market it,

00:19:03: it's the it's a big boy technology it's not a scrappy startup technology it's a once you get to massive massive scale.

00:19:13: This will be the differentiator so it's what I think would separate like the top 10.

00:19:19: It would what it would possibly would make one of the top-10 better than the other nine not what's going to make the 500th largest.

00:19:28: Startups you know kind of startup entrance it's not going to make them grow really fast in don't think and and the and actually I think the financials play that out like.

00:19:37: If they had the magic technology that they described that they have not just sender but all these companies on truck on truck Convoy Uber Freight if they had it.

00:19:49: Then where is it in the economic model because they're underperforming their peers so they lose money on transactions.

00:19:59: Attack a magic technology should either help you win new business run the business you have more efficiently or protect you from competitors.

00:20:09: And it's not doing any of that stuff.

00:20:11: How do you know I mean how do you know the internal numbers or do well it's actually it's interesting because of these companies you know if you take Uber Freight sender Convoy,

00:20:22: they keep going to Market to raise capital and every time they do they bleed out you know financial information.

00:20:29: Um in the case of uber they were bleeding it out and then they went public and then it's just really the kind of a the gates are open you know every quarter you can check.

00:20:40: And I've got send you a link to this but I've done some background math on this and here's what I see so in a period of time of about two years.

00:20:53: Freight and Convoy who I have the most you know you can get the most data on Sir most Publix publicly available sources for every Euro or dollar that they pay a carrier.

00:21:04: They must have charged shippers about 76 cents something like that so there's about twenty four cents that was funded by investors,

00:21:16: so either they didn't charge enough ship to the shipper or they pay overpaid to the carrier or a mix of the two.

00:21:23: Um and that's an enduring you know it's not like that was like a one-time investment where they bother bunch of Machinery or something that's an enduring operating.

00:21:33: Um operating loss so it's not like a camper zation is going to get rid of that it's know it's like this is actually the rate difference between the buyer and the seller.

00:21:43: Okay okay so that seems that seems to match your theory that this is sort of the draw period you going to have to invest before you really see the benefits of Technology kick in after you reach a certain threshold right so you'll yeah you'll have to view to pay up before you reach that level of where it really delivers the goods so to speak yeah

00:22:01: yeah it's a bit like a ram ram chats or something where it's like they don't work until you get to a certain speed and.

00:22:09: It's basically like if this technology exists at all what we can for sure say about it right now is it doesn't it doesn't work at the scales that these companies are operating.

00:22:19: Maybe the work when they get larger.

00:22:21: That's a question but but it certainly hasn't worked yet if these companies didn't have another way to say it is I think that these companies are primarily a way to redistribute.

00:22:33: Venture Capital into the industry that they if they didn't have Venture Capital they would,

00:22:39: atrophy I love having you on the program because I knew this was going to be controversial I like you're being contrarian and you won't be up front so this is this is all gonna be appreciate that so anybody who listens in now who disagrees you know,

00:22:52: feel food hit us up and we'll pick it up again this is great yeah this is yeah I know I was dealing with somebody who doesn't.

00:23:00: Who doesn't speak like everybody else does so I really much appreciate that let's move on to something else maybe let's move on to flex port

00:23:06: yeah different different part different different different part of the world but you know sort of similar analogies what what do you see in them what's what contributes to their sort of

00:23:16: massive success in raising capital and where are they what what's your what's your viewpoint,

00:23:21: yeah I think there's the I think honestly I think they're on the same theme less losses and in the case of flex Port so they're they're not,

00:23:29: they're not have the bleed is as much to get the scale so I think Flex Port is a similar play but like if you frame it from the point of view of.

00:23:39: Let's look at from two point of view is let's look at it from the point of view the investors the investors go the pitch the investor is always the same it's,

00:23:46: this is a huge part of the economy you know if you look at Trucking it's like 3% of GDP it's like it's a huge part of the economy it's poorly run,

00:23:56: it's highly fractional so that the largest in trucking case like the largest single provider touches about two percent of market share.

00:24:05: So so the message is like even if I you know as my startup even if we only got to one percent of market share that's an enormous amount of Revenue,

00:24:15: and we are sure that we can run more efficiently than the existing people because they use pen and paper and Excel.

