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25. 11. 2022
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There are plenty of drivers on the market, but companies only employ them for part-time work. Liftago has tried to solve this problem by launching its own Liftago Network, which maps available driver capacity and offers it in real-time to e-commerce partners. "An online grocery delivery driver may go through Liftago Network for DPD. Or a food courier drives for an e-shop between lunch and dinner because people don't order as much food then," explains Ondřej Krátký, CEO of Liftago, in the Adastra podcast.
Ivana Karhanová: The new Liftago Network maps the free transport capacity of participating drivers and allows partners such as Alza, Datart, or Mall to use it. What is the vision for further development? Where is urban logistics heading? How challenging is it to build such a platform, and what is holding back its further development? I will talk about this with Liftago CEO Ondra Krátký. Hello.
Ondřej Krátký: Hello
Ivana Karhanová: Let's first explain what the Liftago Network is.
Ondřej Krátký: Basically, it solves the problem that nobody has people. Somehow mysteriously, there is a lack of workforce. There are no drivers. There are no couriers. There are no warehouse workers. And we're finding that there's a lot of them, and they're just not being used effectively. They're not engaged in work all the time.
Ivana Karhanová: So, there are enough drivers in the Czech market?
Ondřej Krátký: Exactly. It's just that the businesses they work for work in a haphazard way. There are 40,000 taxi drivers here who are busy half the time. There are tens of thousands of couriers, messengers, food couriers, and so on, who are again only busy for half their time.
We have seen this in taxis and found that it is the same in other sectors. So we said, what if we aggregated their spare capacity and offered it in real-time? Let everybody use it for whatever they want and program their traffic, but in real-time, de facto, all express.
Ivana Karhanová: So you're saying, companies, you're not short of drivers, you're just imperfectly scheduling?
Ondřej Krátký: I think that companies are planning it perfectly within their segment, but they are not planning across segments, and therefore there is a lack of cross-segment authorization, which is the key to success in finding spare capacity.
Ivana Karhanová: I originally thought that the Liftago Network would involve your drivers, just Liftago drivers.
Ondřej Krátký: That's how we started. Without that, it would have been hard to start. But today, an online food delivery driver can go through the Liftago Network for DPD. Or a food courier goes for an e-shop between lunch and dinner because people don't order so much food then.
Ivana Karhanová: Is that happening now?
Ondřej Krátký: Yes, it is happening.
Ivana Karhanová: How did you convince the food couriers, or the companies that employ them, to share this data with you? Because they have to share data with you, right?
Ondřej Krátký: Not necessarily.
Ivana Karhanová: They have to provide you with data about their drivers.
Ondřej Krátký: We can cooperate at all levels. That is, if a company is enlightened, solves a problem like retention of their driver base, or wants to boost their earnings beyond their standard peak, then they talk to us, and today a large spectrum of companies talk to us.
Fortunately, we don't need as many enlightened ones today because we're at the beginning. Liftago Network's biggest success is that the vast majority of Czech e-commerce is somehow integrated into us, but that doesn't mean they're using the Network for that volume of their transactions. That's where we're at the beginning, of course.
Ivana Karhanová: And what does urban logistics look like at the moment? You've already mentioned a few things like taxi drivers are only busy for part of their possible working hours, and so are various food couriers. So what does it look like when we look at it at a high level?
Ondřej Krátký: I don't want to fit the role of an urban mobility expert. I see several problems that we are trying to solve. But I see that specifically, for example, delivery of goods is a big problem, that the same customer who complains that his van is parked on the pavement in front of his house is the one who orders it himself the next day and wonders why it arrived late.
The problem is disconnected from the perception of the solution, there is an awful lot of space in the city, and we need to manage it better so that, on the one hand, the customers who have the goods delivered are happy and, on the other hand, the carriers who then make the delivery are happy and, on the other hand, the whole thing is economical and still meets the objectives of sustainable mobility, decarbonization and so on.
Ivana Karhanová: This used to be addressed by visions where drones fly, and goods are delivered not by road, where there is a lot of traffic, but by air, which is relatively free now. And so you're saying that this place is a step too far, that we just need to optimize the transportation network.
