by Max Stevens-Guille
Excerpted from Transportation Technology Today, September 2001
Amidst all the recent furor of dot.com mania and e-business, trucking company goals have remained constant: improve productivity and vehicle utilization, retain drivers and enhance customer satisfaction to lower costs and boost profits. Keeping a fleet on the road and profitable in today's economy is already challenging enough. But sorting through the alphabet soup of technologies and selecting those that will have a measurable impact on the bottom line is doubly so.
To achieve these fundamental goals, carrier executives are motivated to improve operating practices to realize benefits in terms of time, money, personnel, and reduced management. After all, who doesn't want to automate mundane tasks and enable their staff to focus on managing the exceptions? Who isn't interested in driving the costs out of a system to improve operational efficiencies?
This article provides a brief overview of three areas where the Internet is quietly changing the transportation market by enabling these efficiencies through the deployment of rapidly evolving new technologies. Clear examples of such changes can be found in online marketplaces where capacity is bought and sold. Also, once the job is secured, and a truck dispatched, the Internet is used to improve driver/dispatcher communications. And finally, when it comes to improving efficiencies, Internet deployed systems aid in optimizing resource utilization.
The Internet provides these efficiencies by improving the 3 Cs: connectivity, communication and collaboration. At the same time, the Internet has compressed time, resulting in a renewed sense of urgency amongst carriers to move quickly or be left eating their competitors' collective dust. Many large transportation companies are investing millions of dollars in well publicized technology projects, but they make up only a small portion of the trucking companies in the industry. What are the hundreds of thousands of fleets with 20 or fewer trucks or owner-operators to do? How can small carriers compete with companies that are spending millions of dollars on technology?
Much more than a browser
Many people mistakenly use the words Internet and Web interchangeably. The Internet is all about communications and data. Data comes in all forms, from EDI messages to XML requests for directions. In contrast, the World Wide Web is a way of exchanging readable information and sits on top of the Internet – what we all see through using Internet browsers. Information can be static in the form of brochures, contact information etc., or dynamic in the form of applications that can be accessed through a Web browser. When it comes to the three Cs, the Internet has truly revolutionized the pricing and availability of data communications, making it as easy to interact with a call center in India as it is to talk to someone across town. And the World Wide Web is the interface that has also brought with it significant cost savings as we tap into the incredible data wealth of the much broader Internet. One prime example is how today's Application Service Providers (ASPs) enable customers to 'rent' expensive software over the Web, making high-end software accessible to trucking companies of any size.
Winning Business
The primary goal of business is to do business. In the transportation market, that means finding shippers that need goods moved, whether on a long term contract or short term 'spot' basis. While more than 85 percent of LTL loads in the US are covered under a contract, (according to GoLogistics.com, a freight-marketplace), between 10 and 20 percent of line haul miles are empty, significantly eroding the productivity and profitability of LTL carriers. Consequently, there has been tremendous interest in using the Web as a forum for posting loads and spare capacity to reduce the number of "deadhead" miles - miles with an empty trailer - that carriers drive .
This is where the Web works best, providing a communication environment in which many parties can participate. Using the Internet, shippers and carriers can subscribe to services like GoLogistics.com, Link Logistics (linklogi.com, now part of TransCore), or truckstop.com, all of which connect and foster dialogues between like-minded buyers and sellers of capacity. These sites have the potential to vastly increase efficiencies in the transportation business by creating an open market .
However, the system can get squeezed to the point where prices actually become deflated, where they threaten prized long-term 'contract' rates that carriers rely on to remain profitable. In this case, the Internet has provided the solution to the problem it engendered. Freight optimizers - companies like Transportal Network (www.transportalnetwork.com) - have built an optimization network that provides shippers with competitive rates while building long-term mutually beneficial relationships.
Buying and Selling on the Go
Freight matching portals have changed the way dedicated LTL fleet managers work, but what about the owner-operator and others who need to access these services on the road? NTE (www.nte.com), an active transportation exchange, recently began testing wireless services that allow drivers to get more involved in the process of finding loads. With approximately 500 carriers and 200 shippers currently using NTE's services, drivers can now access the service using commercially available WAP phones.
Drivers can find out background information, such as where each delivery stop is on a route and what the dock hours are. They also can make procurement decisions by accessing a ranking of the most profitable loads, then book shipments right from their tractors. While not appropriate for all styles of carrier, this new service does point towards a day when wireless Internet connectivity will enable all levels of a corporate structure to collaborate, from office of the CEO literally to shipping.
Pros and Cons of the Wireless Internet
The transportation industry has helped to pioneer wireless data connectivity. Early wireless data networks, used by public safety organizations, taxi fleets and FedEx, were built on top of private voice networks. This has evolved in the last decade to a proliferation of dedicated wireless data networks using the public, unlicensed radio spectrum. Those networks, namely Mobitex, ARDIS and CDPD, are packet-switched - the mobile computer does not have to dial-in but is always connected to the network. The data rate of these networks varies from 9,000 to 19,000 bits/s - enough to communicate a day's schedule or a set of directions in about 1/5 of a second. Coverage has been steadily increasing to greater than 95% of urban U.S. population areas.
Meanwhile, terrestrial communications simply don't work very well outside of major urban areas. Points west of the Mississippi are particularly troublesome. Truckload carriers who criss-cross the nation have solved this problem through hybrid wireless networks that blend satellite- and terrestrial -based communications to achieve maximum coverage. Aether's MobileMax2 is such a dual mode system, operating at 300 bits/s over a satellite, and at higher speeds over terrestrial networks. While satellite coverage is universal, it is unfortunately limited to a line-of-sight between the vehicle and the orbiting satellite and thus won't work in urban "canyons" or from under loading docks with roofs.