00:24:21: That that's essentially the message and yeah yeah from an investor point of view that actually could be solid there's it's I think that Flex Port is on track to becoming and.

00:24:33: Very large XPO,

00:24:35: you know like XPO type Freight forwarder they're there they're going to be a freight forwarder that sort of does Freight forwarding.

00:24:46: Makes a significant amount of Revenue pretty small margin but it's not you know it's a marching like it's a solid business.

00:24:54: What I think is interesting about the messaging though for around select sport is is about the valuation multiples so.

00:25:02: If you're if you're put in as a freight forwarder or so if you're like an agility Geo dentists.

00:25:08: You know a DHL those kind of freight forwarders the multiple you're going to get a solo Maybe.

00:25:15: Two times revenue and depending on your profitability if you're positioned as a technology provider you're hoping to get it you know very large scales you're hoping to get like.

00:25:29: 8 to 12 times Revenue okay so for about Flex Port perspective and Uber Freight and Convoy and all these folks.

00:25:37: Even if you move the needle a little bit even if you only convince one in 10 people to Value you closer to a software company.

00:25:45: That's a huge variation in evaluation and I think that's that's really from their perspective like that's really the play is paint the walls is.

00:25:55: With as many coats of paint of you know technology.

00:25:59: Speak as you can because it boosts the value of the business whether or not I don't think that'll ever.

00:26:08: I don't think they'll ever return the the kind of Abita that you expect from a software business but.

00:26:15: That sort of the investors problem that's especially the late stage investors problem not even the early stage investor problem

00:26:21: yeah what other interesting new technology startups to see out there that are super super interesting that deserve our attention anything that strikes me as very super exciting super sexy,

00:26:31: yeah I think that we all should be talking a lot more about autonomous vehicles than we do.

00:26:36: I'm sort of a pessimist on on drones anytime in the near future they got cool edgy use cases like there's,

00:26:44: there's drones flying you know probably as we speak.

00:26:47: Out over Reykjavik in Iceland to to make deliveries to two homes they're kind of on the other side of the Bay.

00:26:56: I've been doing that for,

00:26:58: I think over 18 months and that's cool like there that it's real stuff in China they've got drone deliveries out kind of testing and Rural places but when you test anything and trying to the scale just sounds like.

00:27:11: National Distribution in Europe you know it's huge but,

00:27:16: I think the physics of it are like you know drones are going to lift a 25-ton container you know there's just not going to happen so I think autonomous autonomous vehicles time is trucks is.

00:27:30: Truly game-changing you know industry and changing stuff we just don't talk about it very much so I think that that's.

00:27:39: That's pretty cool yeah I think this there's a newfound at least here in Germany there's a newfound enthusiasm about it because the government just

00:27:47: pass some legislation that allows it makes it makes it makes it legal and for the first time you know autonomous vehicles and passed some major legislation and I drew some recently and just just a previous episode I talk to it like visiting who writes globalization said at a DB Schenker and he was talking about that he liked they use that,

00:28:06: new development on the regulatory front to really look back and re-evaluate their strategy and really changing stuff there because they see it coming faster than they originally thought yeah yeah,

00:28:18: yeah that would be,

00:28:20: like if I had the kind of place my my money someplace I would be in I was looking for someplace I would be looking around the Thomas vehicles,

00:28:29: it's not sure where a I think it's so early it's not even sure where you would.

00:28:33: Go like it's not going to be vehicle manufacturers who then operate fleets is it going to be.

00:28:39: You know people like TV Shanker who collaborate with manufacturers and then lease or buy fleets and operate them

00:28:46: you guys it's yeah that's what what Eric was pointed to right that's that's kind of how they see the role that there's just got to be some intermediary who knows the processes and knows how to run the stuff and

00:28:55: yeah sort of going between they say C major role therefore the distance provider like DB Schenker to play Roller for sure yeah,

00:29:02: so I think that's really interesting stuff I think some of the sensor internet of things kind of world.

00:29:11: Is starting to get interesting I mean I think this is one of those like costs are plummeting.

00:29:17: We can seriously now Envision a world that physical Supply chains move throughout a highly.

