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Trucking ignores technology at its own peril

The headline above comes courtesy of John Larkin – managing director and head of transportation capital markets research for Stifel Capital Markets – who made that comment to illustrate a key issue now facing truckers large and small; whether one likes or dislikes technology, be it automated manual transmissions (AMTs) or electronic logging devices (ELDs), the industry must find ways to accept and adopt it.

For if truckers don’t do so, they might soon find themselves without freight and without work.

Sounds harsh, I know, especially where ELDs are concerned. Indeed, many truckers rightly argue that the main reason ELDs are being pushed upon the industry – improving safety – shows what many consider to be a very small return, with the Federal Motor Carrier Safety Administration (FMCSA) estimating that use of those devices will save 26 lives and prevent 1,844 crashes involving large commercial motor vehicles every year.

Yet it is actually the longer-term trend truckers need to pay attention to; the one where the next generations of workers don’t want to manually shift gears (and frankly, most don’t know how), don’t want to fill out paperwork by hand (the rise of e-commerce has something to do with that, along with smart phones), and for many, don’t want to drive vehicles at all – perhaps a reason the effort to develop self-driving trucks keeps gaining speed, despite worries about job losses.

[As a side note, trucking firms also need to think about making their technology disaster-proof. Ken Ehrman offers some advice along those lines over at our brother publication American Trucker.]

Now, believe me, I’ve got more Luddite tendencies than most (even if that term developed from an apocryphal character) with a strong aversion to online banking and shopping. (Equifax breach, anyone?)

But would anyone truly emulate the Luddites of the 19th century today? The English textile workers who destroyed weaving machinery because they feared such contraptions would eliminate their jobs?

In reality, yes, those jobs were replaced – but it was physically harsh, dangerous, and often deadly work. No one in their right mind would want to bring back that kind of manual labor – if anyone could be found to do it.

John Larkin. Photo: Aaron Marsh/Fleet Owner.

Some of those points occurred to Larkin during a meeting of the Northwestern University transportation center business advisory council this week, from which he drew several conclusions regarding trucking and technology.

“Is there any link or function within the supply chain that will not be ultimately automated?” he wondered in his commentary.

“It occurred to me, while listening to all the experts … that it appears as though the transportation industry is endeavoring to catch up to other industries that generally have been earlier adopters of technology,” Larkin said. “The pace of development and adoption is accelerating and business as usual – i.e., labor intensive, paper pushing intensive, phone call intensive, etc. – will no longer cut it. Motor carriers, brokers, shippers, receivers, equipment manufacturers, et al, must get on the technology bandwagon now, [to] avoid being left behind.”

Where will the biggest technology “pushes” occur in trucking from here on out? There are three main areas, he believes.

“The first is the simple automation of a function historically performed by a human laborer,” Larkin explained. “There seems to be no limit to the potential automation of manual functions: algorithms can arrive at a market clearing price on a brokerage load, inventories can be automatically restocked, vehicles can be autonomously operated, trailers and containers can be autonomously loaded and unloaded – irrespective of whether freight is palletized or not.”

He added that freight can be automatically sorted, too; airborne or ground-based drones can deliver packages and parcels; while blockchain technology can automate the clerical functions associated with order flow, billing, claims, etc.

“The second level of technology relates to the ‘dynamic optimization’ of [motor carrier] operation, and in turn, profitability of the enterprise,” Larkin said. “Routing, mode selection, loading sequencing, asset utilization, labor scheduling – if required at all. [All of that] can be continuously optimized within defined constraints, customer requirements, and financial objectives.”

The last of his three trucking technology change points relates to “forward looking systems” that anticipate demand, risks, deteriorating trends (such as weather) or other "hitches" in an otherwise integrated freight transportation system.

“Predicting demand by lane, by direction, by time of year, week within month, etc., is becoming more refined,” Larkin stressed.

“Alternative operating plans can be developed as weather changes, labor disruptions arise, accidents occur, customer needs change, etc. Hedges can be established to margin pressures related to fluctuating purchased transportation costs,” he noted. “Capacity can be booked days if not weeks advance.”

In short, Larkin thinks it will be tough to imagine any function within the supply chain that will not be automated, continuously optimized, or protected from unforeseen risk via the broader use of technology.

That’s a trend even Luddite-leaning folks like myself need to prepare for.

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