Ondřej Krátký: Nice to see who says that. Typically, it's been said by companies that are losing money globally and need to get blood in their investors' veins that this will be good. So they were coming up with visions that were too distant. They knew that, and then it gave the impression that it was almost there when it wasn't.
Specifically, drones, battery technology, and their weight do not allow heavier goods to be transported in an urban agglomeration. So it's all been a nice little fairy tale for investors. They will probably become a reality one day, but for me, we need to focus on the present. And, of course, innovate the technology to get to that future.
So we're making a platform where we don't care what hardware we put on the Network, whether a car, a small van, a bicycle or a pedestrian or eventually a drone or a self-driving car. Liftago was created because of self-driving cars, but we didn't wait for them, we need to do something with what we consume now and the value we offer now.
Ivana Karhanová: What does the transport planning look like at the moment, just for example, for big e-shops, for multinational carriers operating in the Czech market?
Ondřej Krátký: They are all dealing with the main problem that they have to plan warehouse capacities, people in those warehouses, carriers, and so on. And we all know that forecasts cannot be hit in every planning. Sometimes they overshoot and sometimes undershoot, but it's almost impossible to get it right. It would be like a miracle.
And because the misses in logistics are not found out until almost the day or maybe the night before, you can't react to it because you can't hire drivers for the morning or fire warehouse people and hire them again the next Thursday.
The physical world isn't as flexible as it needs to be and is not as flexible as server capacity in the cloud. Still, we're finding that it theoretically could be if someone had visibility into spare capacity in another industry that's overlapping at the same time, complementary, and that's what Liftago was doing. Networking solves the immediate need for capacity that day and therefore complements existing players who are planning.
Ivana Karhanová: And what is your vision? Where should Liftago be one day? It started as a taxi. Then you added your own transportation, and now you suddenly have Liftago Network, where you simultaneously promote Czech e-commerce and delivery services. Where to next?
Ondřej Krátký: Liftago's vision has always been sustainable mobility, and the inspiration was the phenomenon of autonomous cars. This is the long-term direction of how we want to do business and where we are heading. Taxis were a way to learn that, and the individual steps were always just one step closer to what I was describing.
Now we're getting to the point where we're starting to build the foundations of a spot market for transportation capacity. Just as Amazon Azure trades finished server capacity in the cloud, we're trying to do the same with physical carrier capacity on the street. Well, by connecting them, we're creating a spot market.
Paradoxes don't always have to be more expensive. There's a lot of recognition in the energy market today that the spot market can be far more expensive than the scheduled market, the futures market.
But we find that because capacity in the physical world is close, it can paradoxically be cheaper. And that's the way we want to gradually make it a bigger and bigger game here in the Czech Republic and learn how to scale it abroad.
Ivana Karhanová: How did your business partners, meaning e-shops and delivery services, react or maybe still react when you go to them and tell them: Hey, I can cover Same Day/Next Day Delivery?
Ondřej Krátký: I'm learning to talk about it because I develop many key partnerships myself. I enjoy it, and it's one of my values at Liftag, and then together with my colleagues, we develop the partnerships further. But the key thing we're addressing is the flexibility that nobody expected in that transport.
In today's shipping, that e-shop expects that there's some standard parcel carrier that does Next Day, then there's some faster courier that's expensive and does shipping right away and then they create some Same Day shipping.
And we come in and say: These are not three different things. It's all one thing, except some part of it can be scheduled, probably most of it, and the other part that's the flexible part. And you can suddenly program that traffic so that you can put both the express package and the Same Day and the Next Day from the day before in one route because that will be the most efficient.
Forget the labels, the couriers, the carriers. It's just some shipping capacity, and you stack it efficiently to deliver the goods on time, ideally accurately and cheaply. It can be done, but only if you think differently than how the business got to this point.
Ivana Karhanová: And how many of them can think differently?
