A range of technologies fostered by 'disruptive' start-up firms could bring big changes to the global trucking industry, according to a new report by Frost & Sullivan. (Photo courtesy of Daimler AG)

Disruptors on the march in trucking

Jan. 25, 2017
A wide range of start-up companies could reshape the trucking world and how freight gets moved.

A new study by global consulting firm Frost & Sullivan indicates that a growing variety of start-up ventures are fomenting broad change in the global trucking industry – altering everything from how trucks operate, including driving themselves, to how freight shipments are booked, paid for, and moved.

“The fact is that trucking offers a huge potential for being disrupted,” Sandeep Kar, global vice president for research and mobility at Frost & Sullivan, told Fleet Owner.

In the firm's report, entitled, Start-ups Disrupting Global Connected Truck Market 2016-2017 Kar said there is a "huge upside for improvement [in trucking] for it is not the most optimized industry – there are so many moving parts moving at sub-optimal speeds."

He added that consumers and shippers today are being “born into reality called Amazon” where the low-cost yet extremely speedy delivery of all manner of goods is now an everyday expectation.

“That’s why these start-ups are moving the needle and driving the innovation,” he pointed out. “They are here to drive efficiencies, drive opportunities to lower TCO [total cost of operations], enhance safety, and to increase revenue potential for [industry] stakeholders.”

What is attracting all of these new start-ups to trucking – firms such as Transfix, Trucker Path, Otto [newly purchased by Uber], MyLumper, Peloton, Loadsmart, and many others – is that while hauling freight by truck is “not a very sexy industry” in Kar’s words, it moves $700 billion worth of a freight per year in the U.S.; a number that gets people’s attention.

From that perspective, then, and using the “connected truck” as a launching pad of sorts for a variety of services, Wallace Lau, industry principal with Frost & Sullivan and primary author of this study, expects industry-wide “disruption” of the traditional freight world by start-up companies to be concentrated in five areas:

  • Autonomous or self-driving truck technology;
  • Video-based safety systems;
  • So-called “utility” applications for smart phones, largely driver-focused;
  • Fleet management solutions;
  • Digital freight brokering.

Altogether, those markets are expected to offer big revenue opportunities over the next year, rising from $10 billion today to roughly $245 billion by 2025, according to Frost & Sullivan’s projections.

Photo courtesy of Otto

Lau notes that $210 billion of that future $245 billion market is going to be based solely on digital freight brokering.

At the same time, he said a “new use of telematics” by digital freight brokers could disrupt how that technology is deployed in trucking.

“There’s always been a cost barrier with telematics in terms of hardware and monthly fees,” he explained.

“Now digital freight brokers can come in not only with lower fees but offer a wide variety of telematics services basically for free, just for using their [freight brokering] service,” Lau said. “These new [digital] brokers get a lower commission as their costs are lower and for that also offer location-based tracking, ETA [estimated time of arrival] notices, hotel rate shopping [for drivers], parking spot location, and [vehicle] prognostics. It is similar to Netflix vs. Blockbuster; all of sudden center of gravity shifts. And that could be a game changer for fleets.”

It could be a “game changer” for truck manufacturers, too, he stressed, as technology-focused start-ups could help OEMs reduce research & development spending by 20% to 30% and cut anywhere from three to five years off the time-to-market pipeline.

Photo courtesy of Ford Motor Co.

That’s critical because Lau said “connected trucks” could be the norm in the future. Right now, according to Frost & Sullivan survey data, nearly 40% of fleet managers feel connected trucks are a “must have” item. As a result, the firm expects 35 million trucks worldwide will be “connected vehicles” by 2020.

“With smart roads and smart cities, the smart truck will be a necessity,” he emphasized, as connected trucks will allow users to more easily pay for fuel, toll, parking, infotainment, and many more services in real-time with fewer hassles. For OEMs, they offer opportunities “beyond point-of-sale,” Lau added, notably in terms of warranty management.

“The entire organization within the fleet – dispatch, drivers, maintenance, and operations – all are being connected with new apps and software to shipments,” he told Fleet Owner.

“This is all being moved into digital freight market. Right now, a lot of time is being wasted with current [freight shipment] process,” Lau said. “Having everything automated with connectivity will help overall by making trucking more efficient. It’s about the optimization of assets; every dollar saved is key.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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