Descartes System Group’s logistics platform supports a wide range of businesses that in good times customers expect to perform well and in times of stress on the supply chain…even better.
Swiftly shifting from a logistics flow based on order to one that can react to uncertainties and unpredictabilities is critical for those up and down the supply chain in our Covid-battered world. The Descartes Systems Group Inc. provides technology it believes can aid shippers and logistics providers in making this leap into this great unknown.
It’s the unusual, the extraordinary, the disruptive and just the stresses on the supply chain that make technology such as that provided by Descartes so necessary. Suddenly, a logistics provider must deal with new customers, perhaps different kinds of goods, establish new transport lanes and pickup and delivery routes, and all in a matter of days.
Wood cited food services, with their huge climate-controlled warehouses and fleets of reefer trucks. Schools are closed, as are restaurants. But supermarkets are going gangbusters and can’t stock food quickly enough. “We’ve seen shifts between restaurant supply and grocery wholesale for some of our food service customers,” said Wood, who concluded: “If you’re a logistics system and are flexible, you can quickly onboard new customers, new deliveries and generate new route plans and execution plans.”
Take Capital Logistics, a temperature-controlled 3PL based in White Plains, NY. After the onset of Covid-19, Capital Logistics assisted with reefer shipping and storage at a Westchester, NY nonprofit that is attempting to link shuttered restaurants with those in need of cooked food, particularly in the hospitality industry.
Capital Logistics deployed a Descartes technology, already integrated with third-party services, to help map out and service this new venture. Because the technology is cloud based, Capital employees now working from home could tap the technology with ease, according to Greg Ackner, Capital’s vice president. The Descartes technology tool “has given us the ability to quickly adapt to the new working environment,” Ackner said.
Extend this out. “If you’re Capital Logistics and, all of the sudden, everything changes in terms of your normal supply patterns, you’re doing business on lanes and with partners and parties you weren’t doing business with before. The customers you used to visit are not the ones you’re visiting now,” Wood explained. “Yet, visibility, span of control, quality of service, all still needs to hold.”
Descartes’ Eclectic Clientele
Descartes’ clientele encompass a wide range of the industry. They include big-name shippers like Home Depot, CVS and Coca-Cola; ocean carriers Maersk, CGM CMA and Hapag-Lloyd; trucking firms Con-way, Schneider and Estes; airlines British Airways, American and Delta; and diversified logistics companies such as DHL, Panalpina and C. H. Robinson.
Descartes is based in Waterloo, Ontario, although its operations are global. While definitions of a 5PL vary, Descartes is a prime example of one, which “constructs, organizes, and implements logistics solutions and technologies on behalf of multiple clients.”
Descartes is on AJOT’s list of Top 50 IoS Market Innovators.
While it started as a software solutions provider in direct store delivery and final mile logistics, the company’s offerings now span the world of logistics, with clientele spread across the entire universe of transportation and logistics providers. It has technologies aimed at transportation management, routing and compliance. Descartes systems focus on global trade, cargo security, e-commerce shipping and fulfillment. Some technology systems are specific to one particular task, while others have elements that traverse and link these various players.
“Making it easier to transact across those spheres is the core of our whole strategy,” said Wood, who hastens to add: “That doesn’t mean you have a monolithic technology platform that you try and stick everybody across all of that diversity of roles in the supply chain. They have touch points and crossovers that need to be optimized to fulfill their function.”
Being able to provide such a wide array of technology not only allows Descartes to attract a variety of businesses, but also enables it to service companies with multiple functions, say, a shipper with its own fleet and outside transport.
Descartes also ranks among the biggest such logistics technology providers around. For the fiscal year ended January 31, 2020, the company registered $326 million in revenue, an 18% jump over a year earlier.
Part of this growth is through an aggressive acquisition strategy. Descartes has acquired 11 companies in the past three years. These include large and small, near and far. For example, a year back, Descartes acquired trade compliance software provider Visual Compliance for approximately $250 million, then, a few weeks later, paid $21 million for Core Transport Technologies NZ, a New Zealand-based technology provider that specializes in scanning and tracking for global air carriers and ground handlers.
“There‘s a finite number of people in the world to really understand in detail some of the elements of global logistics,” said Wood. “The talent, the technology, the customers and the revenue all have to go hand in hand in order to be successful. What we‘re looking for in an acquisition is a good combination in that regard, that adds something to our portfolio that we didn‘t have before and brings us something that is appealing to our customer base.”
This strategy will continue, Wood said, with a target of three to four companies purchased a year.
E-Commerce
Descartes has most recently beefed up e-commerce-related technology. This is aimed at B to C e-commerce fulfillment, shipping, connectivity and omni-channel logistics. Covid has obviously boosted this trade. Retailers who only marginally engaged in online businesses before have found themselves struggling even more than others, as their supply chains were geared to physical stores.
“Everybody is re-evaluating those strategies right now as they see more e-commerce balance coming in versus retail fulfillment,” Wood said.
Wood, for one, believes the current supply chain disruption will have long-lasting effects long after the pandemic retreats. One change, he believes, will come with a more rapid digitization of the freight forwarding process, something the industry has been toying with, but not yet fully embraced. That kind of business, Wood explained, is historically scaled by adding people to manage the increased volume.
However, with the current crisis, two things have happened: First, normal flows have collapsed. Second, in many instances, fewer people have been forced to handle these rapid changes in business and business patterns. Efficiency becomes paramount.
Part of embracing digitization “is really about breaking the scalability connection between managing freight and [the number of] people in these 3PL, 4PL type businesses,” said Wood.
The current disruption “is accelerating that process,” Wood said. “‘I‘ve got to get more efficient. I‘ve got less freight. Some of its higher priority freight. I can‘t keep throwing the same number of people at it,’” he said of his customers.
3PLs, 4PLs are all thinking more now about automating systems, Wood believes. “‘Let’s accelerate the plans around things like quoting, booking, tracking, settling, and get people out of that process as much as possible or make the people I have more efficient so they can handle it,’” he said. “Even if Covid gets under control, this accelerates that process because people’s eyes have been opened.”