Ondřej Krátký: I guess I'll answer like this: We inside the company - and I understand it to some percentage - we are in a state of having discovered a completely new concept of how to do logistics, and we are still discovering it ourselves. So I'll give you a high five: I may be at sixty percent, my colleagues at fifty-five, some of our clients at forty-five, some at five.
Some will come and invite us to the express pick-up. So I say, OK, and you know it's probably gonna be expensive? So first, we went to the tenders, and we won them, and then we said: You know, you're connected to us today, and you can do standard shipping, even Same Day, Any Day on exact time, you can do deliveries, branch supply, whatever? You're already connected.
They looked at us a little bit like a dick off the couch. We were for a while, too, because we were also finding out gradually that we had a connection to everything at once, to a part of the capacity that was more appropriate to do on Just in Time while the market was scheduled.
Ivana Karhanová: So it's not enough to connect customers to your system, but you also have to educate them? Someone should still be there to explain the possibilities the whole platform offers.
Ondřej Krátký: Exactly. We explain to our biggest partners how far they can go with us. A fundamental change in my thinking is that Liftago Network is called Network because it has such a network effect. We work with many partners to the point where they want a fast express, and we're the fastest, or more accurately, they can order the fastest service in that Network. They understand that if it's Liftago, it will probably be fast.
I find that the most successful partnerships that we have we develop from some volume of cooperation. They've relied on us for some higher percentage of shipments, and transactions, so suddenly, the "magic" happens. So suddenly, the price starts to drop sharply from a certain point because there is an efficiency, a network effect, in the Network, and the rate is still the same, constant.
So we're now going to increasingly try to focus on clients who understand that if they rely on us for a certain percentage of the capacity on that spot capacity, that triggers a network effect where, for example, a package that was normally a standard Next Day, suddenly they can ship Any Day on the exact time.
Ivana Karhanová: For the same money?
Ondřej Krátký: For the same money, which is a non-intuitive effect of the technology.
Ivana Karhanová: What did you think prevented the delivery service or even the urban logistics from developing in this direction?
Ondřej Krátký: Certainly the fragmentation of both demand and supply in that each e-shop historically had more transports in the basket for the customer, thus diluting that volume among a number of different large carriers. Only the largest ones could handle even a fraction of that e-shop volume and were efficient because they aggregated thousands of e-shops themselves. So that helped.
That's where the technology has gotten so far. But we're seeing now that e-shops are trying to go more in the direction where they just let the customer choose where they want the goods and when. They're far more efficient and better at offering customers new services. Typically, for example, Rohlik.cz. If you look at the shopping carts, from to time, you have express and slots there until the future.
Ivana Karhanová: The more precise I want, the more expensive it is.
Ondřej Krátký: That's the direction that all e-commerce should go. But by splitting the volumes between several smaller carriers that call something express, something Same Day, and something else. That's the way it's been historically, but that doesn't mean it should continue to be that way.
Ivana Karhanová: Now that we mentioned Rohlík.cz, let's say I know what I can expect from the guy who delivers it to me because he's nice, he's well trained by Rohlík because Rohlík pushes him to behave like that, and it's great.
On the other hand, when you're choosing to ship in an e-shop, you're often choosing between different carriers, and you know that you don't want traditional shipping services. So they'll text you in the morning that they're going to deliver it that day, or their couriers if you tell them: Hey, I'll just run down, I'll be there in two minutes, they don't want to wait because they're in a hurry to go somewhere else.
So, isn't it often the case that the customer also wants to choose the mode of transport and how and who delivers the goods?
Ondřej Krátký: I guess I'll answer in two parts. The first point is I think we all feel sorry for the biggest shippers unfairly because their capabilities and their technology have made that shipping was and is relatively very profitable because they were able to aggregate a huge amount of demand, tear it through the infrastructure of depots and warehouses, and deliver it the next day, that's fantastic.
That's ad one. That's just the status of the evolution of that business. And he, unfortunately, makes it impossible to always do it the way people would like to do it.
Ivana Karhanová: So they're paying the price for getting it off the ground and the whole market going?
Ondřej Krátký: Well, I think they are paying for it. It's today's situation. It's as if we were complaining that a car today emits so much carbon and could emit less. Well, that's some state of technology. The second part of the answer is about why it's hard.
