Jakarta. With shipping and delivery costs high, companies such as Shipsy are exploring how new artificial intelligence technologies can help reduce costs across the logistics sector.

Shipsy CEO and co-founder Soham Chokshi talked to the Jakarta Globe about some of the issues surrounding costs in Indonesia and how new technology can help businesses and customers save money.

“The largest chunk right now, where the logistics cost is increasing is in the last mile,” he said.

“There’s a lot of technology now that is coming in to ensure that enterprises can really reduce a lot of the costs when it comes to the logistics side.”

Interest in AI technology has risen considerably in recent years as businesses discover new ways to implement the technology to streamline processes.

Shipsy is interested in using AI technology to help improve communication between all companies involved in the shipping process while optimizing routes so they are cheaper while still being efficient.

However, setting up efficient logistics software in Indonesia has its challenges, particularly with what accurate travel information is available when planning out routes for the later stages of delivery.

“When you look at E-commerce and logistics, the thing that's going to help reduce costs is better routing. But what do you need for better routing? You need accurate geocodes and addresses. So I think this is one challenge for a country like Indonesia,” Chokshi said.

“I think some of these local challenges in terms of addresses and changing routing directions, right, I think this is a big problem to solve. And I think that’s where a lot of crowdsourcing of data technology AI can kind of come in to help solve these problems.”

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Currently, the bulk of costs in logistics are on the first and last mile of the delivery process and Chokshi is confident that Shipsy’s software will help reduce costs significantly as it becomes more widely adopted.

“I think the one main area where enterprises can invest, to reduce the cost, is efficient routing, route optimization technology, that actually merges both the first and last mile to create integrated routes that utilize the entire capacity of your vehicles,” he said.

“I think the second would be a lot of conversational AI, kind of coming in to ensure that the communication with the end customer can be streamlined.”

Chokshi explained that another one of the big issues that push the cost of logistics is often a lot of small issues arise during the entire delivery process that overall end up taking a lot of time and effort to solve.

Shipsy is also focusing on using AI technology that learns from user inputs to optimize every section of the delivery process and better predict outcomes with the hopes that they can save time and money by accurately predicting bad scenarios before they happen and offering solutions.

“The analytics platform takes in data from all these different areas, and helps people make smarter, better decisions through predictive analytics,” Chokshi said.

“This is one major area where we're investing right now. We're seeing great results with some of our customers.”

The AI models that Shipsy uses globally have been trained over the last three years, with its Indonesian-specific models learning over the last 8 to 10 months.

According to Chokshi, about 10% of Shipsy’s partners are in Indonesia, which they are hoping to expand further before moving into other areas in the South East Asian region.

Public interest in AI technology has grown rapidly recently primarily due to the success of ChatGPT which Microsoft recently announced would be incorporated into its search engine Bing.

Its success has prompted businesses from all types of sectors to look at how they can integrate similar AI technologies to improve efficiency.