Yet, companies that are delivering are finding new methods of creating value for their end customers and, in some cases, leveraging new modes of transportation in order to accelerate delivery. As Greg Lemond once said, “It doesn’t get easier, you just get faster.”
You may have heard last week that the new startup darling of the EV world, Rivian (NASDAQ: RIVN), reported quarterly losses of nearly $1.7B. Yes, that’s billion with a “B.” They are repositioning, changing their logistics, and — no surprise to us — utilizing a key tool for their new arsenal: rail.
Responding to externalities is a key tenet of high performing organizations. The past 36 months have certainly shown that businesses ranging from the well-established and entrenched to the up-and-coming visionaries are having to adapt and demonstrate resilience in new and provocative ways. This is true for Rivian as well. When presented with an opportunity, they immediately looked to cost saving measures across all logistics and supply chain, which they highlighted in their earnings report. What is the key unlock to delivering vehicles for less cost? Increasing the use of rail across the entire supply chain.
Regarding the delivery side, Rivian CFO Claire McDonough said, “In July, we started a larger effort to move from truck to rail for our outbound freight, which should provide additional cost savings as we scale our operations.”
Additional cost savings. That’s key. Using rail as the primary method of transport in your supply chain from ports to distribution centers not only saves money, but is often more predictable. In the wake of lengthy disruptions and strikes, that’s music to everyone’s ears.
The underlying thesis here is that Rivian can leverage the substantial network capacity and price advantages offered by the North American rail network. Considering that a single train can carry the equivalent capacity of roughly 280 trucks, there is substantial opportunity for them to gain distribution advantages through tremendous economies of scale.
Using rail, however, is not merely a chance to re-forecast in down times. Rail can be the primary method of intrastate transit for manufacturers.
At Telegraph, we build technology to help shippers like Rivian leverage more rail and intermodal in their supply chain, without having to make tradeoffs for suboptimal processes. Whether it is ensuring parts are properly scheduled into the plant, accurately tracking goods while in transit, or providing analytics on finished vehicle velocity, we’ve developed a modern platform to help companies of all sizes unlock more capacity and resiliency in their networks.
At Telegraph, we are bullish that rail is a tailwind for the broader supply chain. Our core mission is to provide modern logistics technology and help play a role in making rail more widely accessible to shippers everywhere.
Time will tell how Rivian’s products are received in the open market. But one thing’s certain: if they succeed with their plan, it may be in large part because of their use of rail.