Transportation and logistics are always under construction. Changing consumer demands, economic swings, legislative reforms – the challenges require constant navigation. Technology’s ability to meet today’s challenges and anticipate tomorrow’s needs represent one of the only constants in supply chain evolution. As the industry continues to enter new territory, technology provides the guidance and paves the way for where transportation is headed next.

The Three C’s
It’s been a bit of a wild ride in transportation and logistics across the last 24 months. When we think about the major challenges in front of us, we can really put them into three major categories that I like to call the “Three C’s” – capacity, clocks or time, and cash flow.

On the capacity front, we’re currently sitting about 50,000 drivers short. Carrier utilization has consistently hovered between 98-103% utilization. Between 2017 and 2018, loads to trucks increased by more than 29%.

Of the capacity we do have, it’s highly fragmented, with about 97% of for-hire carriers comprising fleets of 20 trucks or less.

Normally, to capitalize on a carrier-favored market, fleets would flex up using independent contractors, but with more than $700 million awarded from independent contractor misclassification lawsuits in recent years, fleets are understandably hesitant to leverage an independent contractor model, or to grow the one they already have.

Further compounding the problem is that trucks are only logging about 6.8 productive hours per day. Miles traveled per day also has decreased between 10-20% due to things like the implementation of electronic logging devices (ELDs), redistributions of shipper networks, and overall congestion and traffic.

Therefore, to increase capacity, fleets are paying drivers more. Driver pay has increased by about 12%, which is pushing freight rates higher. By the close of 2018, rates increased around 10-15% with another 5% increase anticipated for 2019.

To combat rising rates, shippers are extending pay terms to improve working capital. More than 40% of shippers pay carriers in 30 days or more. Of the top 1,000 US companies, average days to pay suppliers sits at 57. This creates a major capital and cash flow challenge for carriers.

These challenges collectively are what’s sparking so much innovation and technology deployment in transportation.

Digital Demands
Accenture conducted a study of digital disruption in transportation and logistics. They estimate that companies choosing not to implement a digital strategy in the upcoming years will start to see downward pressures of approximately 3% EBITDA as compared to companies that adopt a digital strategy. Companies digitizing the customer experience, adopting new digital models, or digitizing operations collectively can improve EBITDA by 13%.

It’s numbers like these that have promoted more than $42 billion of investments in transportation and logistics technologies in recent years.

We’re seeing new technology providers gain footholds inside of transportation – names like FreightRover, Uber Freight, Convoy, Transfix, uShip, and project44.

Transportation staples like DAT and Truckstop.com are evolving their models to keep up with where the industry is going.

The traditional, out-of-the-box TMS providers are moving away from their homegrown, proprietary development models to integrate with new technology providers to meet customer demands.

Logistics providers of all sizes are now launching digital freight management models, rather than solely relying on human capital, to bring speed and transparency to their work.

Business as Usual, but Better
However, transportation as a whole generally sits near the end of the Innovation Adoption Curve. Therefore, the technologies that are proving the most successful are the ones that support a “business as usual” mentality, but also bring something better to the table. That’s exactly where FreightRover shines.

FreightRover includes a suite of four platforms designed to streamline supply chain management and to tackle the “Three C’s.”

CarrierHQ is an online marketplace offering cost- and time-saving services to fleets of all sizes. Services include insurance enrollment, fuel savings, business formation, factoring, and pay-by-trip driver settlements. CarrierHQ also assists large fleets in mitigating risk around independent contractor misclassifications by giving entrepreneurial choice to the drivers on which services they choose for their business.

PayEngine automates the back-office work around supplier payments and provides shippers with extended pay terms while allowing carriers and other suppliers to benefit from a customized quick pay program.
Freight xChange provides automated end-to-end freight management and brings shippers and carriers together online.

SmartLTL connects with all major domestic LTL carriers and provides shippers with quote to dispatch in under 60 seconds.

The Future of Transportation Tech
FreightRover is bringing automation and efficiencies to transportation and logistics today, but there is a lot more innovation for the industry on the horizon.

3D printing will significantly increase nearshoring and challenge the industry in how to do a better job of shipping made-to-order products.

We’ll see changes with equipment utilization as we look to maximize the space inside of trailers by leveraging multiple shippers and lanes together. These changes will ultimately alter the way we price truckload freight.

As we progress from EDI to API connections, giving us larger data parcels at quicker speeds, we’ll have an infusion of data to improve the productivity and profitability of our businesses.

The Internet of Things (IoT) not only will improve the way we maintain our equipment by helping with things like pre- and post-trips to ensure we are safe and compliant, but IoT also will transform our offices and homes by creating smart environments that know when products need ordered before we do. We won’t need to get on our phone or push a Dash button to order a product. And, if we think 48 hours is tough to deliver on, changing demands will only shorten the timeliness of the supply chain as consumers want things faster and faster.

However, perhaps the most overlooked area for new innovations comes from ELDs. This data will help us manage detention better to ensure drivers are compensated for their time. Using location and hours of service data, we’ll be able to issue smart notifications to find a truck and driver the perfect piece of freight to maximize productivity.

But, perhaps the most exciting innovation is using ELD data to create behavior-based insurance, which is exactly what Aon and FreightRover have partnered to do. The industry soon will see the launch of a behavior-based auto-liability insurance program using a proprietary algorithm of things like speed and hard-braking to generate a monthly rate by driver. Safe drivers get rewarded with lower rates. Risky behaviors require higher payments. The deck resets monthly, generating a new monthly rate based on the previous month’s driving data.

Not only will this program help create safer roads and control insurance costs, but we also believe this is a stake-in-the-ground moment for truly creating capacity in the industry. Today independent contractors and small fleets have a huge capital outlay of several thousand dollars per truck to purchase insurance. Our program provides a monthly rate, with no upfront investment, deducted through an easy settlement withdrawal. Drivers also can generate real-time quotes and enroll through their mobile phones, connect their equipment, bind the insurance, and be on their way.

It’s truly an exciting time to be in transportation. Where we used to see technology as the great differentiator, we’re now seeing it as the great equalizer. Plus, the technologies we’re talking about aren’t years away, they are happening right now, and they’re changing the way we do business. The journey is just beginning and there is a lot more innovation on the road ahead.