Sun. Sep 20th, 2020

Bringing digital from zero to one in Vietnam’s trucking sector with LOGIVAN CEO and Founder Linh Pham13 min read

Introducing digitalisation to a traditional industry takes more than technology. LOGIVAN CEO and Founder Linh Pham catches us up to speed on how they’ve been doing that in Vietnam’s trucking sector.

About our guest

A former Goldman Sachs technology analyst and graduate of Cambridge University, Linh Pham founded LOGIVAN after observing the inefficiencies in the trucking industry while working at her family’s fertilizer business. With her firsthand on-the-ground experience working with the trucking industry, she has managed to grow LOGIVAN into a pioneering logistics company that connects tens of thousands of truckers and shippers across the country. She has won prestigious awards ranging from the best start-up at RISE Conference and the Pitch@Palace Global 2018, and appeared in more than 50 TV and media appearances, including Forbes, Tech in Asia, E27, VTV and Business Insider.

Timestamps to answers

00:17 Introduction of Linh Pham

1:40 How Linh started LOGIVAN

3:34 Overcoming challenges of starting up

4:59 Determining pain points of truckers

6:28 Unique aspects of operating in Vietnam and trucking sector

8:06 Driving adoption of shippers (SMEs and corporates) and truckers

12:25 APPLE and other tech solutions

15:53 Impact of supply chain diversification on Vietnam

17:04 Evolving leadership in a fast-growing startup

Yinglan: Thank you Linh for joining us today. It seems you are no stranger to these kinds of interviews. We always like to start by getting to know the origin story, starting where you grow up, your UK education at Cambridge and career start at Goldman Sachs, how did you decide to become a founder and start LOGIVAN? 

Linh: I was in the UK for a long time, and I looked [at] how the UK was growing versus how Southeast Asia was growing, and I absolutely loved the trajectory of Southeast Asia and Vietnam. At that time it was growing very fast, and I decided to return to Southeast Asia to find a big opportunity to work on. So I went into the heavy industries, the manufacturing plants that my family business owns, and we own ten trucks. 

Upon seeing that all ten trucks were returning empty all the time, that was the moment of realization that the market was so huge yet so fragmented, and over 70% of trucks returned empty. It was the defining moment for me, and I wanted to start LOGIVAN to consolidate the fragmented trucking market in Vietnam, and to make sure that the matching efficiencies get better, and 100% of trucks are running full load and not returning empty anymore. So that is how I started LOGIVAN slightly over two years ago.  

Yinglan: Great introduction. You’ve shared the story on Linkedin where you said, “If I waited until everything was perfect, LOGIVAN would still be at zero today.” In our audience we have a lo tof ounders, who are wondering whether and when they should start a company. What was the exact epiphany that gave you the inspiration — well you had a successful career in Goldman, what was the exact tipping point that caused you to start LOGIVAN? 

Linh: So my favorite book has always been the lean startup by Eric Ries. and this lean startup methodology has been the guiding light for my entrepreneurial career and entrepreneurial journey. There will never be a right time to start a business. There will always be obstacles to building the first prototype, to getting your first customer, to getting your first check in the bank. And so the most important thing about this is to start small and to start nimble as you build your MVP, as you build your first product, as you get your first customers, and then reiterate along the way. We built the first MVP, built the first website and secured the domain after one day. And this has always been our mantra. We start testing something, we do it fast, then we move on. 

Yinglan: That’s a great adage. When you first started LOGIVAN, there weren’t any other players. There were global role models, but then what was your process determining the pain points of truckers and developing a product to effectively address the inefficiencies in the industry? 

Linh: So we went out and spoke to a lot of truckers we know of, or at the parking stations we went to, and the common theme that we found is that they often have empty truck returns, they often have idle trucks. And the majority of their time is actually not for driving trucks, but for finding jobs, to negotiate for the pricing of each job. And we see that this is a problem of optimization. So more of their time should be spent driving, not fighting and negotiating for jobs. The more they drive, the more they can earn. 

So we really want to solve the inefficiencies problem of the industry and to bring more income, and to help the trucks, the small independent trucker owners and operators to expand their business, and to improve their cash flow as well. They need the cash upfront for a lot of their immediate expense, such as fuel, tools, insurance, inspection, and maintenance, all of these things need to be paid upfront, and we want to solve this problem for them too.  

Yinglan: We may have listeners who are not familiar yet with Vietnam. What are the unique aspects of operating in Vietnam — first, in terms of hiring talent and second, working in the trucking industry? What are some of the things you have learned, and for our listeners who are not familiar with Vietnam, what would be something you would like to share?

Linh: In Vietnam we have good technical universities, and people are very hardworking, so in terms of hiring tech talent it’s not a big problem for us. The process and hiring pipeline has always been filled with good technical applicants. 

Secondly, working in the trucking industry is very interesting for us in Vietnam. We are building a technology trucking company. The people who often work in the trucking industry are usually very different from the tech people. Bringing these two types of people together in company is a challenge, because one is more used to the traditional way of trucking and doing logistics and the other wants to change it. How do we create the best environment, how do we create the right combination of policies and resources to support both types is always an interesting challenge for us. 

Yinglan: There was a point you spoke about which I wanted to dig deeper. You’ve shared a lot about working closely with truckers and figuring out their pain points. I want to talk about the shippers as well, which range from corporates to SMEs. How does the fragmentation look like from both sides and what was your approach to driving adoption for both truckers and shippers, for the shippers, the difference between the SME and the corporates?

Linh: Currently, it’s the fragmentation and underutilization that makes the shippers very difficult to book a truck last minute. This has been our point-of-entry since the beginning when we launched our marketplace, where we allow SME shippers to connect with the truck drivers. 

