The connection between transportation and logistics and technology is not anything new. Companies like Walmart, FedEx, and others have been using RFID tags and barcodes for decades. What is changing in the industry is the emergence of digitally connected innovations. Consider ing technologies like RFID tags work primarily within silos; digital technology is opening a whole new array of possibilities.
Transportation and logistics (T&L) companies now face not only innovative competitors but disruptive tech startups as well that are aggressively applying digital technologies to upend entrenched business models. Areas such startups are disrupting include digital freight shipping, supply chain, and logistics analytics, sensor and asset tracking, inventory management, last-mile delivery, e-commerce logistics, fleet management, and warehousing.
For established companies to respond appropriately, they must themselves learn to apply disruptive digital technologies to their business models and operations, some examples of which are outlined below.
1. Capacity Utilization Leveraging the Sharing Economy
Uber and Airbnb may have popularized the sharing economy, but today, the phenomenon is creeping into other industries. In T&L, one of the significant challenges the industry has faced so far is real-time resource allocation. By relying on advance arrangements, most contracts are fixed well before the actual goods are in transit, leading to either over-capacity or under-capacity issues.
For instance, up to half of all trucks completing a delivery will return empty, an indication of poor capacity utilization. Today, startups like Cargomatic are disrupting this business model by providing capacity utilization marketplaces that match shippers with carriers in real time using metrics like direction, load, type of truck, and others.
By horizontally integrating multiple service providers, such aggregators are disrupting traditional T&L companies that relied on long-standing arrangements and legacy structures. Today, a merchant needing just-in-time transportation can tap into standby trucks from a range of companies and get real-time stats on when the vehicle will arrive, the driver details, and how much it will cost.
Such real-time access to T&L resources is an advancement that established companies must embrace to keep pace with ever more demanding customers.
2. Real-time Asset Management Using the Internet of Things
Connected through advanced telematics and ubiquitous cloud infrastructure, IoT devices (sensors) are transforming how T&L companies track and manage assets. While in the past companies relied on manual transmission of data, which resulted in ‘dumb’ logs, today, modern sensors feed encrypted data into a central master control, which transforms that data into ‘smart’ reports and charts. From this data, T&L companies can track, in real-time, truck capacity, temperature and barometric conditions, speed, location, the status of the driver, among other detailed metrics.
For large T&L companies, the benefits can be substantial. In the food industry, thousands of tons of grain are lost through moisture spoilage while in transit. By utilizing IoT temperature and barometric sensors, this spoilage can be reduced significantly. Consider also a scenario where a transport company has hundreds of trucks and needs to keep track of space, route and destination times for each one in real-time, as conditions change. With sensors, this would be done seamlessly with no need to monitor each vehicle manually.
3. Increased Efficiency with Semi-autonomous Vehicles
Although Uber dropped their self-driving truck ambitions, the field is still advancing steadily thanks to startups like Kodiak AI and innovative companies like Daimler. With most states cautious about allowing multi-ton vehicles onto their roads with no human at the wheel, they would be willing to start with semi-autonomous trucks. The promise of such vehicles lies in their ability to optimize areas that humans struggle with such as using LiDAR to ‘see’ in poor visibility conditions or performing preemptive maintenance.
Additionally, where a human driver must undertake one task at a time when on the road, such as checking route updates, keeping track of documentation after each stop, safety checks and load management, a semi-autonomous vehicle could undertake some of these operations in the back as the driver focuses on the road.
Combining sensors, telematics, and self-driving technologies like LiDAR, the vehicles of the future, including trucks, drones, planes, trains and ships, will be able to operate as self-aware vehicles with the capacity to report to base on road/air/sea conditions, load capacity, driver awareness, route optimization, and other metrics. T&L companies interested in exploring these technologies have an excellent opportunity to do so by visiting cutting-edge T&L startups in Silicon Valley and learning how they are using these technologies to disrupt current business models and processes.
4. Big Data and Predictive Analytics Ties Everything Together
The proliferation of sensors and more devices getting online has led to a deluge of data flowing into T&L data centers. To leverage this digital goldmine, companies will need to harness big data analytics to unearth insights. For instance, last-mile shipping is notoriously inefficient even for the most significant logistics companies. Challenges like where to park, traffic, no one to collect, and others make this step in the supply chain messy. By crunching big data, companies can isolate location-specific patterns and optimize processes to accommodate any bottlenecks found.
However, to harnessing big data in this way will require T&L companies first identify, itemize and streamline their data sources, something most companies are currently not doing. Startups like ClearMetal and Cargomatic go a step further and use Artificial Intelligence (AI) to sift through this data and not only extract insights but process these insights into decisions such as route optimization, cost and time predictions, warehouse automation, and increase transparency in the supply chain.
Amazon’s automated warehouses are an excellent example of how big data and AI combine to create new efficiencies. Using real-time data and predictive analytics, warehouse robots move inventory around the warehouse resulting in faster fulfillment times and fewer errors.
Pivoting into The Future
Digital transformation is sweeping through the T&L industry. Customers, suppliers, and everyone else in the value chain are demanding better, faster and more integrated services. For T&L companies, looking for areas within operations to introduce digital capabilities offers an opportunity to capitalize on this trend, whether these areas are in warehousing automation, supply chain logistics or any of the other areas mentioned above.
To accomplish this, it is imperative to either insource a digital transformation agenda or work with innovative T&L startups within a synergistic hybrid innovation model. As old business models evolve and disappear, traditional T&L companies that pivot into digital-first companies will be the ones that become the new leaders.
Silicon Valley Transport & Logistics Executive Immersion Program
Attend a 5-day Silicon Valley Innovation Center Transport & Logistics Executive Immersion program that offers board members and senior executives in the automotive, shipping, and logistics industries unparalleled access and insights into the innovations surrounding the industry. Executives can expect to learn about autonomous vehicles, blockchain in auto, AI and Machine Learning and IoT and predictive intelligence. To find out more about the program and how to participate, click the button below.