00:29:25: Connected fully censored you know life cycle but of course we're nowhere near using that data so yeah okay the data is somewhere but what do we do with it.

00:29:38: But I think there are there are interesting so there's an interesting future in that

00:29:42: yeah just just going back to autonomous vehicles I mean are you spending any time are you paying attention to what's happening in the warehouse I know that's not your Forte that's not your traditional strong suit but yeah there's a lot of stuff happening in warehouses with autonomous is in collaborative robots right are you interested in that stuff

00:29:55: yeah I am I'm actually the the most interested in in it like inside TC automation is,

00:30:05: is physical Material Handling manipulation because there's

00:30:09: there's a thing called the more of X Paradox where it's easier so it's lower cost to get a human being to do something like pick up a penny off the ground.

00:30:19: Then it is to get a robot robots manipulating their physical environment the tend to be very expensive and you have to specialized design what's the.

00:30:28: You know what's the role that they need to do if you want to general-purpose robot with a decent amount of like spatial recognition.

00:30:36: And ability to follow commands that are you know given to it ad hoc that's a human right like that's a and they're cheap they're plentiful and they like to manufacture themselves like though that's what humans are right so.

00:30:51: The thing that I find interesting about where housing is that particularly e-commerce warehouses is that the material handling is really complex you have a bunch of you have everything from like jewelry packets where it's this tiny little thin fragile you know.

00:31:06: Plastic bag all the way up to like pallets of materials.

00:31:11: And and designing warehouses that can continuously adapt to new material handling requirements sort of forces this solve of this this more of X Paradox of,

00:31:24: a lot of physical manipulation flexible physical manipulation out of a robot.

00:31:29: To the extent that we do that I think like as that's happening I think that's the signal for robots taking over a really large portion of current jobs and.

00:31:39: In the physical supply chain yeah but that's still pretty far out I would say right because right now it's so efficient for someone you just to grab in the box and pick out whatever is in there,

00:31:48: the robot it would be totally dumbfounded right staying there and not knowing what to do and like fumbling and just that there's,

00:31:54: there's ways there's there's areas where robots are so far advanced in terms of what humans can do

00:31:59: in other parts where we just hopelessly behind it feels like right yeah and the logistics spaces like this sort of hodgepodge and mixed of these different phenomenon yeah yeah yeah exactly exactly it's exactly said like there's some things that,

00:32:12: it's essentially the Paradox is this like the things that appear easy to us are hard for software and robots and the reverse so you can make software that can do Advanced algebra,

00:32:23: you know that one in a hundred maybe one in a thousand people can do.

00:32:28: And that's dead simple for software because it's computation and it's sort of its natural but if you had something that was like where you you wanted a robot that could walk across.

00:32:38: A crowded room and pick up a penny and then tell and then like tell you if it's heads or tails that's a

00:32:45: multimillion-dollar robot if it exists at all oh so that's actually a perfect perfect argument for the sort of humans and Ai and robots

00:32:56: not trying to replace each other but working in unison right working together collaboratively right because there's so many skills that Youmans are just better at doing other skills,

00:33:04: that robots and I are better doing why not join them together right as always this talk about well let's create this sort of

00:33:10: general purpose AI That's just like a human that's better than a human right there supervise everything a human can do like for what purpose because you could build AI that when you combine the two they I or the knowledge and the skills of a human and the knowledge and the skills in AI of a of an AI

00:33:25: then magic happens right would you agree right right yeah yeah I have yes I agree.

00:33:30: I have to say the last five years with tnx Logistics is maybe a bit contrarian on this as well and so here's my contrarian streak on this its.

00:33:41: What people want to hear this is kind of a populist thing I just just just mentioned like what people want to hear is that.

00:33:49: In that synergistic vision of the future of AI and human beings that the AI will take away their drudge work.

00:33:57: And allow them to focus on the more creative things of their job the more creative aspects and help them Elevate their sort of contributions by doing the things which are,

00:34:09: uniquely human and are not you know wrote In other words okay right in reality the reality that I've experienced as AI enters the workforce,

00:34:19: is that.

