Huge money is flooding into transportation technology. The emergence of all sorts of new platforms offering to digitize freight matching get a lot of play in the media — but what’s the impact in the real world? Today’s freight market has become highly customer-centric in most areas of service, requiring third-party logistics providers (3PLs) and carriers to create dozens to hundreds of customer-specific tech customizations to meet client demands. Can shippers — who have spent years obtaining custom-tailored services and tech from their software and service providers to match their specific supply chain needs, disrupt their own businesses to try innovative, but dumbed down, noncustomized “solutions?”
Many market “disruptors” enter the transportation space with a single great idea, representing only one scene in the supply chain feature film. You’ll never hear us say a bad thing about innovation — we’re so excited to see the progress that the industry is making — but we need to find technological solutions that tie it all together.
Most agree that the driving market force behind this transformational pace of change in the transportation sector is e-commerce. The “need it now” attitude of consumers has elicited a strong reaction from retailers. One way they have responded is by updating their receiving practices to include very little room for error by shrinking delivery windows and imposing heavy-handed compliance fees.
It has also changed the landscape of warehousing practices across the country. Most big-box and online retailer warehouses can only, or strongly desire to, accommodate roughly a day’s worth of inventory in their distribution centers. They’re optimizing their supply chain to avoid inventory and simply manage throughput. That dramatically elevates the importance of, and demands upon, transportation.
Tech — increasing accountability
These new directives demand perfect or near-perfect performance from all of their suppliers, and there’s a lot of money at stake if they don’t pull it off. The shippers, up to this point, have relied on their carriers to report on-time performance — but now that the consignees are monitoring closely and applying punitive punishments, they’re finding they can’t necessarily rely on carrier on-time reporting. Here’s another place where technology is increasingly playing a role. Both the shipper and consignees need to document exact in and out times for all their shipments — and while it may seem inconvenient at first, that data can be turned around and used to help shipper efficiency across the board.
One obvious piece of technology that’s already implemented is the electronic logging device (ELD). With the mandate fully in place, we now have access to gobs of data on transit times, driver hours, lane trends, equipment availability, etc. This new piece of equipment allows many transportation management system (TMS) providers and transportation innovators to create logistical weapons that even the smallest shippers and 3PLs can access, which helps them compete for business with bigger brands, larger carriers, and top brokerages.
The great thing about technology is that it’s affordable and it’s penetrating the industry quickly. With the platforms that are emerging, smaller brokers are gaining access to the same predictive analytics that the bigger players have — and their ability to adopt new technology quickly puts them at a distinct advantage. Nimble logistics firms are already implementing emerging technology to create a new degree of operational efficiency and are better suited than anyone to put all the pieces together and make meaningful change within the industry.
Keep this in mind — every innovation in technology and transportation since the fax machine was invented, that was intended to disrupt or to disintermediate, was adopted and deployed first by 3PLs and carriers. Those businesses thrive on traditionally razor-thin margins, and can easily and readily deploy tech into their operations. Today, the speed at which we adopt tech is days and weeks, not months or years. These are exciting times for industry leaders. (And not just the alleged disruptors!) Your action item lies with your 3PLs and their carrier partners. Ask your 3PL what its plans are to improve your business.
Jeff Tucker is CEO of Tucker Company Worldwide. Contact him at: firstname.lastname@example.org.