Ti Interview: Nexogen COO foresees new power dynamics in FTL driven by technology

What exactly does Nexogen do and what inefficiencies do you try to solve through your products?

Nexogen is a software company on a mission to disrupt the FTL logistics industry using AI and cloud technology. We provide an on-demand SaaS AI solutions automating complex FTL processes to save cost and increase efficiency. More specifically, we are automating two key processes – planning and dispatching.

For carriers, and especially large asset-heavy carriers, one of the key challenges is resource utilisation. These companies need to optimise the use of their assets and match orders with trucks in the most efficient way possible. This planning process is not as complex for small carriers, but it becomes exponentially more complex when operating large fleets. Nexogen AI Planner serves to target this problem specifically and automatically plans and optimises the fleet of large carriers.

The second big challenge in the FTL sector is the delivery itself. This again is a very complex problem because firstly, FTL journeys typically take several days and cover large distances, and carriers are expected to execute these journeys by meeting certain standards (e.g. on-time delivery and pick-ups). Secondly, the execution itself needs to be optimised to keep transport cost (fuel costs, driver costs etc.) in check to maximize profit. A third challenge are all the constraints and factors that need to be factored in when executing the transport (e.g. driving times regulations, finding a parking location, selecting the type of intermodality, border crossing points etc.). This process is called dispatching or fleet management and serves to plan and guide the driver. At the moment, a lot of these processes are done manually. Our second core product, AI operator, completely automates all these calculations and provides ETAs, optimises the route, driver schedule, transport costs, and other factors.

Why did you decide to specialise in FTL?

FTL is a highly inefficient sector with 50%-60% of trucks running empty. In FTL, there are also more constraints than in LTL that need to be factored in when planning the journey, such as driving time regulations, cabotage or things like the mobility package.

What is more, the LTL sector is already better supported in terms of technology in our opinion.

So, overall, the complexity in operational requirements, the inefficiency and underutilisation as well as the low adoption of smart solutions within the FTL sector have been the main reasons why we’re targeting this segment of the market.  

Who are your customers and what is the feedback you’re receiving about your products?

We work with carriers, forwarders, digital platforms and shippers, but at heart we are a carrier focused company. At the moment, we are targeting large asset-heavy carriers that have between 1,000-6,000 trucks.

We automate and optimise the workflow for some of the largest carriers in Europe, including Waberer’s and Girteka. At Girteka, which has a fleet of more than 8,000 trucks, 90% of the planning is being done by Nexogen.  

Waberer’s and Girteka use these solutions to elevate the level of their performance and efficiency. The ultimate impact of using Nexogen’s solutions is cost reduction, time savings, and improvement of service quality and execution. For instance, by using Nexogen’s AI Planner, Waberer’s loaded ratio increased from 87% to 92%, which greatly reduces empty kms, saving millions of EUR in fuel costs. The ROI of the project was expected to be one year but ended by being only three months.

What are the main challenges you’re facing when trying to push your product to the market and how have these challenges shaped your business model?

We are struggling with very bad data quality and data governance. Most of the carriers don’t have a digitalization strategy; only the largest carriers have chief digital officers that deal with these issues and take accountability around the process of data quality. The more advanced companies are realising the value and importance of data and consequently become more IT and tech heavy, but smaller carriers still need to get a deeper understanding of the value of technology and data.

The resistance among carriers to open up their data is a major hurdle, not only for Nexogen but for the other digital players in the field as well. We therefore welcome companies that work with data, collect and aggregate data, because AI companies such as Nexogen are dependent on data availability and data quality. For instance, we are partners with digital platforms such as Transporeon and Trans.eu as well as visibility platforms such as Project44 and looking for ways to integrate our APIs with platforms.

Do you envisage an increased need for planning technology such as yours in the near future and what might cause this?

The leverage that carriers have in terms of guaranteed capacity and quality is shrinking every day. When digital forwarders become capable of providing guaranteed capacity and the same level of service quality as traditional carriers, which in my opinion is likely to happen in the next 5 years, the difference between traditional truck operators and digital forwarders will disappear.

In this hypothetical future, carriers will then have to work through digital forwarders or platforms, thus will become more and more commoditized. This means they have to give up more and more control to other digital players. This realization, I think will force a paradigm shift to encourage carriers to invest more in digital transformation and technology to keep pace with the market.

Additionally, large shippers like Amazon are also becoming more digitalised and demand more digital maturity from their carriers.

How do you expect the FTL market to evolve?

The industry is faced with so many challenges – driver shortage, shortage of good quality dispatchers, increasing costs and wages, sustainability goals etc. Unlike other sectors which can benefit from economy of scale, FTL companies can’t do more work and scale up revenues unless they incur more costs, trucks and drivers. Because of this, moving forward, there will be a mismatch of performance – there will be steady growing carriers and those that are shrinking.

So, the power dynamics will change as a result of the use of technology. In an interconnected digital future, most business will be data driven, instead of process driven. In this context AI engines will be the receiver of all these data and will be the enabler of the next level of performance. Those that will not participate in this digital paradigm will soon be left in the dust and lose their competitiveness.

Our mission is to help carriers to digitize and be part of the new age, with out AI software and expertise. We believe that this is how we can contribute to the sustainability of our world. To make the world a better place is a responsibility that we all embrace.

Source: Transport Intelligence, September 28, 2021

Author: Violeta Keckarovska

More information about the road freight technology landscape and start-ups operating in the market can also be found on GSCi.