By Felipe Capella
It was a pleasure to be a sponsor of the Chicago Venture Summit Future-of-Logistics this year in our hometown. Kudos to Abin Kuriakose, Lauren Backe, and Michael Fassnacht for bringing together the brightest minds in logistics tech and supply chain innovation.
It was also an honor to be on centerstage for the Keynote Fireside Chat with William Adjei, Senior Managing Director, CBRE, to discuss the future of freight. There were four main points we discussed:
We need to differentiate between the current macroeconomics (rates increasing), freight cyclicality (three year cycles), and the secular digitization trend of transportation and logistics.
The last one is the most exciting and a one-direction movement. Similar digitization events have happened in other industries, like food delivery and travel bookings. Both were not “overnight” transformations. It took them 10-15 years to adopt cloud-based systems and create significant transparency, efficient execution workflows.
We are probably 1/3 into the freight digitization journey.
Think about the following: up until 2018 most of the Fortune 100 companies were executing transportation in systems (TMS) that were not in the cloud! During the last four years all major TMS have created cloud-based versions and a significant number of enterprise companies have followed and migrated to the cloud. But there are many who still haven’t, but will in the next few years – and how exciting is that? On the carrier side there are still only a few trucking companies that operate using cloud-based systems, but that’s changing slowly–but surely.
Cloud adoption is the most important challenge facing transportation digitization today.
In earlier panels, Uber Freight and Microsoft mentioned the Metaverse and self-driving trucks as THE exciting near future of freight. There is a major disconnect between these declarations and the current stage of freight digitization. These trends will not impact the industry significantly in the next four years or so. What WILL is the movement of shippers and carriers onto cloud-based operating systems. That’s where supply and demand meet and value is created. Before we talk about the Metaverse, let’s talk about how Transportation Departments (some executing $1bn+ yearly) are still overlooked by upper management due to low top-down interest in innovation in freight execution–and how everyone thinks it’s ok to use a supplier that operates out-of-the-cloud.
Media treats visibility as if no one has any idea where trucks are.
Trucking companies do know (see ELD/GPS mandate), but this information is usually analog, siloed or disconnected. The hack in the system today is done via EDI connections (last century tech), mobile apps forced onto drivers, and visibility providers that leverage both of them in scale – the end result is unreliable data, manual entries and lagging speed. The real problem is that the trucking company (and the broker!) is not managing its business in a modern cloud-based software with easy to use external API’s. That’s where the industry is going. Blame the lack of modern cloud adoption – visibility is just ONE of the results of the analog operating system.