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CEO PAKi Logistics on digitalization: ‘Our business is highly suitable for blockchain’

15 May, 2020 | published at 16:59 CET

The concept of sharing is not new to PAKi Logistics, which has been in the business of load carrier pooling services for decades. What is new, is the innovative application of digital tools, making the supply chain more efficient and sustainable.

Christian Agasse, CEO of PAKi Logistics, part of the Faber Halbertsma Group, speaks to us from his home office in France during the lockdown. The company, like many other businesses, has been impacted by the coronavirus, which holds a tight grip on the economy worldwide. “At the start of the lockdown we saw a surge in demand from the Fast Moving Consumer Goods sector as people flocked to stores to stock up on food and other household products. After two weeks it returned to normal, pre-crisis levels. In the automotive sector we see a different picture because the plant closures have hampered demand. We do, however, expect a slow pick-up now that key European factories are reopening. The first flows of car parts are moving again, which prompts demand for the load carriers that we supply to the industry.”

The services that PAKi Logistics offers are crucial in facilitating European trade flows. The company manages, supplies, relocates and repairs standardized and exchangeable load carriers (various types of pallets and boxes) in 26 European countries. In the last 45 years, the company has continuously expanded (today its network has more than 10.000 stations) and innovated to meet increasingly complex requirements from the transport companies, retailers and industries it is working with. The latest accomplishments are the PAKi e-voucher and a Drop & Drive app, which enable the digitalization of transactions. A welcome innovation which saves precious time, reduces administration, and cuts back on the transport of empty load carriers, which in turn reduces CO2 emissions.

PAKi e-Voucher

Supply chains have become increasingly complex and international over the years. It makes pooling the most sustainable solution when it comes to the choice of load carriers. “Pooling limits the travelled distance in relocating the load carriers and stimulates reusing and recycling of the load carrier. On a practical level it means that when a transport company delivers goods to, for example, a retailer, pallets are exchanged for a pallet note at delivery. By doing so, the driver does not need to travel with empty load carriers, the carrier company receives the credits for the pallets, and PAKi Logistics manages the relocation of the pallets”, explains Agasse.

With a constant flow of goods one can imagine the time and paperwork it requires to facilitate the ever increasing transactions. The company decided therefore to apply available technology for efficiency and sustainability gains. The result is the PAKi e-Voucher, which enables an automated 1:1 exchange, cutting back on time and eliminating the need for paper. The cycle time to process the credit is now reduced from a minimum average of 14 days to a matter of seconds, tells Agasse. “A truck driver from Napoli could still be in the car park of a recipient in Germany, while its company in Italy receives the credits for the pallets in real-time.”

Big boost

To make the PAKi e-Voucher truly successful the entire supply chain needs to get behind the digitalized system. “The development of the digital voucher was rapid. We initially piloted the system with Edeka and are now ready to bring this solution to the market”, Agasse says. “Although it offers enormous benefits, the implementation is challenging because the transport sector is still largely paper-based, lagging behind other sectors when it comes to digitalization.”

A big boost is that Europe’s biggest retailer, Lidl, has already introduced the PAKi e-Voucher into its supply chain. The retailer’s motivation for choosing the digital pooling service is to offer greater flexibility for its carriers, no more empty pallet transport, and shorter distances for the relocation of pallets, of which the latter two also contribute to lower CO2 emissions. “Working with a player like Lidl, which has an extensive supply chain across Europe, is a major opportunity to roll out our digital solution”, Agasse says. He expects the PAKi e-Voucher to roll-out exponentially in the coming 5 years.

Drop & Drive

Another digital innovation that has been launched earlier this year is the Drop & Drive app. With the app, truck drivers are able to find depots where they can drop off empty pallets, and notify them of their arrival. Previously, this business would have been conducted over the phone, while the actual transaction was processed on paper. This has now been replaced by a digital solution. The various lockdown situations in Europe however, have delayed the roll-out of the app. But when restrictions are lifted, PAKi Logistics’ latest innovation is ready to go.

“This new digital handshake is much more efficient. In the past, transactions with depots were sealed with a piece of paper. Processing these documents from all over Europe takes up a lot of time and makes it difficult to track pallets. The Drop & Drive app, again an innovative application of existing technology, solves this issue. For parties involved in the transaction it is fast, simple and safe”, says Agasse.

Blockchain

So what is next in terms of digital innovation? It will not be a digital platform like Airbnb on which you can exchange pallets, assures Agasse. Although there are countries like France and Spain where he sees the rise of such platforms, they lack one important thing. “They don’t bring the solution that the market needs. The platforms are great in terms of functionalities and they offer fancy tools. But they don’t fulfill the primary need of relocating empty pallets. Our approach is different. We see digital solutions as an enabler and not as a goal in itself.”

A promising next step, however, is blockchain. PAKi Logistics participates in a GS1 blockchain initiative that focuses on load carriers. “Our business is highly suitable for the application of blockchain. We represent a shared economy with our standard and interchangeable products as a currency. Added to that, transactions in the supply chain are concluded between unknown participants where a third-party endorsement is required to  provide the ‘trust’ element. All these factors together are the key definitions of blockchain. As a neutral partner in those transactions we are well positioned to be one of the drivers of this project.” Lufthansa, SAP and Lidl also take part in the project. Following a successful pilot in 2018, the group is currently in the process of developing a full-product solution, enabling an efficient, digital load carrier management system for all participants in the supply chain. “We take the time to develop it because it has to be a reliable system that we and the other partners, all having large networks and supply chains, can rely on. The keyword is trust and with the forces of strong businesses joined we will together make the next step in making digitalization happen.”