Trucks Are About To Be Uber-ized By Amazon's Delivery Partner

The attempts of IT businesses to send customers their belongings faster have been readily defeated by freight corporations. Amazon's European delivery partner Sennder is working to move the sector along.

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The world's cargo is transported by enormous rigs that travel along highways and beep their way back into warehouses. Anything within your reach has probably been transported on many semis, whether it be Amazon boxes, furniture crates, banana pallets, or even the device you're using to read this article. Nevertheless, this diesel-guzzling business is also a marvel of inefficiency, plagued by issues that strangely haven't been solved by the magic wand of technology. The typical freight truck travels without any cargo for around 20% of that distance. Such "empty miles" are an industry inside joke because air is the most frequently shipped good on the planet.

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Mariusz Grzes is working out how to cut down on his empty kilometers in southwest Poland, off the A4 autoroute, at a little lot filled with tractor-trailers. His business, Demar-Trans, has expanded to have a fleet of 28 vehicles that are used to move plastics, dog food, car seats, and other goods throughout Europe. New orders, rate negotiations, and shipping tracking are daily headaches that are often handled via phone and email. Then there is the three-month processing period until payment is made, during which time Grzes must pay overhead. On a November evening inside his 4 headquarters, where a handful administrators and dispatchers are buried in printed bills and schedules, he adds, "We battle with getting paid all the time.

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Grzes has recently found success with Sennder Technologies GmbH, a Berlin-based firm that creates online solutions to connect shippers and truck drivers, or carriers. The software from Sennder combines a fleet management app with a road freight marketplace. It provides small businesses with a list of nearby cargoes from companies like Coca-Cola, Danone, and Anheuser-Busch InBev that Grzes may book or bid up with a click. For example, Wroclaw to Bruges costs €1,410 ($1,513), while Waldershof in eastern Germany to Périgny in southern France costs €2,500. The difference between what Sennder charges shippers and what it pays carriers is where the company makes its earnings. The platform's logistics services streamline paperwork and optimize routes such that there are shipments from points A to B to C, then back from C to B to A. The platform is free to use. Demar-Trans has switched 25% of its revenue to Sennder since signing up in early 2021. Grzes praises the system's accounting capabilities and speedy payouts, which often take just a week or two.

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That there is a convoy-sized gap between the Bay Area's aspirations and the realities on the ground may be the reason why those advancements look uninspired in comparison to the autonomous and electric trucks Elon Musk and his pals promise will soon fundamentally alter the freight landscape. This is a business that originally depended on fax machines and has only advanced as far as Excel and exchanges on Craigslist. The jokey Latvian independent truck driver Pavel Korol claims that prior to utilizing Sennder's software, he primarily used "paper apps."

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The instability of the Covid era has demonstrated how unsustainable the status quo is and has assisted in attracting venture funding. DB Schenker and Kuehne + Nagel International AG, two century-old market leaders, are rushing to upgrade before more tech-savvy competitors do. Approximately twice as much money was raised for supply chain tech firms between 2020 and 2022, according to statistics from the research firm PitchBook, at $124 billion.

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"Our company strategy is resilient to crises. For the crises we have witnessed, at least.

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The wager is that "Uber-ization" of the freight business is long overdue, but it absurdly oversimplifies the difficulties that lie ahead. Ordering taxis is not the same as coordinating trucks. In fact, six months into the epidemic, Uber Technologies Inc. decided to sell Sennder its European trucking division for €900 million in an all-stock sale. This division had built its own digital platform for shippers and carriers. "Their American model did not work in Europe," says David Nothacker, Sennder's 35-year-old co-founder and chief executive officer. We're going in seeing continental winners in road freight, and the early leader in China is Complete Truck Alliance Co. Although Trade Algo says on March 8 that Uber is contemplating spinning off the remainder of its freight division, Convoy Inc. and Uber are battling for the upper hand in the US.

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Sennder has gone through struggles to advance this far in the European Union, reflecting the disorderly nature of a regionalized sector. Even though the company has raised more than €320 million and increased its valuation to over $1 billion, it has still had to deal with disasters like Brexit and the Ukraine War in addition to market fragmentation and plain old consumer animosity. That may be sufficient to make using pen and paper seem preferable. But, Frankfurt-born pragmatic Nothacker sees Sennder's survival as a sign that it is headed in the right direction. He can sound matter-of-factly ruthless. He emphasizes that customers need their goods delivered in difficult times more than ever and claims that his company's business model is crisis-resistant. For the catastrophes we have experienced, at least.

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A university project gave rise to Sennder. Nothacker came up with ideas for businesses to go along with BlaBlaCar, the French carpooling app, while doing his MBA at the school of business Insead outside of Paris. He created a website under the name ÜberBringer because he believed empty trunk and roof rack could transport packages for extra money on well-traveled passenger routes. He soon recognized, however, that the cars were just too unreliable in comparison to DHL and UPS and were only practical for large, specialized commodities like musical instruments. Then, he and a classmate tried moving objects into bus storage compartments. A test agreement with the German bus company FlixBus also failed to produce a single paying passenger in 2016. The classmate of Nothacker eventually left for a consulting position. Nevertheless, in 2017, he convinced Julius Koehler and Nicolaus Schefenacker, two other acquaintances from the consulting industry, to work with him to develop a logistics for vans and light trucks.

