Chris Cunnane is the Transportation Technology Trends Specialist for ARC Advisory Group. gentlemen. Cunnane identified five key trends for 2023.
The first shipping trend is that network effects are at the heart of supply chain transformation. Essentially, network effects exist when all components of the supply chain technology ecosystem work together to improve end-to-end supply chain performance.
From a transportation perspective, network effects rely on communication between trading partners on public cloud applications to improve freight efficiency. The more entities on the network, the stronger the network synergy. Web applications mean matching loads to capacity more efficiently, using visibility tools to predict more accurate ETAs, optimizing routes, and ensuring trucks are loaded and unloaded as efficiently as possible. Sustainability is a by-product of network effects. Identifying good backhaul opportunities, load consolidation and route optimization means fewer trucks on the road.
Network effects play a role in the remaining trends below, especially transportation management and slot management.
Transportation Management System Innovation
The second transportation trend is innovation in transportation management systems (TMS). Historically, transportation management systems have provided a high return on investment. The main reason companies buy TMS is to save on shipping costs. These freight savings can be attributed to simulation and network design, load consolidation and low-cost mode selection, and multi-stop route optimization. As freight costs continue to rise, companies are increasingly looking to their TMS to mitigate these rising costs. A big reason for the growth of TMS is that the technology has been improving steadily over the past few years. Three innovations in particular played an important role.
The first is artificial intelligence. AI has and will continue to be a key component of transportation management systems. AI can be used to “understand” constraints such as capacity, regulations, and service hours, and plan shipments appropriately. This provides better ETAs for warehouses, stores and end customers. In addition to improving estimated times of arrival, artificial intelligence plays a role in other aspects of transportation management. Shippers understand which carriers are meeting on-time service levels and which are not, which lanes typically have more chance of delays, and whether there is an optimal number of stops before a shipment is delayed. AI helps shippers better understand how to increase efficiency without sacrificing service levels.
The second innovation is a real-time visibility solution. Some transportation visibility solutions are standalone applications, and in some cases, TMS visibility because the TMS is part of a multi-enterprise supply chain network.
The need to know where products are, whether they’re on their way to a warehouse, store or customer, is critical to ensuring a positive experience. The rise of container-level visibility solutions is helping to propel the transportation management market to new heights, with real-time visibility being the major growth driver. Real-time visibility tools are often most effective for road transport. However, they are equally important for other patterns. For OTR shipments, visibility is based on integration with truck carrier systems. Carriers in turn track the ELD devices on their trucks, or via a downloadable app that the driver installs on his smartphone. Ocean ETAs are very different because macro factors are very different from highways, such as water currents and wind speeds, which play a large role in overall transit times. Air cargo rebounded on tight capacity. Compared with ocean freight, it is easier to predict the expected arrival time of air freight based on network and transportation speed.
The ultimate technology that TMS innovates is the Internet of Things. IoT-enabled fleet management solutions can improve visibility and versatility for companies across multiple industries. Versatility is important because every industry has its own unique set of requirements when it comes to fleet management and integrated logistics. Using an IoT-enabled fleet management solution can improve performance by improving asset visibility and vehicle utilization, reducing destination wait times, and providing cost savings associated with proactive maintenance.
A third traffic trend is the increasing importance and interest in time slot management. Slot management helps organize warehouse resources in preparation for incoming trucks. The warehouse needs to know who is coming and when, and this starts with the ETA. Beyond that, warehouse workers need to be updated on which dock the truck is arriving at, when the truck will be loaded, what documents they will pick up, what needs to be signed, and when they will leave the warehouse or yard.
Some factors are out of your control and can affect shipments. It’s really just a matter of how big the impact is. A slot management application can help reduce the impact of changes. Whether due to traffic jams, missed appointments, or a variety of other reasons, loading and unloading will need to be rescheduled on any given day.
A fourth transportation trend is self-driving trucks. Clearly, the jury is still out on self-driving trucks — there have been plenty of trials and hype, but are self-driving trucks ready to hit the road at scale? One of the biggest drivers of self-driving trucks is a driver shortage that continues to grow every year. However, self-driving trucks are not a quick solution to the driver shortage. In fact, similar to autonomous robots in warehouses, autonomous trucks are not designed to replace human drivers. Instead, they’re here to work with drivers to make the task easier.
The practice of platooning appears to be the space where the reality of self-driving trucks may first have an impact. In these solutions, the lead truck is equipped with technological enhancements, while the follower trucks operate in tandem with a fully autonomous system. These vehicles move in groups or platoons with trucks powered by smart technology and communicating with each other. For safety, a driver remains on board each truck and takes over when leaving the highway. This allows the follower driver to log off and rest while the truck is in motion. This means that two trucks operating in tandem allow drivers to travel twice the distance while ensuring they stay within their stated hours of service.
Automated Last Mile Delivery
Last mile delivery is the fifth and final transportation trend of the future. One of the most difficult and expensive aspects of the supply chain is the last mile and home delivery. However, it is also the most memorable and possibly the most important from a customer experience perspective. As e-commerce continues to grow, we are looking at automated last mile delivery as part of the solution.
Over the past few years, a number of companies have been testing drone deliveries. The use of last-mile drones remains challenging for a variety of reasons, including FAA regulations, public perception, and the technology itself. However, a growing number of companies are exploring the use of last-mile drones, hoping to improve customer service while reducing delivery costs. The big names right now are Wing, Amazon, UPS, Matternet, Flytrex, and Zipline. Each of these companies has already accomplished the task of delivering small packages by drone to various locations. Using drones to deliver medical supplies and prescriptions still seems to be most effective.
The flip side of autonomous home delivery is autonomous mobile robots. A number of companies have already begun testing autonomous delivery robots in cities and college campuses. For many of these companies, however, the term “autonomous” can be a bit misleading. In fact, a team of humans tracked the vehicle every step of the way throughout the delivery process. While behind-the-scenes workers primarily monitor the robots, human workers can use remote controls to drive or troubleshoot the vehicles if the robots run into problems. If the robot gets stuck or fails to deliver, the workers come to the rescue and deliver the goods themselves. Companies such as Starship Technologies, Nuro, and FedEx have completed pilot projects and are currently deploying delivery robots.
Investors have poured more than $8 billion into autonomous delivery companies over the past two years. The big question is what is the public perception of these delivery vehicles? The jury is still out, but as they become more common and use cases pile up, usage of the technology is getting closer to the norm. Either way, it’s a glimpse at what the future holds for home delivery.
The lead author of this article is Chris Cunnane. gentlemen. Cunnane is Director of Supply Chain Management Research ARC Advisory Group.