MAKE ME A MATCH by Peter Mackay (HCB)
Peter Mackay is Editor–in–Chief of Hazardous Cargo Bulletin HCB Monthly.
PLATFORM • THE DEVELOPMENT OF A NEUTRAL CARGO BOOKING PLATFORM FOR THE TANK CONTAINER SECTOR HAS THE POTENTIAL TO RADICALLY ALTER THE WAY SHIPPERS DO BUSINESS
From a standing start at the beginning of February 2017, TankContainerFinder.com has rapidly built a significant list of users, indicating that its founders’ belief in the need for the service it provides was correct.
The web-based service aims to fill a gap in the market that has so far been overlooked: tank container operators have plenty of tanks lying around not working – especially in today’s over-supplied market – while there are any number of potential customers out there looking for tanks. In the shipping business, this gap has traditionally been filled by brokers but the tank container market has never been large enough to sustain such a role; by putting the whole process onto a neutral platform, however, TankContainerFinder.com has been able to garner a significant slice of business at a low cost to users.The pace of growth has, says Léon de Bruin, vice-president of growth and marketing, and one of the founders of the company, “exceeded our expectations”. He reports strong interest, not least among the major players in the market.
What TankContainerFinder.com does, in essence is to match up owners and users in a sort of online dating framework. No longer do owners of idle tanks have to hang around at home with a bottle of cheap Chardonnay watching re-runs of Friends, they can be pro-active and announce their availability through a dedicated website. The four founders behind TankContainerFinder.com stress that the website does not perform the role of a broker – that could create conflicts of interest. Neither does it take the place of a fourth-party logistics provider (4PL), although they have in common the lack of assets. Rather, it is a neutral and transparent service open to all who care to join up and announce their asset availabilities and needs.
What those who use the service can achieve is greater asset utilisation and greater efficiency in the supply chain. Tank container and flexitank operators, tank leasing companies and freight forwarders all need to maximise the employment of their fleets, particularly at a time when increasing competition has forced down lease rates. On the other side of the equation, the need to optimise supply chains means that producers and distributors of chemicals, liquid foodstuffs, gases and other materials are looking for prompt availability of transport assets to help them get their products to the market as cheaply and efficiently as possible.
The problems that TankContainerFinder.com seeks to ameliorate are not new: there has been much discussion among chemical shippers and their logistics service providers over the past two decades regarding the need for greater efforts to be made to remove waste from the supply chain.
Idle tanks are a waste, not just in terms of the capital cost of having assets unemployed but also in terms of the need to transport empty tanks to the next cargo. Better utilisation ensures an improved return on investment and lower fuel consumption, contributing to the desire for sustainability in the supply chain.
Those discussions have often led to a call for more collaboration both between asset owners and shippers but also between different asset owners and between different shippers, with the idea that more transparency in the network will encourage the sharing of assets and asset utilisation, thus improving efficiency. What has been lacking – until now – are the tools to enable that collaboration.It is no coincidence then, that of the four founders of TankContainerFinder.com two – Jeroen Koppenaal and Robert Broeders – have been responsible for developing the platform that supports the system. Advances in information technology and concepts such as the internet of things (IoT) have enabled the sorts of systems that the website uses.
Whether we know it or not, we are now all familiar with that platform concept: the likes of Uber, Alibaba and Airbnb use a similar approach and each has rocketed out of nowhere in just a few years to become the leader in its own sector. Indeed, as Frank Andreesen, vice-president of logistics operations, transport and distribution at Covestro, highlighted in a presentation at the LogiChem conference in Amsterdam at the end of March, Uber has disrupted the established business model and has effectively improved asset utilisation in the transport of people.
The arrival of similar platforms in the freight transport sector means, Andreesen reasoned, that carriers need to ask themselves whether and how to make use of these new platforms. In his presentation Andreesen noted the emergence of “at least a dozen” companies that are developing and promoting platform-type applications in the freight sector, among which he identified TankContainerFinder.com.
Andreesen also quoted Accenture, which said of the concept: “Uber-like platforms in logistics demonstrate that a new era in logistics is becoming a reality. Competitive, real-time pricing and market transparency provide the next level of efficiency savings through new ways to link supply and demand.”
So, far from being just a matchmaking service, TankContainerFinder.com has the potential to play a role in disrupting the existing model in tank container transport. Shippers get better visibility of the carrier base, in real time, allowing optimal supply and demand matching even in volatile periods in the market. That ought to give them more competitive freight costs.
For carriers, the obvious attraction is that better visibility of available loads should provide the opportunity to reduce idle time and to do so with lower transaction costs, both of which will deliver higher margins.
Once platforms become established, they tend to disrupt older business models, particularly those based on asset ownership (but also the 4PL model) and may even challenge the role of conventional freight forwarders. Andreesen felt it unlikely that platforms such as TankContainerFinder.com will totally replace the existing shipper/carrier relationship, as the shipper will always want to lock in his baseload demand, but they will certainly offer an interesting route to a fully fledged ‘spot’ market in tank containers.
Editor–in–Chief of Hazardous Cargo Bulletin
Published on 2017-05-04 at 11:35 by Peter Mackay (HCB)