Logtech: what it is and what it delivers to fleets

Logistics innovation reaches most Brazilian fleets through logtechs and their technology solutions.

That is why the webinar held in partnership between Fretefy and Prolog, two Brazilian logtechs, focused on logtechs themselves.

Jean Zart, cofounder and CEO of Prolog, and Adriano Guardiano, product specialist at Fretefy, were the two guests responsible for discussing the agenda topics. The webinar is from 2021, and the statements reproduced here are what each of them said at that time.

It all began with a simple question:

What is a logtech?

A logtech is a startup applying technology to a specific logistics problem—from freight to tires, from warehouses to route planning. If you keep up with the startup world, you will notice various niches: fintechs, edtechs, foodtechs, legaltechs, and so on. Logtechs are simply another highly specialized group among them, focused on logistics solutions.

Another point raised by Jean concerned ERP (Enterprise Resource Planning) solutions: a complete management system for the entire company, rather than specific segments of the logistics process.

What Prolog's CEO said is that it is very difficult for an ERP product to meet the needs of each part of the operation with the same depth. This is where challenges arise at certain points in transport operations—precisely the points a logtech usually chooses to tackle.

He also used Prolog as an example, since the company's solution served tires. Today the platform brings together three modules— tire management, electronic checklist and maintenance management —and all of them are still based on records made within the operation itself: the tire inspection, the vehicle checklist, the workshop work order.

Meanwhile, Fretefy focuses on freight management. This logtech's software manages freight and fleets and monitors the entire operation. It is a different area from what Prolog covers, and a good illustration of how two logtechs can coexist in the same fleet without competing for the same space.

To summarize the answer: logtechs are companies offering logistics solutions and innovation, whether for the supply chain, warehousing, fuel or route planning.

How does a logtech benefit the market?

The second major point addressed by the specialists was this: what do transport companies gain by adopting the solutions supplied by logtechs?

In Jean's view, cost reduction is the main benefit. Through the platforms and technology it delivers, a logtech can help logistics operators reduce operating costs.

Using Prolog's solution as an example: based on inspections, the tire management system brings together data and calculates CPK—cost per kilometer—for each tire, as well as CPK for each make and model. The manager therefore has very valuable information at hand: the fleet's best-value tire.

Of course, the best make and model may vary depending on the vehicle, road conditions and cargo type, among other factors. This is precisely why the calculation needs to come from the fleet's history, rather than a market average—and why tire management software is so important.

The system also helps determine the ideal pressure to use, keeping track of wear at each inspection and helping prolong tire useful life, which also contributes to road safety.

Adriano from Fretefy emphasized the importance of process automation and rapid decision-making resulting from logtech solutions. This makes the company more competitive and generates value for end customers.

For both, the database created by each solution is equally extremely valuable. And there is a facilitating part of any tool provided by a logtech: the API, whose function is to make everything integrable with other systems.

Therefore, even if a company already has an ERP, it can integrate other solutions instead of replacing everything at once. This is the path Prolog itself follows, with open APIs for integration with any ERP, management system or BI tool in the operation.

What are a logtech's main challenges?

For those providing solutions as logtechs, the major challenge identified was companies' conservatism. Many still did not believe in technology, leadership teams took a long time to analyze the product and did not prioritize adopting these solutions.

Jean also emphasized how “it is difficult to get a logistics professional into a Zoom room to present the solution and show how it can help them day to day.” These companies' leaders were accustomed to face-to-face contact, and breaking that barrier to build trust in a logtech team solely online could be very complicated.

Prolog's leader also commented on bureaucracy within companies and said one adoption cycle for Prolog's tire management took as long as 6 months. Time when the tool could already have been used in the company's daily routine, reducing costs and optimizing operations.

An interesting fact Adriano shared was that, among the 100 countries working with a transport model similar to Brazil's, Brazil ranked 56. In other words, far from being among the most innovative countries. He presented the number in the webinar without citing the ranking's source, so it serves as a snapshot of what was on the table in 2021, rather than Brazil's position today.

For him, the greatest challenge is selling knowledge and innovation: making the view of technology straightforward, simple and easy. In his assessment, it was the opposite at the time—there was considerable resistance and slow responses.

What can be done about this?

As emphasized in the conversation, logistics was experiencing a moment of innovation. A disruptive scenario, with a paradigm and cultural shift.

The view of innovation within companies needs to change. After all, they have the greatest interest in this: they want efficiency and productivity.

For both guests, these logistics professionals need to stop “accepting” that things are as they are. Jean also closed the subject by saying:

“If you are unhappy with manual processes and results, you have to look for solutions. And if there is no solution, it is an opportunity to create a tool.”

How did the pandemic boost logtech businesses?

The webinar ended with this question.

And the conclusion?

For both guests, companies had to change their mindset. Those that did not yet have innovative processes realized how far behind they were and, in their view, those that did not invest in new technologies did not survive.

Years later, the question that opened the conversation remains the first a fleet manager needs to ask before engaging any supplier: does this logtech solve a real part of my operation, or only promise to? The answer usually appears in the data the operation can record every day—and in who is willing to integrate it with what the company already uses.

Watch the full conversation (video in Portuguese) on Fretefy's channel and take the opportunity to subscribe to the Prolog App channel too!