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Logistics Tech: The Future of Trade

Logistics,Tech,Event,Startups,Stowga,Ontruck,What3Words,Kontainers,Zencargo,University of Essex,Bosch

Logistics Tech Trade

On 13th July Stowga organised the world's first Logistics Tech meetup. It was sponsored by Google and held at Google Capmpus London.

As this event was the first of a series we plan to do, the theme was kept broad: TRADE

We chose the theme of Trade because:

_1.) Trade is what drives logistics _

Understand the drivers of trade and you'll understand the currents that the industry rides on.

_2.) It's topical. _

You can't open a newspaper without reading about trade agreements but most of us don't fully understand what they mean.

Around the world, and particularly here in the UK and accross the Atlantic in the US, rising protectionist sentiment threatens to constrict global trade flows, the lifeblood of logistics. We have already seen TPP snuffed out, and potentially NAFTA is going the same way.

Here in the UK we have seen the currency devalued by 20%, meaning the costs of imports have risen by a corresponding amount. The pressure that has caused on importers can not be understated.

Trump won the US presidency with a mixed message of tax relief, regulatory reform (relaxation?), and trade restrictions. His agenda could cut both ways for logistics, and it’s still not clear which proposals will become law.

Interest rate hikes are expected to lift USD, which is still trading at high levels relative to recent years, making American goods even more expensive abroad while foreign imports become cheaper in the United States. The US has the opposite problem to the UK, but on both sides of the pond logistics companies will have to adjust their networks to handle more in-bound (US) or out-bound (UK) shipments.

Continued uncertainty over future economic trends impedes longer-term planning throughout the supply chain, forcing companies to continuously monitor inventory levels and exacerbating month-to-month fluctuations in freight volumes. This uncertainty is a challenge for executives but a huge opportunity for new entrants… companies like the ones here.

There's a lot of talk of negotiations but I can tell you that I honestly believe more important to the global economy than negotiations will be technological change.

Cost of Carry

Trade is the exchange of goods for money. When you buy a commodity the cost is calculated as the raw value of the goods + the cost of carry. The cost of carry is really the cost to deliver the goods. It is made up of the cost of capital, which includes interest rates and FX, the cost of services like transport and insurance, the cost of storage (warehousing) and risk costs - like the cost of things going missing or obsolete.

All that is factored in and generally accounts for 1/3 of the cost of any product bought.

Now we think this is where the opportunity lies because the cost of carry is really governed by the efficiency with which goods can be delivered. More efficient logistics means less carry costs. If we can use technology to optimise routes, optimise capacity, reduce paperwork, speed up transactions and better price risk, we will reduce the cost of services. Goods are Less likely to go missing or become irrelevant before they are sold. It's 100% feasible the cost of carry could be halved.

That saving will have a huge compounded effect on trade. The implications are far greater than any trade agreement because it will be the result of a free market - the will of billions of buyers and sellers rather than the political will of a few individuals with their own agendas.

Logistics is the next frontier in technology and we are really excited to be here at the start of the next big thing.

Speakers:

Alex Hersham, Zencargo

Alex Soare, Ontruck

Graham Parker, Kontainers

Julia Maas, Bosch Smart Monitoring and Logistics

Tom Self, What3Words

Vania Sena, TEDx University of Essex

Moderated by Charlie Pool, Stowga CEO

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