As a service
Every industry can now offer "as a service" with some embedded finance option as the kicker.
One that I am most interested in, of course, is LaaS logistics as a service. "SaaS" is the tag for on-demand software that is open to use whenever needed. Some top SaaS companies include Xero, Shopify, and Salesforce. The value lies in flexibility. Users don't have to invest heavily in setting up native systems with dedicated hosting.
The SaaS company lays down the software infrastructure, almost like a macro infrastructure investment by the government. Open the tap, and there's water.
Unfortunately, transport economics doesn't have the same characteristics as software, mainly because LaaS needs real-world action.
The real-life logistics are not flexible, so I am not sold on LaaS yet.
In SaaS, the unit of delivery never changes. The pipes were laid and taps fixed.
Transport units vary in type, including size and volume. The operating leverage is low, not what you want in the "as a service" world. Transport units range between van, bike, refrigeration, flatbed, container 20ft or 40ft, reefer, air container, etc.
When we need more water, we keep the tap running. However, in logistics, if you go over the volume constraint of one unit, you need another. We are sticking to the water analogy, another tap.
For sea freight to be more "as a service," consider the following.
A macro approach, where private companies invest in operating even when the transport unit is only 10% full or empty. Or.
Physical unit flexibility, for example, if a container can change in size like a concertina, vessels can vary in size, and truck trailers can vary in size depending on the space demand. The supply chain can adapt, with the operating cost decreasing to reflect the smaller load. It seems far away.
There are exceptions where I would agree that road logistics has enough similarity to a pipeline in intra-city parcel delivery.
Uber.
Pipeline economics is one of high leverage. The operating costs are low with increased initial capital investment.
Similarly, what does it cost for Uber to offer an on-demand intra-city parcel service?
The capital layout here is the e-hail service. Logistics flexibility comes from an already viable base layer that pays for the unit of transport to be available, on-demand.
What can be the foundation layer in other game-changing logistics and mobility startups?
What do we build first? A hyperloop?
Photo by Quinten de Graaf on Unsplash