For the SME shippers when they need a truck tomorrow, they usually call multiple brokers and truckers today to ask for quotes. Then they have to wait an hour or more to get the quotes back because nobody has the price to all the routes instantly. Nobody has the answers, because the market is fragmented. 

Then after getting all these quotes back, the SME shipper has to negotiate hard for different brokers. Once they finish that negotiation process, it’s already been a couple of hours. 

The booking process is very time consuming, very labor intensive. If you don’t finish the negotiation process before 5 pm, then the price increases sharply after 5 pm, because the brokers and truckers know that you are in need of a truck, and you are desperate. 

This is a very big problem for SMEs because how they ensure that they get their cargo in time by tomorrow is determined by how good and how advanced they book their truck in advance. So this has been our biggest problem to solve, how do we create an instant price, so we can guarantee a truck for the SME shippers when they have spot needs, when they need a truck urgently for tomorrow. 

This has been our key focus for the last year, when we launched our AI model called APPLE. It is an instant pricing model that nobody else in the market has. No logistics company in the market has the instant price to all the routes and all the truck types and all the cargo types, and this has allowed the SME shipper to decide instantly whether they can ship tomorrow or not. This brings speed and reliability to the spot market in Vietnam. 

This has been our key point of entry into the corporate market as well, because the corporate shippers have spot needs, about 20% of their needs are spot, and 80% of their needs are stable, regular volume contracts. If we can solve 20% of their spot needs efficiently, we can build trust with the corporates, and the corporates then later convert that regular volume with us, they bring that regular volume to us as well. 

Also the corporate shippers, they need more lean and efficiency into their internal operations, and they have trouble with reconciliation from different truck suppliers that serve them for different routes, and they cannot control the trucking suppliers, during onboarding, loading and offloading the cargo. They need a way to centralize all this information, and the documents and management and control of the trucks in transit. We can provide them that. 

Yinglan: Actually I wanted to talk about APPLE, which is one of my favorite parts of the tech platform. I’ve also been a big fan of the engineering team, which is one of the big strengths of Vietnam. I want to talk about the truck matching capability you have and some of the other models you are building that will help the truckers and shippers on both sides. How does the platform enhance the capabilities of both truckers and shippers? Are there other interesting mechanics and models you are building? 

Linh: APPLE essentially analyzes the market demand and supply, and then gives out a price instantly to the shippers on our platform. It also gives the instant price offers to the truckers as well. But the interesting part is that it doesn’t just give one fixed price to the truckers. It gives the price personalized to each trucker. This has allowed us to see whether a trucker is going to accept a lower price, and thus increasing the margin and spread on our platform. 

For truckers, personalization is so important because truckers have different types and models of trucks. They have different types of driving that are more or less fuel efficient. Because fuel accounts for 30% of each truck’s logistics costs. So the way they drive and the type of truck they own are determining factors of the price they’re going to accept, and so the price needs to be personalized to each trucker. 

The reason we can do these is because we have those data points — the truck model, the truck type, and how reliable the truck driver is, and how he has been bidding over the last two years on our marketplace. We have these data points, and we can improve and train our personalized APPLE for each trucker. 

In terms of truck matching, we have built a recommendation engine for logistics, which is a matching system powered by AI as well. Before in the marketplace, typically we would send out notifications and job offers to truckers with the suitable truck type and nearby pickup location and this may result in sending the offers and notification to thousands of truckers, which is not ideal, because that means for each trucker they would received a lot of notifications and a lot of job offers, and the chance of actually winning the job is actually low for them. So how do we improve this process? 

We have built an AI model to match the right trucker more smartly by finding the right truck that is going to arrive at the destination (pickup location) in a couple of days. It’s a question whether the model can predict when and where the truck is going to be empty and available to take the job at the pickup location rather than their absolute location at the current moment. This has been the major change in the matching process in LOGIVAN. For the truckers, less notifications and job offers but more quality, and win more of the jobs. 

Yinglan: Last year Vietnam was on the headlines quite a lot because of the trade war, and we’ve seen the diversification of global supply chain and that has benefited Vietnam, especially manufacturing industry in particular. How did this affect your operations? How is it playing out now given the recent slowdown globally and in China especially? And what’s your view of the future? 

Linh: As companies are diversifying their operations, manufacturing and plants away from China, amidst the uncertainty in the China and the US trade war, we see that Southeast Asia is the main beneficiary from this because of the lower labor costs, stable governments, stable currency, and more diversification of supply chain. This is going to impact positively on the logistics sector of Vietnam over the next couple of years and in the long-term. It also drives a lot of the production and the consumption in Vietnam as well, and this is going to be our core focus in the upcoming years. 

Yinglan: What is the day-to-day like for a founder like yourself, and as the company gears up for its next stage of growth, what do you look forward to doing from a leadership perspective? 

Linh: I think for day-to-day life, there’s no day that is similar to yesterday for the founders roles and responsibilities, it involves the financial stability, setting business and product strategy for the business, executive hiring, and upkeeping the culture. These are the four main roles and responsibilities of a founder.

As the company gears up for the next stage of growth, we have to grow ourselves faster than the company is growing itself. Because each stage requires a different set of skills and it requires a different set of executives. As a founder you always need to look for opportunities to improve the company structure and organization as we grow really fast, and see whether an executive is going to be suitable for the next stage of the company.

Previously in the early stage of a startup, executives need to be very versatile, up for doing anything but as the company progress to growth stage, executives need to be more specialized, they need to have more experience under the belt, and they need to be able to manage a large team, and they need to ensure that the culture and motivation and the alignment between hundreds of people are going to be the same when we have 50 people and 20 people. And these are the challenges that a startup founder has to think about every day. 

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