Five
years ago, Princeton Consultants CEO Steve Sashihara created the Digital Disruption in the Freight
Transportation Industry survey. The goal, he said, was to quantify the impact
technology was having on the industry, and gauge industry leaders’ views on the
disruption these technologies would have over a five-year time frame.
Each of the five technologies — self-driving
trucks, drones/robotics, Uberization, Internet of Things (IoT) and Big
Data/artificial intelligence — was ranked on a scale of 1 to 4, from no real
impact to large impact. Over time, each technology has risen in its expected
impact in the survey, although participants seem to be downplaying the roles
for most in this year’s survey.
Since 2018, self-driving trucks,
Uberization and IoT have seen declines in their expected impact by 2025.
Blockchain, which was added in 2019, also declined in this year’s survey
compared to its initial ranking.
The survey of 810 executives across
the freight industries included 51% who worked for carriers, 15% for shippers,
8% for suppliers, and 26% for financial, educational, media or government
organizations.
Sashihara, on a conference call
sponsored by Stifel on Friday, said the declines are not necessarily a
reflection of the potential disruption of the technologies, but rather, could
be attributed to respondents’ feelings that the technologies are no longer forward-looking,
as many are becoming more mainstream.
“It’s during the period that it
starts gliding back up that it starts to have the value people thought it would
have [initially],” he said.
Take self-driving trucks, for
instance. In 2018, respondents ranked them as a 2.5 on the 4-point scale, but
that has fallen in the past two years to less than 1.5 this year, suggesting
that the technology is not close to becoming a disruptor.
“For it to have an impact on our
industry, I think the [Department of Transportation] would have to recognize
self-driving trucks,” Sashihara said. “If a driver is still burning DOT hours,
I don’t think there is a benefit [to having a self-driving truck]. DOT would need
to extend driving hours for a benefit. When we surveyed the executives in the
transportation industries, I think they are saying it’s not going to have a
real impact in the next five years.”
That said, Sashihara seemed to
agree with respondents, saying it will be many years, in his view, before
self-driving trucks become commonplace unless there are broader structural
changes to regulations and technology.
Uberization, too, has declined in
respondents’ eyes. Sashihara defines it not as Uber, but the digitization of
freight brokerage. The technology has dipped to a 2.5 rating from its high
point of almost 2.7, achieved in both 2016 and 2018. The rating is up slightly
from last year, though.
Commenting on a common question he
receives, Sashihara said companies like DAT and Truckstop.com, which have been
booking digital freight for years, are not really what Uberization means for
most.
“I think the Uberization is as much
about getting everyone up to high standards as it is about some mobile app,” he
explained. “I personally think Uberization [means] better standards around”
freight movement.
Respondents seem to have soured a
bit on IoT, but Big Data and artificial intelligence are heating up. IoT has
dipped from a rating of nearly 3.5 in 2018 to under 3 this year. Big Data,
though, has remained strong, staying close to 3.5 in all years except 2019 when
it fell to a rating of 3. It is just under 3.5 this year.
“IoT is cooling off … whereas big
data has remained high,” Sashihara said. “It dipped down a bit last year and
has come back up again. Our firm believes that IoT and Big Data will [drive]
the biggest changes in the industry.”
Asked to explain whether Big Data
solutions would remove the inherent bias humans have, Sashihara said perhaps
not.
“If we use current human processes
and program them in, it basically takes the biases and inherits them,” he said.
“It just makes the calculations quicker; that’s not necessarily a bad thing.”
Sashihara noted that many human
biases develop in response to a previous action, for instance the addition of
an extra hour in a delivery schedule because the facility is notoriously slow
in unloading trailers.
“If you just take the human
learnings and put them into the machine, [that’s one way], but we should also
take machine learning [and use data to draw conclusions],” he said.
Sashihara said companies are, and
continue to be, cautious when adopting new technologies, and that gives the
Silicon Valley freight-tech startups a boost.
“One of the things that helps the
Silicon Valley companies is they don’t have a long [historical] reference,” he
said. “Anything that has hardware written on it, you have to ask, ‘Will I be
happy three, four or five years from now with it?’ Anything on a
high-technology curve, you have to ask [if it’s worth it or if it will change
too quickly].”
Sashihara did say that a lot of the
technologies have promise and will provide performance value, but companies
should be careful when adopting cutting-edge technology and be sure they are
comfortable with the risk.
That comfort level is also why more
innovation is happening in what Sashihara said was smaller freight — things
like parcels and e-commerce.
“The small stuff, highly
consumer-facing stuff, ironically is highly visible and where the automation
is,” he said, noting the detailed tracking now common in shipments.
Sashihara said the reason for this
investment is that more stable industries, such as cold chain and big pharma,
had previously made big investments in their supply chains, and the desire to
make more investment in technology that makes current technologies obsolete is
not there.
Related to that, though, is
blockchain. First introduced to the survey in 2019, respondents seem to have
already cooled on it, rating it below 1.5 this year, down from almost 2.5 in
2019. Sashihara, though, still believes it will be a major disruptor.
“I think most of us will adopt when
it makes sense as a price of business,” he said. “It’s definitely coming; it’s
definitely the real thing, but for most of us it’s coming when the customer
tells us to use it if you want their business.”
Sashihara noted work the Blockchain in Transport
Alliance is doing
to develop global standards around the technology as being an important step in
the process to adoption. Once companies are able to coordinate on a single set
of standards, adoption will grow, he said, adding that the decline in rating
could also be due to more people realizing the technology is coming but won’t
be as disruptive as first thought.
Since its introduction as a
category in 2016, drones and robotics have remained pretty steady in the
survey. Respondents have consistently rated their disruption at about a 2.35
and have done so again this year.
Sashihara said the coronavirus
pandemic is showing legitimate use cases for drones.
“I think it’s legitimate,” he said.
“It’s potentially game-changing in many scenarios. In our current environment
with coronavirus, it’s [the ability to] drop masks or medical supplies to
remote hospitals.”
Robotics are also showing their
worth today, he said, noting that many warehouses have used some form of
robotics for years. The technology is proven, it’s just a matter of “when it
becomes worth it to change facilities,” Sashihara said.
In terms of business impacts,
respondents were asked to rank several areas on their impact by 2025. Not
surprisingly, visibility (about 2.6), real-time routing (2.5), exceptions (2.5)
and streamlining operations (about 2.4) all ranked highly. Each has also ranked
highly during the life of the survey.
Other technologies, such as
workforce planning, pricing, inventory management, forecasting and last mile,
are proving more volatile in the survey results.
Finally, Princeton Consultants
always asks respondents whether they believe digitally disruptive technologies
are creating winners (disruptors) and losers (disrupted) in the marketplace. In
2017, only 33% of respondents strongly agreed with that statement. This year,
63% strongly agree and an additional 30% agree but remain unsure how their
business should proceed.
“These are real changes that are
coming,” Sashihara summed up.
