Over the last five years, the logistics and transportation industry has attracted a significant and accelerating amount of venture investment. The numbers have ballooned from a little over $100 million invested in 2013, to what could exceed $3 billion in commitments this year.
Driving this trend is investor coalescence around the thesis that innovations serving the digital supply chain offer an opportunity to impact a tremendous “seen” and “unseen” portion of the economy. The measurable portion, which is comprised of annual OPEX and CAPEX amortization, is generally understood to clock in at $700 Billion or more in the U.S. alone.
The direct and indirect costs related to inefficiencies impacting carriers, supply chain partners and the ecosystem in which they operate are potentially even more staggering. This unknown and unbounded upside opportunity is at the heart of investor enthusiasm and will likely increase as near-term wins emerge that validate these ideas.
The five Ps of autonomy
While the specific products and services these investments address are becoming increasingly varied, the role of autonomy is often an underlying theme and a consideration for investors evaluating ideas against a long horizon. The most frequently postulated advantages of an autonomy-enabled transport ecosystem include improved efficiency, safety and a decrease in operating constraints created by a shift in the roles of humans in the cab.
That’s the headline. The details relating to how we reach that end state and who will bear the cost of these improvements will unfold over time. What appears evident today is that Autonomy alone won’t deliver an evolved transportation ecosystem. To imagine when adoption will deliver that outcome, we must consider the roles played by product, policy, process, partners and people.
To date, most attention has been fixated on the “product,” which in this case refers to the autonomous vehicle and enabling technologies. Leaving timing aside, it appears clear that technology is not a long-term barrier to adoption. This shifts the focus to “policy” considerations: factors that include regulatory, legal and ethical frameworks and physical infrastructure allocation (think HOV lanes, etc.). As these problems work through their own solutions, the role of “process” emerges as the next adoption gating factor.
Autonomy by itself won’t change the way the supply chain operates. This change will accelerate when systems for making resource allocation and scheduling decisions leveraging common data shared among “partners” are adopted. This suggests that the introduction of new technologies offering the promise of increased efficiency also comes with a commitment to increased inter-dependency between partners. Imagine how detention times might be reduced through the application of autonomous vehicles and connected technologies.
The efficiency of the flow of goods has the potential to improve to a point where volume and frequency could increase while costs remain flat or decrease. The reality is that such a scenario will require near perfect visibility into up-time, which means there is much to do in order to prepare maintenance for this new world.
Impact on maintenance
The most successful Maintenance organizations will be those that master the ability to keep vehicles safely and efficiently on the road, generating revenue as often as possible, while also delivering the most precise up-time predictions to their operations organizations. Success in these pursuits will increase asset yield – increasing per-vehicle daily revenue while decreasing costs, penalties, or missed revenue opportunities. This feat will need to be accomplished while miles accumulate faster than ever and maintenance windows for scheduled and unscheduled maintenance shrink.
An entirely new level of process and intelligence will be required to ensure that those smaller windows are best utilized. In this success scenario, “people” will be the determinant variable. The most successful carriers will be home to maintenance organizations staffed by exceptional talent. These individuals will be required to possess comfort with a host of emerging tools to meet these challenges, the curiosity to continually seek new answers and the ambition and to innovate when solutions are not otherwise readily available.
Attacking unscheduled down-time
While a lofty objective, the ability to see and react to maintenance related issues before they become downing gripes has the potential to improve immensely as connectivity solutions become ubiquitous in enterprise trucking. Time-series data capture and transport will be easily facilitated through on-board edge computing paired with Mobile, Wi-Fi and other low-cost methods of moving bulk data off vehicles to the cloud or enterprise.
The application of algorithmic analysis to these large data sets will make it increasingly effective to develop preventive maintenance procedures. Preventive maintenance economically provided during scheduled maintenance, long before any detectable manifestations of wear or failure emerge, provides the greatest opportunity to avoid problems before they become unscheduled maintenance events.
In addition to preventive measures, algorithmic approaches also offer the promise of increasingly precise predictive solutions. The capability to recognize pre-event triggers and take steps to avoid catastrophic failures or even unscheduled maintenance can have a significantly beneficial impact on a fleet customer’s experiences and the carrier’s yield.
When neither preventive nor predictive methods prevent a maintenance incident, precision in identifying a problem and the ability to execute remote problem solving can also lead to yield improvements. For example, when a vehicle becomes non-operational during a scheduled trip, the ability to distinguish between the need for a tow truck or a fuse can make all the difference in keeping movements on schedule.
As autonomy becomes reality within the trucking industry, there are plenty of new possibilities and uncertainties to speculate about. The only thing that seems certain is that the role of the maintainer will increase in importance, the tools to execute that role will increase in sophistication and the organizations that master those will have a significant advantage.
Information provided by Jack Kennedy, CEO of Platform Science
