Written by Eytan Buchman, Director of Marketing at Freightos, an online freight marketplace. This is one in a series of periodic guest columns by industry thought leaders.
Although trucking has a reputation as an industry that is conservative and slow to change, it actually is an early adopter of technology. CB radios were big with truckers long before they became popular with consumers. As international freight and logistics in all its forms – air, freight and rail – remains painfully offline, trucking has already hit its tech stride.
Transportation service provider YRC Worldwide, for example, is rapidly blending technology into its LTL, or less-than-truckload, hauling network, Justin Hall, the carrier’s customer service chief, said in recent industry remarks.
Both giant carriers and start-ups are deploying technology to reducing excess capacity and make trucking even more efficient. More than a baker’s dozen of “Uber-for-freight” start-ups were joined this year by Uber itself with a cloud-based, on-demand, full truck-load freight brokerage called Uber Freight.
This isn’t just a drive-by-night business. Freight tech start up Convoy – which has received seed funding from the founders of LinkedIn, eBay, Salesforce, Expedia and others – recently landed Unilever as a client, proving that the big boys are listening.
Even Amazon.com – whose founder Jeff Bezos also has invested in Convoy – has on-demand trucking aspirations.
Using technology to connect customers and truckers is far from a new idea.
U.S. domestic trucking has been shifting toward technology for nearly half a century. Truckers and customers used to coordinate loads through bulletin boards at truck stops. This was digitized when Dial-a-Truck, now called DAT, launched a telephone freight matching service in 1978, followed by an electronic version years later. Electronic load boards have since evolved into $150-billion freight brokerage market with brokers leveraging sophisticated technology to manage both inbound and outbound shipments for clients.
Trucking in the United States has two key drivers – incredible infrastructure and outstanding technology. Together they helped lower the U.S.’s percentage of GDP spent on logistics to “only” 7.5 percent. That compares with around 18 percent in China and well over 20 percent in less developed countries.
In 2015, trucking revenue reached $726.4 billion, with 3.6 million trucks moving 10 billion tons of freight. That’s a lot of freight. But it can get more efficient. As a matter of fact, there are at least 10 on-demand freight companies that have billed themselves as an “Uber-for-freight”:
Uber – which acquired autonomous truck startup Otto in 2016 and completed the first real-world commercial shipment using an autonomous truck just months later – brings a magnitude of capital as well as the promise of infrastructure.
That’s not to say it’s all business as usual. The ride hailing giant has also entered the race toward autonomy.
And Alphabet, Inc.’s Waymo Division recently installed its self-driving technology on a single Class 8 Peterbilt truck, which means more resources pour into the sector.
There’s a huge potential for vastly lower-priced and more efficient self-driving trucks. Even manned autonomous trucks will greatly increase operating hours, reduce dangerous mishaps on the road and, combined with the new Neopanamax ships bringing more cargo to the East Coast, reshape the viability of trucking across America.
Autonomous trucks will of course partially displace trucking jobs. A report released by the Obama administration last year estimated that of the 1.68 million heavy-duty trucker jobs identified in 2015, at least 80 percent are threatened by artificial intelligence and autonomy. And that is only one segment of the 3.72 million commercial vehicle driving jobs out there.
However, at the moment, there’s a shortage of truck drivers, which is predicted to worsen, potentially leaving the industry short 175,000 drivers by 2024. Self-driving technology could pick up some of that slack. It will also improve safety. Truck crashes kill about 4,000 people on U.S. roads annually and injure 116,000 more.
The introduction of autonomous technology into the trucking industry will change the entire shipping ecosystem.
Implementing a fully autonomous trucking system will have an impact at every point in the supply chain. Trade routes will be altered and shipping prices decreased. This will all eventually trickle down to the consumer in the form of lower prices at the register. Lower prices can particularly impact countries around the world for the better, where the domestic trucking infrastructure is not as evolved, bringing them specific and necessary goods at much more affordable price points.
More technology in the space means more efficiency. Time and time again technology such as one-day delivery and online goods tracking that’s taken for granted in courier delivery and trucking is nonexistent in international freight. That matters. It may be 1,100 trucking miles from the Port of Long Beach to Denver, but it’s 7,250 miles by ship first.
Either way, more attention to the LogTech space, whether from start-ups, legacy enterprise forwarders or giants like Waymo and Uber, is finally bringing efficiency to the global logistics industry, which moves $19 trillion of goods a year.
And that’s a great thing.
Editor’s Note: Eytan Buchman is the vice president of marketing at Freightos, an online freight marketplace. With a background in international relations and communications, Buchman also runs the logistics technology research at Freightos.