These sophisticated hybrid communication systems provide drivers with mobile data terminals that offer a number of ancillary features as well, including a display, keyboard, GPS location-capture, and usually a J1708 engine management interface. While initially proprietary, many of these new devices are being built on systems such as Microsoft's WinCE. And manufacturers such as Symbol technologies are building highly portable systems that drivers can take with them once they reach a customer to perform such tasks as signature capture and point-of-sale.
Today, such systems still cost between $1500 and $3000 per truck, a substantial investment for a motor carrier. Systems suitable for regional use such as @Road, now cost under $700 including an operator console. While most large carriers have wirelessly enabled their vehicles, this only accounts for approximately 30% of the market. Smaller fleets with fewer than 100 trucks - companies most in need of achieving operational efficiencies - have put off taking the plunge, primarily waiting for prices to drop.
More capable, lower-cost Devices Coming
And prices will drop as innovations market tested and accepted by consumers are deployed in the transportation industry. The new data services based around email and chat will drive improvements in user interface technology, specifically the need to enter text. The consumer market opportunity for wireless communication - some 530M handsets worldwide according to the The Strategis Group - is a huge market when compared to the roughly 2.6M Class 8 heavy trucks in the US. Cellular telephony is converging with digital data to provide new appliances that offer 'always on' text messaging, email and document exchange. New data networks - so called 2.5G and 3G networks - that support high-speed packet switching, are being built to support these new protocols. Along with these new networks, next generation devices feature improved ergonomics and display capabilities - all features that will be embraced by the transportation market.
Transportation users of wireless data communications technology are realizing efficiencies beyond their early expectations. Even after paying initial set up costs, trucking companies have discovered digital transmissions are less expensive than voice communication for business information. Digital signals also automatically generate records or logs of activity that prove invaluable for managing the business. Another advantage of wireless data is that, should delivery of a message be slowed or delayed due to a communication dead spot, the message will automatically be resent once the signal is restored. This reduces the amount of time drivers spend trying to get through on traditional cell phones.
The days of waiting for a driver to call in from a payphone are, thankfully, way behind us. And the combination of wireless data and location-capture has created many opportunities for carriers to address operational efficiencies. Wireless dispatch, asset tracking, and real-time reporting are becoming well established as means of achieving such efficiencies, resulting in such quantifiable benefits as improvements in driver efficiency, asset utilization and customer service.
Real Time Information to Drivers
Once a wireless data channel is in place between a driver and a fleet manager, information regarding the driver's progress can be relayed. Information about changes in road conditions can be communicated, enabling drivers to alter their routes to ensure they arrive on schedule. Maptuit's FleetNav (www.maptuit.com) services, for example, allow drivers to request and receive door-to-door STAA-compliant driving directions from where they are to where they need to go from anywhere in North America. Using the service, drivers are able to query for information about the location of the nearest conveniences along the way. In doing so, TL carriers are able to reduce the number of out-of-route miles their trucks travel.
Knowing the location of a vehicle enables fleet managers to most efficiently deploy their mobile workflow. Local delivery and service companies are using services from vendors such as eDispatch (www.edispatch.com) to dynamically deploy their workforce as customer orders change. The courier market also uses wireless communications to dispatch their drivers. Companies such as Datatrac (www.dtac.com) use commodity phones running on top of the NexTel network to facilitate driver communications.
Jobs that involve uncertainty and customer communication especially benefit from wireless Internet access. Service companies frequently have to deal with situations where parts are not available, service calls take longer than expected and customers are added or cancelled as a day progresses. Moving to a centralized scheduling system can provide such companies with as much as a 20% productivity improvement by enabling service personnel to update information and receive schedule changes over a wireless channel.
Automated Data Communication
Wireless data communication devices don't necessarily require operator input. Vehicle tracking systems, for instance, can be installed on each trailer in a fleet, and configured to broadcast their location at pre-determined times, or when specific situations occur, completely without human intervention. Wireless data systems from vendors such as Qualcomm (www.qualcomm.com/qwbs), can track a load during its entire journey, allowing a company to know if a truck is trapped in heavy traffic, or delayed by bad weather or a vehicle breakdown. When a dispatcher knows a load will be delayed, they can alert delivery points to the schedule change, thus improving customer service.
The web can play an important role in making this type of information 'visible' to all stakeholders in a shipment. These so-called track-and-trace services, popularized by industry leaders such as FedEx, have increased customer expectations, leading many carriers to provide these services through their own web sites. Courier and expedited freight companies use Datatrac's (mentioned above) dispatch software and the centralized etrac.net hub to communicate information about deliveries to their customers as well as to get orders from customers to their drivers.
Lower Cost of Adoption
New services such as those offered by Datatrac, Maptuit and eDispatch are available at ever more affordable rates by virtue of their deployment using the ASP model. As centrally hosted sites communicate with customers across the country and around the world over the Internet, they offer an economy of scale that can't be matched by traditional CD-ROM distributed software. These savings are passed on to customers, resulting in services that are frequently sold by subscription rather than expensive software licenses. As centrally hosted services, transportation companies do not need to invest in as much IT support, further reducing costs.
The Ever-Evolving Market
The Internet and Web provide many new opportunities for the transportation market. Internet based services, such as freight matching, enable carriers to do their jobs more efficiently. New wireless technologies enable even small owner-operators to share these benefits while on the road. Wireless data communications can lower telecommunications costs while improving the accuracy and efficiency of driver/fleet manager interaction. Driven by the economies of scale present in the consumer market, devices which incorporate location-capture, wireless data communications and more effective operator interfaces will make their way to market at ever lower price points. Finally, more and more centrally hosted ASP services will be rolled out on a subscription basis, opening the market to transportation companies of all sizes. All of these are only the beginning of the way the Internet is improving connectivity, communication and collaboration for the transportation industry.
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