Regarding IT experts, there are a great many start-ups popping up now, focusing on individual solutions to various cargo problems. At the recent Cargo Facts EMEA conference in FEB20, 5 of them who had been through the IAG Hangar 51 hackathon, presented solutions on data analytics, cargo dimension measuring and label reading, for example. Does Hermes work with start-ups, too? Since you talk about IT ecosystems which, as I understand it, are basically lots of little apps and everything all working together in one overall umbrella. So, does Hermes do everything in-house or do you also work with them?
AL: Absolutely! We do work with them. I know a number of these start-ups and some who attended that hackathon, and, as you said, we look for ancillary capabilities that could be integrated into our platform, so we do keep an eye on them, and will maybe considering acquiring some of them, or partnering in future. Currently, given the corona crisis, we are focussing on underpinning our own community platform and its integration possibilities – for example, we are talking to BRUCloud at the moment – but once this corona crisis is over, we will resume looking at some possible acquisitions we started talking to before.
Start-ups have a hard job. Digitally they are advanced and do not have the baggage that large IT providers like us have, but what they lack is the customer-base. Cargo handling systems are very “sticky”, since any move to new IT is a huge, costly and many times painful projects. So, on the one hand, large companies with large functionally rich systems like Hermes, will need to break down their massive handling system to more modular applications to evolve at the right pace, and start-ups can benefit from acquisitions or partnerships with us to better access customers through joint ecosystems.
We would have liked to use the WCS to meet up with potential partners in terms of ecosystems – two of them would have been attending – as well as talk to our competitors in regards to aligned technology thinking and consulting, so that our competition terrain becomes a competition of excellence rather than simply competition on the basics.
CFG: Plan 2020. You mention in one of your recent blogs, that you want to move to artificial intelligence, focus on e-commerce and being able to handle loose packages and mail, other than standard cargo, and that you want to work on slot management systems. Now that we have corona at the moment, two questions: 1) Is that plan still going ahead and what is Hermes going to come out with this year? And 2) Because of corona and because you also deal with Chinese customers such as PACTL, do you see a financial impact already?
AL: Yes, we are already preparing our customers. In terms of sales orders for the new generation system and new technologies, although we had no cancellations of any kind, we have made plans so we are ready in case orders will not be near what we expected. As we see that more and more companies reporting going through consolidation, we had to take some preparatory actions ourselves such as revise all our plan of hiring staff for our teams. In this time we put the emphasis on safety while ensuring our service level will not decrease which lead us to move all our staff to work seamlessly from home and be able to support our global customer base, something that kept our IT team quite busy. That said, like all businesses right now, we are looking at option one to ten to temporarily hold back on spending and how best to support our customers. It is pretty tough for our customers right now, so we know that we’re probably going to have to make some adjustments because our customers will. We have taken the foot off the pedal a bit for innovation, but then again, we’re looking at partners, for things like slot booking for example. There are some excellent community systems out there and we will still be looking into integration rather than doing it on our own which is not viable in the current climate.
In terms of innovation, we are in a good flow still, and based on our agile development, we have the ability to accelerate or slow down, so whatever our NG customers want to do this year, we will do. Just some of our other plans will be slowed down a bit. Our digital roadmap is secure because we already have done the groundwork and have the resources.
CFG: At the ACHL, you had a talk called “How to Make Your Own crystal ball.” What was the main message from there?
AL: It was all about monetizing data! We generate time-based, event-based, classification-based data, which is excellent for machine learning and better forecasting, even going all the way to dynamic pricing, something which is particularly highly profitable for businesses. It was all about alerting cargo handlers to the fact that they are sitting on a data goldmine. If they don’t go digging, and don’t pay for diggers, if they keep their coffers locked, nothing’s going to happen. I just wanted to show them the possibilities in the simplest way really, of profiting from predictive analysis.
The by-products of this business intelligence are awesome! Once you know what’s going on when it’s happening and why it happened, then you can start creating all sorts of apps or let start-ups loose on the event. And we develop everything in the cloud, which is both secure plus it allows you to connect with other partners in the cloud, resulting in some excellent business possibilities.
CFG: What is a final message you would like to send out to CFG readers?
AL: What is new about the digital platforms out there? The entry costs! Compared to the big, incumbent handling systems where the entry costs are heavy, what we focus on in the digital world at Hermes, are minimum entry costs. And also, the ability to “dip your foot in” which is what we tell our customers for NG BI, for example. We don’t install it and say, “There, you got it!” since every handler has different processes, different events, is a different size and so on. We tell them to go for six months, play with it! Usually, after the six months, the customers have ideas of what they want next. During the six months, if they have issues with working with what they are looking at, this prompts us to train, develop and evolve, too.
The entry costs are really minimal, and the beauty of it is that after six months they can decide to keep it or remove it. So, cargo handlers should dip their feet into the digital world. It doesn’t cost that much. The infrastructure costs are pay as you go – so if you don’t use is, you don’t pay it – and the potential efficiencies are enormous.
CFG: Thank you, Alex Labonne!