00:34:20: Oftentimes a i takes over exactly the thing that the people are most satisfied to work on so so I'll just talk specifically to the tnx logistics experience,

00:34:31: we're you know autonomous spot procurement for Road Transport so who does fa procurement right now it's it tends to be the dispatchers or quarter that's the wording and Europe and us you call them carrier sales reps.

00:34:45: Okay the dispatcher is in Europe they say they see this.

00:34:51: This job that they do around Spa procurement as something where they're uniquely skilled because they've been in the industry for years and they've memorized you know the patterns and the seasonality.

00:35:02: And they know the carrier and they enjoy negotiate the negotiation aspect of like hey.

00:35:10: I did you a favor I need you to you know I need to do this lower price or me whatever and they get you know a bottle of vodka from their favourite polish carrier at Christmas and

00:35:21: so it's so this is the most enjoyable part and what we do when we come in is we say.

00:35:27: Yeah you're not going to do that anymore like you're not going to have an influence on it you're not going to decide you thought you were good at this but you turns out you weren't your you weren't as good at this as software is.

00:35:38: And but you're still getting used to it can do something that's like okay what am I going to do what you're going to do is you're going to do data entry.

00:35:44: Because it's cheaper right now to have you work 40 hours a week re-keying some

00:35:50: data from another system or you got an email or PDF or something that's a that's cheaper like we don't have a general-purpose AI that they'll rekey PDFs yet.

00:35:59: Or we can we have robotic process automation which is even cheaper and even more ubiquitous right yeah yeah yeah yeah if it's if it's repeated if it's not the highly variable format right but but you know so basically it's like we're going to take.

00:36:13: The so I call this sort of like Last Mile office jobs it's like there were pushing these workers to the thing that automation hasn't got to yet.

00:36:23: Right and and just keep pushing them kind of further and further towards actually the lowest value task and it because if it was higher value,

00:36:32: we will automate it but if it's it's low enough value that it makes sense to kind of keep having a human being on it nobody's and start a start-up yet to do it.

00:36:41: And we sort of keep pushing them out and they hate it and I understand I mean you know it's a hard message to here for your ego,

00:36:49: but I think that we have to kind of be ready for that reality and not think that everyone's going to become.

00:36:56: This sort of the master of this little nest of AI that does all the dredge work for them and they get to focus on

00:37:02: whatever they like yeah but is it an edge case or like a particular case of describing or do you see that across I mean try to think of other examples or try to think of other cases where that's also the case.

00:37:14: Yeah is it always the case that when Aniyah comes on comes on then the the job that was previously done by human know their delegated to doing something.

00:37:23: I mean that's completely contrary to what's commonly said about it yeah maybe you're saying well that's that's sort of the marketing whitewashing and making it sound digestible and make it easy for people to digest but the reality is is pretty different or,

00:37:37: like where do you come down on this I mean are you just black and white and this is this is always the case or is this more gray than you're making it appear yeah I think it's more like it's a wedge so I think that I think that when a i enters,

00:37:49: a a team or Workforce or roll it naturally creates this wedge if you're on one side of the Divide.

00:37:58: You're heading upwards you're going to get the credit of the success of the AI you're essentially a i supervisor.

00:38:05: And and your company will see you as more valuable your you're basically you're the pilot of a of a much larger and powerful machine.

00:38:14: Then there's the actually Pilots is this off the cuff but like this is actually happened in pot in piloting you know it used to be that airplanes had.

00:38:23: And the minimum of three crew they had a pilot to co-pilot and a flight engineer.

00:38:28: The flight engineer job is no longer existing in almost any airplane because it's automated now,

00:38:37: so what happened is that the pilot and the copilot boosted their value right and the flight engineer disappears.

00:38:45: Lowers their value there must have been a period of rollout in which there still were planes needed flight Engineers but there were too many flight Engineers relative the role so became less valuable and,

00:38:56: and I think that's what happens I think there's essentially a wedge that comes in and if you're on the if you're on the low end of that you lose the part of your job which was the.

00:39:06: You know the kind of the route to to being a hero in the company and now you're just a support person for the software

00:39:14: and if you are at the high end of it you're seeing as the supervisor of the software yeah but is it also the case that it's the introduction of an AI or new system,

00:39:23: also creates demand for jobs that know how to handle it and how to work with it in conjunction and manage these and sort of expand on it and make better systems yeah I just thought their organization yeah yeah for sure when you talk about AI entering the workforce leadership

00:39:38: leadership of companies essentially have two questions and the first one is.