They're efficient because the system assumes they will cram the van with a hundred and twenty hundred and fifty bales. And when you cram it that way, you can't offer the customer that one part of that van will deliver at 11:17 and the other part, which is in the same zone, will deliver at thirteen to fifteen. You can't do that. It would lose efficiency and increase costs. It wouldn't cost the e-shop ninety crowns to deliver anymore.
And because the block is there, that efficiency doesn't allow for flexibility. So our role is to add flexibility to these players so that they can use another capacity, flexible capacity to do, for example, new products at a precise time or to reinforce their capacity when they don't have it.
Ivana Karhanová: As we're talking about this, I think that to be able to do this with the big players like DPD, PPL, DHL, other services... What's the technology and the computing power behind that because it's not a simple task?
Ondřej Krátký: Technologically, it's partly on the partners' and our side. We need to tune the two systems to each other. We are integrated with many other players, some of whom are harder to integrate. But today we're in a situation where everybody already wants to, we're just figuring out when, which is fantastic for being at the beginning and already proving the value.
On our side, it's about saying what we need for flexibility on that partner's side, typically in dispatch speed, so that they use that Network at times that are complementary to their capacity so that the flexible capacity doesn't meet the planned capacity at one point in time at the depots.
We're figuring out what processes and data flow that entails, which is relatively straightforward because we already know how to address that. Then it's just a matter of getting the more traditional carriers to learn to allocate some of that traffic to our Network and for us to continue to be flexible enough to always auction those volumes, to split into individual trips, and auction that on-demand among the best carriers that are around those depots right now.
I don't want to go completely into the nature of the technology because that's kind of a black box that we want to keep to ourselves. It's very innovative, and we want to be secretive about it, but fundamentally we're doing a lot of auctions, on-demand availability, pricing, and those roles.
Ivana Karhanová: And you developed the platform all by yourself?
Ondřej Krátký: Yes.
Ivana Karhanová: How long did it take you from the moment you said you would do it?
Ondřej Krátký: It's more of an organic growth. By having that vision for the company, as I said, there was some, so we've been learning a lot from day one by piloting Liftago into an auction after six months of starting Liftago, which we found to be more beneficial for the customer and the driver.
That was one part of the know-how, other parts were built later, and eventually, we ended up with these microservices in the cloud, each of them solving something different and together offering that service. That is, whether it's auctions or pricing, availability, live tracking, etc. So it's X number of functions that our cloud drives, that availability we need for clients.
Ivana Karhanová: If I understand this correctly, the shipping going on now should be spread out over the entire 24 hours in quotes from the peak hours.
Ondřej Krátký: You hit on one quite interesting point. Several logistics players, whether e-commerce or otherwise, are used to shipping once a day, deliveries, and deliveries.
And we say it's exactly 24/7, and it's our role going forward to allocate capacity on the Network to make it more profitable to behave sustainably. That means making off-peak capacity or nighttime boxing cheaper than the peak hours people experience daily.
Ivana Karhanová: So, you have your drivers in the Network now?
Ondřej Krátký: We have some others, but they have never been our own.
Ivana Karhanová: Well, the ones that work with Liftago, to be precise.
Ondřej Krátký: Part of the Network is, of course, personal cars marked with the Liftago logo, which customers can still order through the Liftago app. Part of those drivers falls into the universal category, who are also available for mail orders.
We are gradually adding several other categories of drivers to the Network, folding the Network to make it available for client requests that come up there.
Ivana Karhanová: What is the biggest challenge for the Liftago Network?
Ondřej Krátký: Probably the innovation, the fact that we're already talking to a number of players around the world. I don't have time to employ someone to tell me if someone is doing it this way. In general, people who say they do something like that, we can't find out if it's really like that or if it's some kind of PR.
But we talk to interesting players worldwide who have that capacity, and they tell us we're either complete bullshit or a total coup. I believe we're a total coup, not bullshit.
Ivana Karhanová: Says Ondřej Krátký, CEO of Liftago, who recently launched the Liftago Network.