Load matching technology, Freight as a Service (Faas), Trucking as a Service (TaaS) – call it what you will, this new approach to goods transportation is rerouting the path ahead for trucking companies. Negotiating loads has historically involved a long-drawn-out process that – despite best intentions – all too frequently results in deadhead journeys. That could soon be a thing of the past.
“We are seeing a substantial number of players getting into load matching,” observed FTR President Eric Starks. “Not only is Uber part of that equation, but you are looking at the whole broker community doing that. As we move to 2018, the ability to make better decisions on how freight moves goes up noticeably.”
It’s a simple idea: provide greater transparency into the shipments that need to be delivered and the vehicles that are available to take them. Throw in connected, real-time data and a friendly user interface and there is potential to streamline operations and boost productivity.
Big names, big potential
“In addition to ride and bike-sharing, TaaS will have a major impact on how operators start to manage their vehicle fleets in 2018. On-demand trucking will turn the current system of multiple phone calls and high admin levels on its head,” observed Theresa Bui Revon, Director of IoT Strategy at Cisco.
ABI Research’s 2017 Industry Survey ranked FaaS as the primary disruptive trend at work in the automotive industry. “FaaS will take over part of traditional short haul and delivery, fuelled by e-commerce’s exploding delivery needs, which are largely based on the availability of on-demand service models,” predicts Susan Beardslee, Senior Analyst at ABI Research. “Open and competitive cargo markets will stimulate competition and help both private and for-hire fleets to absorb unexpected demand, as well as level out seasonal fluctuation. FaaS will help address the 20% cargo capacity utilisation deficit in the US, resulting in higher profitability.”
Plenty of different companies are keen to play. The list of disruptive digital freight brokers is growing, but some of the bigger players at the moment include Convoy, Trucker Path. C.H. Robinson Worldwide, J.B. Hunt and Uber. For Uber, it was a relatively simple step from taxis to trucks with Uber Freight. The app links trucking companies with shippers, providing visibility on available loads and their final destination. It offers upfront payment and an option to book with a simple click. Uber wasn’t the first to offer this sort of brokerage service but it did bring a big name to the movement and could help change customer perceptions.
Working conditions
Not everyone is as bullish on their outlook for the impact of connectivity and FaaS. For Avery Vise, FTR’s Vice President of Trucking Research, it all depends on the region. “I don’t see this as much of a disruption for the established markets, like the US or Europe. Here there is already a very established infrastructure and plenty of technology for handling spot market freight,” he told Megatrends. Notably, the US market is currently operating at very tight capacity just now and Avery estimates that most drivers are already fully utilised.
Instead, he sees this technology as a means of “keeping the pressure on for innovation.” Where it could have significant impact is among smaller carriers and owner operators. “It does open up the chance for these guys to set their own rules on how they want to operate. Rather like Uber in passenger transport, truck drivers can decide when to work, the terms under which they work, etc,” Vise explained. “You don’t see much of that in trucking, because the drivers need to make their truck payments. It is not as if they just had the truck sitting around anyway, as Uber drivers would their personal car. However, in the longer term, this type of arrangement allows drivers to set conditions of their work.”
“Transportation has to change. It has to be much more efficient, and last mile logistics needs to be optimised for quick and reliable delivery.” – Volker Mornhinweg, Head of Mercedes-Benz Vans
Emerging markets
Emerging markets are another story altogether. “In emerging markets, this has much greater potential, albeit within the limitations of the overall infrastructure,” added Vise. “These markets do not have the same kind of established third party intermediary systems like the US or Western Europe. In those cases, it could be very disruptive. It would allow for the supply chain to tap technology that might not exist at all now. Quite possibly, the only method that works in some of those places is a phone call or even a load board, where people just post load requirements at a truck stop.”
Start-up company Truckola is targeting the Indian market in particular. “The transport industry in India is highly fragmented, with numerous very small players. What we attempt to do is organise it,” explained Truckola Founder and Chief Executive Raghav Himatsingka. The company is taking a relatively low-tech approach to start, as that’s where the current players operate. Today, it’s all on a phone and limited to retrospective analysis, with no predictive analysis. However, at some point real-time connected technology could allow for much more efficient route planning on return journeys and searching for cargo opportunities. “Incorporating more technology is our grand vision. Once that happens we can have real time data on vehicle movement and the operation becomes more efficient,” he added.
“FaaS will take over part of traditional short haul and delivery, fuelled by e-commerce’s exploding delivery needs, which are largely based on the availability of on-demand service models.” – Susan Beardslee, ABI Research
OEM involvement
At some point, the CV manufacturers themselves may become directly involved in truck connectivity services like this. Sandeep Kar, Chief Strategy Officer at IoT solution provider Fleet Complete, believes they will have to. As vehicles are used more efficiently, fleets will require fewer vehicles and overall demand volumes may slow. “In this kind of environment, the OEMs are trying to acquire some of these companies, or partner with them, so that they can tap into the revenue stream,” he pointed out.
Kar paints a worrying picture for those that miss out: “Imagine a Peterbilt truck is travelling from San Francisco to Los Angeles, and the freight load board service it is using is from a company that has been acquired by Volvo. What if, at some point, the truck’s transmission begins to overheat? The service will find a mechanic in the area that can fix the problem but it won’t be directed towards a Peterbilt dealership. It will be a Volvo one.”
This also applies to last-mile logistics. Volker Mornhinweg, Head of Mercedes-Benz Vans, is actively positioning for this trend. “Transportation in general has to change. It has to be much more efficient in the future, and last mile logistics especially in urban regions needs to be optimised to satisfy the demands of consumers for quick and reliable delivery,” he explained. To make logistics more efficient and intelligent, vans of the future will need to be a part of the Internet of Things (IoT) too. Mornhinweg flagged digitalisation as one of the megatrends significantly impacting the company’s business and its customers’ businesses. “When the environment changes, you either evolve or disappear,” he conceded. “And so we are evolving from a manufacturer to a provider of holistic transportation solutions, and are thinking far beyond our core product.”
“I don’t see this as much of a disruption for the established markets, like the US or Europe. Here there is already a very established infrastructure and plenty of technology for handling spot market freight.” – Avery Vise, FTR
The Mobility Dispatch
Navigation specialist HERE is putting its own twist on the approach with a fresh application of its expertise. The company recently launched The Mobility Dispatch solution, a real-time fleet utilisation and optimisation service that uses advanced algorithms for demand prediction. Specifically, it harnesses Big Data for insight and analysis to maximise each transport opportunity.
“With dispatch systems, you need to create efficiency in the way you operate your fleet. In order to create this efficiency, you need to rely on data. You need to understand the market. You need to be able to predict where the demand will be in an hour from now, two hours from now, three hours from now, in order to make sure that you’re always occupied,” explained Liad Itzhak, Vice President and Head of Mobility at HERE. “On top of that, you need to know where the supply is.”
Many companies have been developing their own dispatch systems, but many smaller players lack the financial resources to back this sort of investment. “These guys don’t have the R&D, they don’t have access to the market data to see the full picture of demand and supply in order to create efficiency,” Itzhak told Megatrends. This is what HERE Mobility brings to the table with its dispatch solution, which provides tools such as demand prediction, fleet utilisation and smart zone management. “These are the kind of toolsets that they lack at the moment, and this helps level up the smaller players to put them on the same level as the larger ones in the way they operate their fleet,” he added.
This article appeared in the Q2 2018 issue of Automotive Megatrends Magazine. Follow this link to download the full issue