00:39:42: And they're both around HR essentially one is where do I get the talents that will help me create and deploy these new technologies and the second is what do I do with my existing Talent who is,

00:39:53: have their roles displaced or Changed by the Technologies and I think that is the are a few people who are going to go from.

00:40:03: From Camp to Camp 1 so there's very few people who are going to be like huh I used to do this job now ai is doing part of it,

00:40:11: I'm going to become the expert in this a I just don't see that's realistic I think it does create new jobs but they're not for the same person yeah where do you see AI in logistics and supply chain really sort of making people's jobs better per se mmm,

00:40:25: people's jobs better.

00:40:29: I don't know I with these people's job I mean I'm just like thinking like the I'm just thinking back to the warehouses for example and if I really have to manually schluck something from point A to point B and I have no idea where I'm going and I have to find stuff.

00:40:41: Having a collaborative robot that shows me the way for example sort of gives me guidance and that sort of stuff.

00:40:46: Looks from the outside as more enjoyable than you being by yourself in that warehouse with your stuff that you have to schlep around right or know I don't know I I mean essentially I would want to think that it's definitely better for the company it's better for the warehouse,

00:41:00: overall the operations of the warehouse they're more efficient they're certainly safer I mean.

00:41:06: AI is preventing people from getting injured you know right now as we speak.

00:41:11: I I remember talking to somebody who was working in in Road Transport with a very large Fleet.

00:41:18: And he was describing every basically every year they replace a third of their vehicles of with kind of Newark it and over the course of three years they introduced this kit that would as the

00:41:29: truck was backing up if the trailer sensed that there was somebody something behind it.

00:41:35: That it would run into it would simply not let the truck back up it would it would autobrake the truck.

00:41:40: And he was describing the number of serious accidents which were dropping and you could see it was like January when these new fleets went out.

00:41:50: There would be a drop and then it would be essentially stable for the rest of the year then the next year would drop again so I think in terms of an enjoyable jobs and in the most enjoyable job is the one you don't get hurt doing.

00:42:02: And yeah it's hurting somebody else that could be traumatic to yeah so I think that's a that's a pretty clear-cut case yeah

00:42:09: yeah well so talk to me about other stuff that you excited about the market right now as you look around I know you're such a keen Observer you stuff must show up on your radar as something

00:42:18: striking his odd or noteworthy or interesting or sort of contrarian let's go there again I think the main thing,

00:42:26: I'm always on the lookout for you know just just generally across you know across the my time is.

00:42:36: Something which will cause the Dynamics of our Market to change I think right so I think about these is the difference between the Manhattan Project and like.

00:42:46: Better tires so every year there's Tire technology improves a little bit you're less likely to have an accident when it's raining your tires going to last a little longer you can get a little more grip,

00:42:56: you can get their fuel efficiency because your tires but.

00:42:59: It's evenly distributed everybody changes their tires continuously there's no Advantage whereas the Manhattan Project was one of these things that when it became knowledge public knowledge that it had succeeded.

00:43:13: The world had exactly one superpower who was capable of using it and it for as long as it lasted it was.

00:43:21: You know true dominance in that in that domain I'm looking I'm more interested in general in these right now anyway am I my life I'm more interested in identifying these emerging Manhattan,

00:43:35: project.

00:43:37: Type Technologies give me that give one company a such a dramatic advantage that will last over years like do you think that's possible or is this a mirage I mean because.

00:43:47: I mean Amazon that that was such a step function and required so much expertise and and so much dedicated effort to pull off right yes obviously in historically,

00:43:57: yes and then when it hit the market so to speak Margaret is a wrong word but when it hit the hit reality and you know

00:44:05: everything was put in place to prevent the technology for from spreading right yeah I wouldn't this be like like in this situation where you have a technology provider for example that

00:44:14: the comes up with this step function sort of game-changer Technology the goal would be to distribute it as widely as possible as opposed to committed to only one nation for example right or one company

00:44:23: yeah yeah exactly I think one of the one of the countervailing forces here is that the way the technology companies generally make money is they they destroy they sell many subscriptions or,

00:44:36: they sell many transactional license models or whatever.

