Editor’s note: Written by Gary Brooks, chief marketing officer of Syncron, an after-sales service provider. This is one in a series of periodic guest columns by industry thought leaders.
From new technology innovations to burgeoning trade wars, 2019 was an exciting — and sometimes hectic — year for the trucking industry. The rise of the Internet of Things (IoT) and Machine Learning are paving the way for heavy truck manufacturers to design and build incredibly powerful and technology-enabled trucks.
The rise of IoT, coupled with an ever-evolving customer landscape and the independent aftermarket, is leading many OEMs to explore Product-as-a-Service business models, where customers purchase a desired result or output of a product rather than the product itself.
And, with experts forecasting new truck orders to dip in 2020, truck builders must begin exploring new revenue streams. Below are four key trends we can expect in the auto industry this year, with tips on how OEMs can use these trends to fuel success in 2020 and beyond.
THE RISE OF PRODUCT-AS-A-SERVICE
Consumers across industries and verticals are increasingly expecting more flexible consumption models. In the age of Netflix, Spotify, Uber and Lyft’s All-Access Plan, new consumers are rethinking the traditional ownership models preferred by prior generations and are more interested in usage and experiences than ownership. The heavy trucking industry is no exception, and for truck manufacturers, or OEMs, to successfully prepare for a shift to delivering products as services, they must simultaneously optimize their current service operations while implementing new technology, infrastructure and resources to succeed in the future.
If manufacturers take lessons from brands like Salesforce and other leading cloud companies that provide an “as-a-Service” model, they will not only create a cost-effective model, but also a highly profitable one. The software industry was enormously successful transitioning from on-premise instances to the cloud. Following this shift, Adobe nearly tripled its stock price in four years. Meanwhile, Salesforce, which pioneered the Software-as-a-Service (SaaS) model, now enjoys an annual revenue in the $13 billion range.
Trucking OEMs have made headway into greener business practices with the proliferation of electric trucks. And as the call for emissions regulations continues to grow, manufacturers — particularly in the automotive and trucking industries — are looking for ways to reduce their footprint to meet the moral obligations of climate change, and avoid heavy fines.
In 2020 and the years to come, manufacturers will aim to reduce waste and use fewer natural resources as the circular economy takes hold. The way value is created in business today is very linear. We use natural resources to build a product, sell that product into the market and dispose of it at the end of its lifecycle, filling up landfills and using energy to continuously dig for natural resources.
We’re seeing the circular economy in consumer brands like Adidas and its Futurecraft Loop shoe. Consumers return the shoe to Adidas once they have worn them out and the shoes are repurposed for future Loops. It’s inevitable that this same model will make its way to the manufacturing space, as governments, consumers and Wall Street will all expect to more sustainable business practices in place.
And, with trucking OEMs increasing their focus on delivering products as services, many will begin thinking about how to design products that can be reused, repaired, recycled and redistributed. This will impact teams within the entire organization — from R&D to sales, service, finance and more.
Much has been made about the rollout of autonomous vehicles and trucks. Increasingly, pilot programs are popping up across the U.S. and beyond. This has sent shockwaves through the industry as drivers are wondering what their roles will look like moving forward.
Yet while there’s intense interest in the future of autonomous driving technology, drivers will likely play a key role in the success of fleet businesses — albeit in a shifting capacity. As autonomous driving becomes the norm, there will still be a key element of maintaining vehicle performance between stops and ensuring that everything progresses smoothly en route. This means that drivers will take on a more supervisory position to make sure everything goes as planned.
As a result, fleet owners will need to formulate new strategies for retraining drivers to tackle tasks that are associated with the new autonomous trucks from taking over control to potential maintenance.
SHIFTS IN TRADE POLICY
Whether it’s the U.S.-China trade war or Brexit, trade policy over the past year has been one of the most prominent topics in manufacturing and trucking circles. And since neither of these complex policy issues are likely to resolve in the immediate term, trucking businesses must keep their ears to the ground about both the short-term and potential long-term impacts.
Freight is about more than just picking things up and dropping them off. It’s also about what types of products are being shipped, where they’re from and where they need to wind up. Therefore, any sort of changes in trade policy can have a large downstream impact for trucking companies from products being shipped to who their clients actually are. This sort of instability is obviously uncomfortable for any business. But trucking companies can help mitigate issues that may arise from uncertain policy happenings by carefully planning for any contingencies now.
2019 was a busy time for the entire trucking industry and set the stage for what looks to be an even busier year in 2020. Trucking is in the midst of a hugely disruptive period, and by keeping these key areas in mind, manufacturers can position themselves for 2020 – and the years to come.
Editor’s note: Trucks.com welcomes divergent thoughts and opinions on transport technology and trucking industry issues. Use the comments section to cite yours. Qualified opinion leaders are welcome to offer suggestions for opinion columns. Contact email@example.com.