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 TNX Logistics, a practical AI software for trucking, as the January “Logistics Startup of the Month” for its remarkable contribution to the development of Artificial Intelligence for transport planning and dispatch.
In order to learn more about TNX Logistics and what they do, we talked with Jonah McIntire, a Co-Founder and Managing Director of TNX, about the business and how it improves the trucking with AI.
First of all, congratulations on becoming the Logistics Startup of the Month! Could you briefly introduce our readers to TNX Logistics?
TNX offers AI for trucking. For each shipment, our software devises a tendering strategy and constructs carrier-specific offers on its own, including when and to whom to make offers, pricing, and bundling of work. It is a catalog of tendering tactics powered by optimization and machine learning. It’s also software that looks simple like it was made by Fisher Price, but it does smart stuff behind the scenes.
Would you like to share any specific customer success story?
Our customers are discreet about how much TNX helps them. It is a competitive differentiator that reduces costs substantially, so not something one advertises. That said, in both New Zealand and Europe, we’re used by top-ten 3PLs and 4PLs. As a start-up, those are hard companies to break into.
Underutilization of assets and especially trucks is a big problem in the industry and a lot of service providers are not sure how to tackle it. What do you think are the reasons behind this problem and how, in your opinion, can Artificial Intelligence play a role in solving this issue?
Truck utilization has three key metrics. (1) Out of the 24 hours of the day, how long is the truck rolling? (2) Out of the time it’s rolling, how often is it empty? (3) When its rolling non-empty, how full is it? Improving the second and third metrics comes down to better planning, and it is where TNX Logistics plays. Improving the first metric, i.e. keeping trucks rolling >20 hours of the day, is the domain of autonomous trucks. We’ve published some analysis in 2018 about the cost reductions that should provide, and McKinsey has published excellent assessments of the timelines to get there. Taken together, they suggest a shift to autonomous vehicles during the 2025 to 2045 years, and a cost reduction of 30-50% from today’s rates.
As AI and automation are enabling higher levels of efficiency and better planning capabilities for the logistics industry, there is a popular concern that a lot of jobs might be eliminated. What is your take on that?
This is absolutely happening. Jobs that require modest skills have been and will continue to be eliminated. And many high skill jobs will go away. Many of these staff have been chased into “last mile jobs”, always one step away from the next automation but not really increasing in skill or added value. So they remain at risk. To be clear, I believe human beings should embrace this trend instead of fight it. Should we have frozen development of vehicles, containerisation, or computers in order to save horse handlers, longshoremen, and typists from job loss? What I do believe is needed is an emphasis on AI as a coaching resource that can help upgrade the skills of staff as it scales into replace some of their jobs. This won’t work for everyone on an individual level but will help with the transition at a societal level.
In your opinion, besides AI, what are some of the biggest trends in the logistics industry we should keep an eye on in 2019 and why?
I think of a few forces that frame the industry, things like demographics, political landscape, capital markets, and commodity prices. Of all these, it seems obvious that 2019 is poised for incredible political turmoil. Brexit, trade wars, reactions to climate change disasters, an unpredictable president in Brazil, and so forth.
Your team is based in Europe, New Zealand, and the US. What are the biggest differences in approaching the logistics businesses between these three markets? Does this diversification have a big impact on the culture of TNX and your view of the global logistics operations?
The differences are large, important, and complicated. They mostly come from their histories, especially when and how they deregulated trucking. Plus there are effects from their differing size: New Zealand is as large of a trucking market as a major metropolitan area in Europe. The USA is one huge market whereas Europe is just a collection of de-facto separate ones. There are more differences than similarities, and in effect almost no trucking company plays equally well in multiple markets. For TNX, this posed an additional challenge. Start-ups (really, most businesses of any size) have a high chance of failure outside their home market. We think by having launched successfully in two foreign markets already that we’ve made ourselves more adaptable for future growth.
Being a very successful young company yourself, what advice can you give to the other logistics startups and founders?
Personally, I launched TNX because it was the best way I had to positively impact the world. I have expertise in a niche area, and together with my co-founders we can change a lot of daily trucking for the better. I think that kind of a motivation is needed because start-ups are not actually fun and glamorous as depicted by popular media. It’s a stressful, agonising grind to build something from nothing. You’ll almost certainly fail, and even successes can feel like they aren’t worth it. If the idea is to have fun and maybe get rich, just work hard in a day job and have fun on the side. Start-ups need a deeper motivation or else you burn out.
What are the goals of TNX Logistics for 2019?
Our goals for 2018 were to secure our first customers in Europe, and to grow our New Zealand customer base organically. This year we’ll try to secure our first USA customers, at least double our customer base in Europe, and continue organic growth in New Zealand. We are in the stage of business where we want double or triple growth each year for several years.