00:44:40: So very few software companies would have a and then sent it a financial incentive if they came up with some killer technology.

00:44:50: To you know to hoard it themselves but you could imagine for example like a next-gen,

00:44:56: TMS that's just that much better than it takes over the whole team s market you know the 14 billion.

00:45:04: U.s. dollar you know All Transport management Market.

00:45:09: That's possible I find that a little I don't think it's gonna happen but but it's you know you could imagine it similar thing with like some sort of like.

00:45:19: You know iot consolidation platform and if there is a someone who had truly could truly do it but I don't see anybody doing it I mean this is the the your there aren't many men Hatton projects in a lifetime.

00:45:33: And one of the closest would be AI projects right that we don't know of somebody that really develops this is super smart super capable yeah M AI That's more capable than others because you know the circumstance in which it came about are you EJ.

00:45:48: Yeah small datasets and less regulation and that gives you the advantage right yeah I would probably look that space that that's probably the space where,

00:45:56: something like that is most likely to occur or not yeah yeah it's really great this actually one of the reasons why I Economist vehicles I think.

00:46:02: It is interesting to me because just for the sake of argument let's say that you let's say that you did come up with and until a.

00:46:10: Package that you've retrofit onto any truck that allows you to control the the truck autonomously.

00:46:18: And you got regulatory approval for it everyone else has has to have drivers but you don't need to have drivers or maybe you need to have somebody in the truck to like for legal reasons but they don't have to drive.

00:46:30: They're just there to like in case there's an accident they can get out of the truck and help with loading and unloading whatever so,

00:46:38: that if some that that's a monopolize double obviously game-changing technical advantage.

00:46:45: Then that that would be interesting to to see how someone with exploit that.

00:46:51: This is our very many of these though yeah but you are here on the lookout here you watching out for those so

00:46:56: let us know as soon as you find one and we'll the next episode Yeah Yeah well yeah exactly I'll send out an investment perspective I think there are other industry like if you look at if you look at someone like Amazon.

00:47:09: You know there are they they are the Manhattan Project of.

00:47:13: Of retail right like they touch us a huge portion of online transactions and it,

00:47:22: it's just really challenging and they could have right they could have gone a different direction like they could have they could have decided the license things and you know not not focus it on on unique competitive advantage to themselves.

00:47:37: But they didn't yeah yeah John I think we should do this more often I think I could easily come up with like 10 20 more topics we could kick around like this and and get your

00:47:47: contrarian view on maybe eventually you'll find one where you're not contrarian they will be boring though yeah that's a good point yeah contrarian that everything to know you're not that contrary I'm exaggerating I'm being facetious.

00:47:59: Well that's that makes this interesting right I like people who had that think through stuff and don't take everything at face value that they read and just cursory

00:48:09: hmm glancing at the headline so I think this is this is good so maybe we should do this for man off and let's let's see what the what the audience thinks how they react if they think this was total garbage okay well if they think this is interesting maybe we'll we'll do another few rounds we should do this more often yeah

00:48:23: awesome yeah in any case thanks

00:48:25: Jonah for joining us today good luck with the transporeon and all the best with this with the little one and until next time thanks very much ports really appreciate all right that was the logistics try podcast episode with Jonah McIntire

00:48:40: I'm curious to know what you think I really enjoyed this very open freewheeling format.

00:48:45: If you want more of this let us know you will find links to Arlington profiles in the show notes don't hesitate to contact us and don't forget to subscribe to the logistics tribe podcast so you don't miss any of the future.

00:48:57: I'm bored fat and RAM until next time.

About this podcast

Boris Felgendreher, Dana von der Heide and Marco Prüglmeier invite you to listen to The Logistics Tribe, a weekly podcast about the world of global logistics and supply chain management.

You can follow the hosts on Linkedin:

Boris Felgendreher: https://www.linkedin.com/in/borisfelgendreher/

Dana von der Heide: https://www.linkedin.com/in/danavonderheide/

Marco Prüglmeier: https://www.linkedin.com/in/prueglmeier/

by Boris Felgendreher

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