Trucking is likely to transformed technologically in 2017.
Trucking is likely to transformed technologically in 2017.

For an industry that moves the vast majority of freight in the U.S. – worth more than $700 billion a year – trucking is still considered by many to be an antiquated sector. But a comprehensive report from Frost & Sullivan titled, “Start-ups Disrupting Global Connected Truck Market 2016-2017,” summarizes findings suggesting a new era of freight transportation may be upon us.

Citing industry experts and utilizing years of data, Frost & Sullivan conclude that by 2025, revenue generated from five key tech disruptors will grow to $245 billion a year, an astronomical increase from its current $10 billion.

With this level of disruption on the radar, trucking companies are certain to face an inordinate number of obstacles bringing product to market simply due to slow adoption of the newest tech offerings or lack of funding needed to overhaul their fleets. But for companies that are already laying the foundation for implementation strategies and solidifying their respective budgets to ensure they have the finances to act quickly in the months and years ahead, there’s no ceiling to how high they can climb, metaphorically speaking.

Let’s examine some of the key disruptions that are just a short distance away:

Optimizing all facets of trucking technology
In a previous post we discussed the tech imperative in which trucking is now confronted: Essentially, updating fleets with the latest gadgetry is a necessity to stay afloat in the 21st century economy – anything less is an admittance of failure.

What this means for fleets across the country is identifying a technology hierarchy, a concept that gives companies the ability to prioritize certain components of their businesses that can be overhauled first before moving onto the next, all while keeping a keen eye on budgets.

The Frost & Sullivan report stated the core functions to be replaced by technology in less than a decade are:

  • Safety systems – soon to be video-centric
  • Fleet management – moving to digital solutions
  • Driving – autonomous and self-driving commercial vehicles are already being deployed
  • Freight brokerage – outsourced to tech or logistics companies to be done electronically
  • Driver applications – smartphones, IoT and wireless communication the new norm

Wallace Lau, author of the report, noted startups have scaled up their abilities and are now entering the freight market in a big way, FleetOwner Magazine reported.

“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 brokerage] service,” said Lau. “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, parking spot location, and prognostics. It is similar to Netflix vs. Blockbuster; all of sudden center of gravity shifts. And that could be a game changer for fleets.”

In just three years, 35 million trucks around the world are expected to be categorized as “connected vehicles,” those that employ the above applications.

It’s easy to see that larger organizations already using tech partners as service providers are strongly positioned to gobble up larger shares of the transportation market. Smaller companies, owner-operators and independent contractors will be hard-pressed to compete in a world quickly going digital – these operations tend to be only capable of the core functions of trucking, such as moving freight, and not the ancillary components that also comprise a successful fleet.

However, that is not to say smaller businesses will be wholly left in the dust – startups are entering the market every month and it only takes a single leg up on the competition to make headway in a crowded field.

Leveraging change against the backdrop of regulatory uncertainty
In light of such dramatic change, fleets may be pining for a sense of normalcy and business stability. Not so fast.

The regulatory landscape is projected to be disrupted as well, likely by way of gutting federal oversight and mandates pertaining to trucking.

Transport Topics reported one of the first regulations that may be on the chopping block is one that governs emissions levels from commercial vehicles. The Obama administration rolled out two phases of benchmarks that mandated the manufacturing of fuel-efficient, aerodynamic, reduced-emission vehicles rather than previous models that were proven to negatively impact the environment. These federal standards could conceivably be curtailed in short order under President Donald Trump.

Other standards providing guidance on lightweighting, safety systems and fleet maintenance may likewise be modified or scrapped depending on how active agency officials intend to be in the coming years.

The many regulatory changes that may be on the horizon don’t provide the most solid of foundations on which companies can make long-term business decisions dictating their futures. When combined with the enormous array of technology redefining the industry, trucking may veer down rocky paths in 2017.

The key for navigating such roads will be shoring up current finances and getting a head start on integrated tech functions that stand to contribute the most benefit. Federal regulations, on the other hand, may be difficult to influence, further placing the onus on fleets to effect the changes they have power over – tech.