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The group realized how frantic the companies were to deliver same-day shipments to smaller hinterland communities during discussions with local delivery teams at Amazon.com Inc. and other e-commerce suppliers. Almost 70% of the trucks in Europe are operated by small businesses with fewer than 10 vehicles, and the majority of them are only reachable by phone or email. Some shippers have historically relied on unreliable third-party brokers to connect with them. It is often in this obscurity that middlemen profit. According to Ludwig Hausmann, a consultant at McKinsey & Co. who specializes in working with logistics clients, "They could have lost productivity by not digitizing, but they mainly benefitted by not having transparency and predictability, by using that knowledge asymmetry.

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Large freight forwarders like Kuehne + Nagel, which occasionally have sizable fleets but frequently use subcontractors, also lacked incentives to modernize. They ran the danger of upsetting long-standing partners and auxiliary systems for air and marine freight as they cleaned up their outdated infrastructure. Deutsche Post AG attempted to modernize the technology architecture at its subsidiary DHL Global Forwarding but failed, therefore the parent firm ultimately took a €345 million writedown in 2015 and went back to its previous configuration.

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The co-founders of Sennder spotted a chance to cut out the middlemen while cohabitating a 48 square meter (517 square foot) apartment in Berlin at the time. They signed same-day delivery agreements with fashion e-tailer Zalando SE and Amazon, after which they started looking for carriers. They had to input shipping information from the carriers at first as they learned how to automated delivery monitoring with a basic web-based system (such as the quantity of pallets, loading confirmation, arrival times, etc.). Although a major Swedish automaker's venture arm, Scania Growth Capital, made a seven-figure initial investment in the business in 2017, it was still difficult to attract carriers. Truckers would reserve shipments only to abruptly cancel them, potentially upsetting shippers. Nothacker recalls that he and Schefenacker had to rent a van on their own and elope to an 11 p.m. Drive back to Berlin for a 3 a.m. pickup after spending four hours in Erfurt. deadline. Nothacker, a posh dresser who would appear out of place in a warehouse, says, "We already had a few problems and could not afford another one.

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They started concentrating on 40-ton vehicles in 2018, the large tractor-trailers that are frequently seen on expressways. With their self-service booking website, they made a unique industry promise: real-time tracking and pickups within three hours. Yet, it was difficult to encourage drivers to provide data. Several people were dubious about GPS or chose to send delivery documents rather than upload pictures of them. Later, Sennder attempted to provide drivers with Motorola cellphones pre-loaded with a simple program, but they frequently replaced the SIM card with their own or disconnected the batteries when they didn't want anyone to know where they were. Their superiors were also reluctant to abandon their traditional practices. Koehler was shocked to discover a landline phone in every restroom during a pitch at one carrier's office to ensure staff members never missed a call

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However, revenue increased by 300% between 2018 and 2019, as Sennder won over shippers with its dependability and secured more yearly contracts. This in turn enticed more carriers. More than 7,500 trucks were available on Sennder's platform by the middle of 2019. It increased to 150 staff members that year and raised €90 million from investors such as Accel and Lakestar LP.

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Sennder had good timing. The same €325 billion industry was being chased by a swarm of software firms in Europe, including Uber Freight and Everoad, a well-liked rival from Paris. To attract shippers, they all had to spend enormous sums of money. Using algorithms to visualize prospective load bundles that reduced empty kilometers and cost losses was crucial for these newcomers. The Orcas (as in killer whales) transport management system from Sennder was created to provide carriers with suggested shipping costs based on historical pricing information. But, the data was no longer relevant after 2020's double whammy of Brexit and Covid. Our machine learning experts were tearing out their hair, exclaiming, "Oh no, our models don't function! Dirk Daumann, who was then Sennder's chief technology officer, remembers this.

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Large swings in the number of drivers available and the demand for specific commodities followed. Koehler claims, "We exported so much toilet paper. Sennder began losing revenue on trips as a result of having to pay drivers more than what it could have expected from its own agreements with shippers. In an effort to win client loyalty, the business absorbed those losses in the hopes that by increasing volume, it would soon make up for them. Sonali De Rycker, a partner at Accel, explains, "We ran a route assessment in which it looked quite red in the beginning. It becomes green over time as you put more money into the client or route.

