Pay for Value, Get More of ItPosted July 13, 2017
Business owners notice that they experience better in-transit visibility for their personal online purchases compared to their B2B cargo movements. Kiwis can order from Amazon with instant and accurate delivery estimates. Amazon keeps their customers updated as the goods are picked, packed, shipped, and delivered.
B2B shipping on the same laneway is painful in comparison. It appears easy to provide in-transit visibility for a shipment worth a hundred dollars, to a novel address, and for an occasional customer. High-value, repeat customers get much less visibility. What’s holding back B2B in-transit visibility?
How does shipping relate to the business?
For eCommerce, the delivery is in the core, crucial steps to complete a sale. It’s half the experience for the customer. Late deliveries often get returned or directly block future purchases, i.e. they have catastrophic financial consequences.
In contrast, most B2B transport is seen as secondary, a necessity but not how business is won. Transport costs do not make-or-break most businesses. A delayed delivery, or an opaque in-transit status, is a nuisance rather than an existential threat. Through this lens, the difference in the in-transit visibility of consumer vs. B2B transport is a consequence of how much transport impacts the bottom line.
Are carriers paid for visibility?
This explains a lot about the New Zealand transport sector: the dominant business models makes in-transit visibility an afterthought for them. Carriers struggle with driver shortages and don’t get paid for completed jobs until the 20th of the following month. They have no incentive to have the driver slow down their day to confirm in real-time the location and status of transport jobs.
Follow the money
If B2B in-transit visibility underwhelms, it’s because the business models neglect it and the operations of those businesses simply follow suit.
As an example, imagine a trucking company moves a full load from Auckland to Christchurch. Many trucking companies would wait until the driver returns with the POD and paperwork, and then confirm to their customer that the job is complete. This happens several days after actual pickup and delivery.
The shipper may ask for faster confirmation, but the business model doesn’t incentivise it: almost all trucking companies are being paid on the 20th of the following month. If the carrier waits 40 days on average for payment, regardless of when they confirm actual in-transit events, are they really aligned to do those confirmations faster?
How TNX aligns incentives
In TNX, we pay the trucking company 7 days after they confirm delivery. It aligns the value for cargo owners for faster event updates with the value for carriers to be paid faster.
Of course, they also are given good software and mobile apps, but the real reason why TNX delivers better in-transit visibility is the business model. Pay carriers for the value they create, and they will work to create more of it.