Every month we select one logistics startup which represents a positive example of innovation in Logistics and Supply Chain and has the potential to alter the way the industry operates. This month, Transmetrics selected xChange, the neutral online platform for one-way container moves, as the October “Logistics Startup of the Month” for its remarkable contribution to the improvement of empty container movement.
In order to learn more about xChange and what they do, we talked with Christian Roeloffs, Managing Director and Co-Founder of xChange, about their business and how to improve the logistics of empty containers.
First of all, congratulations for becoming the Logistics Startup of the Month! Can you please briefly introduce our readers to xChange?
XChange connects users and suppliers of one-way containers or shipper’s own containers (SOC’s) on a neutral online platform.
We build up the whole process from searching for containers to use/ supply, online negotiation, tracking and offer value-added-services like insurance and payment handling. Through a continuous vetting process, a multiparty interchange agreement and our customer service team in Hamburg, Germany, and Surabaya, Indonesia we make sure that only trustworthy partners become a member of xChange.
xChange became a one-stop shop for one-way containers including the following service offerings:
- Browse the market: Using xChange smart search or their newsfeed you easily gain market transparency and find containers to supply/ use in more than 2500 locations worldwide.
- Reduce your effort: xChange implemented tracking and tracking alerts as well as an easy online negotiation process and API/EDI integrations to save you long hours in the back-office.
- Be safe and secure: Through a continuous vetting process, company profiles and a standardized contractual framework xChange created a community based on trust.
What is the effect of empty container repositioning on the logistics industry according to you?
More than 200 million containers are being moved every year with one-third being moved empty. This costs the industry up to $20 billion a year.
Of those empty moves, about 1/3 arises from the limitations of individual companies’ operations—which could be avoided by sharing containers on xChange (see BCG case study “Think outside your boxes”)
The average savings is $200 to $400 per interchanged container, arising mainly from the avoidance of expenses related to land transportation and the use of terminals. This corresponds to potential annual savings (per carrier) of approximately $350 million to $700 million. Scaling up this impact to the top 100 carriers would promote annual savings of up to $4.5 billion.
Including all other equipment providers and operators, such as leasing companies and other logistics companies, would increase the potential savings to $5 billion to $7 billion annually.
At Transmetrics, we’ve also developed the predictive asset management tool AssetMetrics to tackle the empty container repositioning. Why did you decide to focus on this problem in particular? Is there an interesting story behind it?
Our Co-Founders Johannes Schlingmeier and Christian Roeloffs worked at The Boston Consulting Group for almost five years on projects including equipment management, operations and cost reduction processes. During their work with some of the biggest carriers worldwide they came across empty container repositioning and noticed a huge problem: Every third container is being moved empty and causes the industry costs of more than $20b annually (… without mentioning the environmental part of it).
Johannes Schlingmeier was looking for a topic for his PhD-thesis used “that opportunity” and chose empty container repositioning as his topic. Working with data-sets from many of the biggest carriers worldwide his conclusion was this – There should be a platform connecting users and suppliers of containers to avoid these empty container moves as much as possible. Using their existing network, our co-founders started an excel document collecting the following information:
- Company A offers XY Containers in location Z and wants them to be in location Y.
- Company B searches for Containers in location Z and needs them for a stretch to location Y.
- Based on that data they were able to put company A into contact with company B – company A would now let company B use their containers ex-location Z to location Y.
That list quickly blew up via word-of-mouth until it was not manageable anymore for Johannes and Christian. They needed a real “tool”, a platform to replace their excel document: Container xChange.
While still being a part of the Boston Consulting Group, they hired our first developers and started building the platform. Now, xChange is an independent company offering a neutral online platform (no industry participants as a shareholder of xChange) for one-way container moves with more than 200 members and more than 250 000 containers in 2500 locations.
The container shipping industry still has a lot of potential for innovation and digitization. In your opinion, what are the other important trends that are shaping the industry for the next 3-5 years?
We think these four key-points will shape and challenge the container shipping industry in the future
Availability of big data and analytics. There will be more analytics solutions e.g. in freight planning, route optimization or collaboration with more data available
Low margin and price pressure. Consolidation will continue and experts will appear in their niches. Companies need to innovate their business model, make use of digital solutions and open themselves up for the third party provides in order to stay competitive
Innovation. There is already a good amount of innovative solutions and freight tech startups but that’s nothing compared to other industries. That means there will be more innovative solutions and market participants which will provide solutions and increase efficiency amongst the industry. To participate and benefit from those solutions companies should be open-minded and curious to try out new approaches.
Asset sharing. We believe in asset-sharing and collaboration to increase flexibility and efficiency, as we have seen it in other industries, to foster challenges the face in the mid-term future such as price/cost pressure.
xChange is based in Hamburg which has a robust startup scene with an easy connection to the maritime industry, thanks to one of the biggest ports there. How does being part of such an ecosystem help xChange?
Sure, having our office in Hamburg creates trust and puts us in a position where we can easily invite many of our (potential) clients and partners for a coffee to our office because so many industry participants have representatives in Hamburg or travel to Hamburg now and then.
Personal relationships are the core fundament of xChange, that’s why we have a local office in Surabaya, Indonesia as well as we attend conferences like the Intermodal regularly.
What was the biggest learning point for you while building your platform?
“We thought that there’s a savings potential for container shipping companies, so why not do it? But we ultimately had created more interchanges for them, more work for the users. So, we’ve spent the last months making the platform easier and simpler, not just cheaper. The end goal is to make your users’ life easier and better.”
When xChange was first introduced, the industry balked. First, at the number of xChange’s original users: just eight. We started with eight companies on the platform and said, ‘Well that’s a market.’ Eight is not a market. But users also complained the product actually added more steps to repositioning, already a time-consuming and costly procedure.
We thought that there’s a savings potential for container shipping companies, so why not do it? But we ultimately had created more interchanges for them, more work for the users. So, we’ve spent the last months making the platform easier and simpler, not just cheaper. The end goal is to make your users’ life easier and better.
What’s next for xChange in 2019?
For us, everything is and will remain focused on the container and facilitating collaboration between market participants along the entire transportation and logistics value chain. Going forward that will mean increased system integration with our clients through e.g. API/EDI etc. but also extending our service offering to e.g. container resale.