The same disruptive technology that Uber has brought to the taxi industry is coming to the truck industry according to a report by global analysis giant Frost & Sullivan.
According to the report the transportation industry is now at the cusp of a similar revolutionary transition with Uber for truck-type apps entering the market, but this time the competition will be high and the solutions a lot more fragmented.
Frost & Sullivan has found that the big data trend is slowly transforming the trucking industry, with services like Uber boosting new business models like mobile freight brokering.
Big data is already driving significant cost efficiencies in many areas of the global trucking industry from manufacturing of trucks and vehicle systems to their operation and maintenance.
The new analysis has put a dollar figure to the trend saying that big data analytics in the trucking industry could generate up to $1.6 billion by 2022 – compared to $93.9 million in 2014.
In line with that, the report said that more than 65 per cent of original equipment manufacturers (OEMs) in the trucking industry are expected to adopt big data in the next four to five years.In the U.S. like Australia more than 70 per cent of all freight movement is carried by trucks.It goes without saying that any improvements in freight efficiencies will have a cascading positive impact on all corners of the world’s economy.The last time the transportation and logistics industry experienced such revolutionary changes was in the 1990s when IT induced remarkable efficiency gains.Imagine that a manufacturer in Melbourne needs to urgently ship 20 boxes of product to another manufacturer in Sydney. An “Uber”-type app for freight transportation could connect the shipper to a truck that is scheduled to leave Melbourne for Sydney. The driver is happy, as he can now get more payload to carry which otherwise could not have been located on an on-the-fly, ad-hoc basis, gain revenues and reduce empty miles.
The shipper is happy because they can ship freight on an ad-hoc, on-demand basis. The app provider is happy as it has created a new opportunity in the market helping efficiently connect demand business to supply and finally other motorists and the environment are both happy as we reduced empty miles hence congestion and also emissions.
In addition shippers are billed immediately and carriers are paid immediately and the transaction is executed in a swift and seamless manner with the app provider benefiting from each transaction. Each year on average 20 billion empty miles are incurred by trucks in the US, which cost the economy billions of dollars in fuel, congestion, environmental damage and lost manhours.The Frost & Sullivan study forecasts that by 2025, $US26.4 billion of all truck freight movement revenues will be enabled by mobile freight brokering. Smartphone/mobile device-based freight brokers are attempting to rise above traditional brokerage firms by offering higher asset utilisation and expedited revenue allocation to carriers, peer-reviewed and rated carriers and an expedited on-demand, ad-hoc demand response service to shippers.
In the USA start-ups such as Cargomatic and Transfix from California and New York, respectively are targeting a host of market sectors such as long-haul, regional, and local trucking, and carrier types such as for-hire and private fleets.
The growth potential of this industry is promising and that has attracted an array of investors, ranging from truck makers such as Volvo to logistics giants like UPS.
Like Australia the North American trucking industry is facing an acute driver shortage, which by some estimates stands at a deficit of some 400,000 drivers.
An even more disturbing trend is the record-low levels of young drivers especially the 21-25 year old sector in the overall driver population mix.
These challenges can deal a serious blow to economic growth if they are left unattended.
Smartphone-based freight brokering, among many other innovations could help reduce the severity of this shortage, when coupled with autonomous driving, truck connectivity and infotainment, cabin comfort and convenience-focused enhancements brought by truck makers, which could help attract younger drivers.
The advent of autonomous trucks and other innovative technologies currently being developed could see drivers use their smartphone to connect to the world outside and vice versa.
This will also help the driver to locate nearby freight and carry it to its destination if the truck is also headed there.
There are sure to be concerns like there are with Uber in terms of the track record of the fleet, driver, equipment and the type and nature of the freight that will present initial hurdles and user inertia but with extensive vetting, reviewing and checking mechanisms, companies offering mobile freight brokering services can present trucks that can deliver better service that is cost competitive, fast, effective, safe, and efficient.One thing that will be different this time around however will be that competition will come from several quarters.The article in Forbes recently quoted an Indian light commercial vehicle maker who revealed how they were developing a similar app solution for their light trucks in India as they seek to increase the earnings capability of their customers who are largely independent truck drivers enabling them to take more jobs on the fly.
The story also cites potential solutions being developed by leasing companies, telematics service providers and even telecoms.
The possibilities are enormous and how it all plays out will be fascinating to watch