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With branches in Latvia, Poland, and Spain, Nothacker invested some of Sennder's venture capital windfall in sales and operations outside of Germany. He signed a cooperative venture in July 2020 with Poste Italiane SpA, Italy's version of the US Postal Service, to digitally handle their full-truck loads. Uber sold its European freight division to Sennder in late 2020 in response to pressure on its primary taxi business in the US. As Thomas Christenson, general manager of Uber Freight for Europe, who later joined Sennder as its CEO, puts it, "getting the investment that we required to build tech capabilities that met the requirements of European customers was just like pulling teeth. Sennder also acquired Everoad that summer after the French business ran out of money, reportedly for a pittance.

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Several hundred young professionals in their 20s are hooked to computers and laptops during a recent visit to Sennder's opulent Wroclaw headquarters in Poland as music plays from a nearby speaker. Aleksandra Kunce, the carrier manager, is analyzing her day's orders on two screens while sitting at a desk covered in business cards from possible clients. Her responsibility is to assist Sennder's carriers in any way she can, which typically entails talking with them over WhatsApp or Skype. She chuckles, "My colleague has one operator from eastern Poland who won't even use email.

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On the shipper side, Magdalena Strozek handles with comparable concerns a few rows away. While processing orders for well-known brands like Coke and Pringles goes rather smoothly, there are many occasions when Sennder's self-service apps struggle to deal with the peculiarities of the business world. Similar to that occasion a few Christmases ago when a guy tried to export a single unboxed toilet to Bulgaria, which resulted in a perplexing series of phone calls.Even before Sennder's technology has completely automated any employment, many partners appear to be wary of it. Strozek says, spinning a fidget spinner, "This is the hurdle we have to overcome to advance digital.

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Nothacker claims that his staff had "hard conversations" with clients about price increases as the macro issues that began in 2021 and 2022—Covid variants, growing inflation, and skyrocketing energy costs—persisted. Sennder increased its spot trade with shippers, which helped it gain more control over daily profits and fewer annual contracts. In order to secure access to drivers for periods of six to twelve months and prevent potential truck shortages, it also started prebooking capacities with a "chartered fleet" of independent carriers. Putin's war was ineffective. According to Nothacker, about 10% of all truck drivers are from Russia or the Ukraine.

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He claims that Sennder's top hurdle is still widespread tech adoption. Truckers frequently email shipment paperwork or call in updates, which Sennder workers manually enter. This raises the question of whether Sennder's service is actually all that creative compared to what typical freight companies have to offer. Two-thirds of the company's employees, who now number over 1,000 across 11 offices, have been dedicated to sales, operations, and marketing since 2020, when it had only 200 people.Speaking anonymously out of concern for career repercussions, a former senior logistics specialist compares the organization to a neatly packaged package that has the same sweets inside that everyone else has.

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Sennder executives said they are dedicated to gaining the trust of carriers and learning from errors. Vice President of Product Philip Jonas shows off an accounting function that he created for Orcas users. He explains, "I thought there needed to be these very attractive dashboards—bar graphs displaying your loads over months along with the amount we paid you out. "The vast majority claimed they never used it! ”

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Sennder is hardly the only person who struggles to scale without traditional assistance. Although the US is more open to technology than Europe, according to Lior Ron, CEO of Uber Freight, carriers still need staff members from his Chicago office to "pick up the phone, walk them through the first load, and then hand-hold them on the second and third loads." At first, the carriers are using Uber's "most mundane functionality," but by the "fifteenth load, they're like, 'Oh, I can press this toggle and get a contract?”

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Also, Jonas' team discovered that customers preferred simple transactional capabilities that didn't contain 500 buttons. Although the UI appears dated to me right now, he claims that it works perfectly for them. It is also obvious that customers need real rewards to test out new products. To entice truckers to use its mapping system, Sennder, for instance, has incorporated features that direct them to secure locations for showering and sleeping. The company promises reimbursements within 30 days of submitting the paperwork, or within 72 hours for a 3% fee, in order to incentivize carriers to file their delivery records digitally. We turn your PDFs into cash, explains Jonas.

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These features may promote greater adoption and boost efficiency, but if Sennder and its competitors are to meet the long-term expectations of their investors, they must drive shippers and carriers even further toward automation. On this front, Nothacker, whose revenue reportedly doubled last year, is upbeat. Whether it be dispatching, load completion, or payments, the vast majority of Sennder's clients have automated at least one component of their business operations by this point. In an effort to get around their ingrained practices, the company is relying on unsexy promotions like gasoline cards and tire discounts to draw more mom and small carriers to Sennder's platform. According to Nothacker, Orcas is intelligent enough to automatically scrape data from emails, Excel files, and PDFs.

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There's no denying that many processes at Demar-Trans in Boleslawiec still require digitalisation. Even if the company's bookings and bills with Sennder are largely streamlined, staff members have continued to print out roughly 15 order sheets and post them on a whiteboard.That makes them simpler to read. Owner Grzes rushes outside to display his fleet of trailers, the first of which he received from his father in 2007 while he was still a driver. He doesn't think that road freight back-end operations will become totally automated any more quickly than driving itself. He continues, "Maybe my grandchild will live to see such times," as he stands next to some old tires.