Autonomous revolution may be nigh, but it’s coming for brokers faster than operators

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Updated May 28, 2018

I looked back on the autonomous-trucks-prediction headlines to find this nugget from my colleague James Jaillet’s report from an FTR Associates conference two years back about the chatter from forecasters and others on autonomous trucks:

Among those quoted was Noel Perry, then with FTR and now Truckstop.com’s Chief Economist, who predicted autonomous vehicles themselves would make big inroads in trucking over the next 30 years. Perry figured largely in two panels during proceedings at Truckstop.com’s Connected user conference yesterday and ongoing today. The event, attended mostly by brokers but also some carrier users, has been a consistent window into the hopes and fears and general practice of the freight intermediaries owner-ops encounter in “one-and-done” (in brokers’ terminology) type scenarios via the load board or partner with in closer business relationships for freight.

Yesterday, Perry was perhaps as bullish on autonomous-driving technology as he was two years ago — “this is a time of radical change,” he said — but offered this to the audience of mostly smaller brokers:

The brokerage business will be automated before the trucks will be automated. … The existing people who are aggressively attacking your business [the Uber Freights, Convoys, and perhaps the biggest disruptive player in various aspects of freight logistics, Amazon] — they have no idea of the subtleties of relationships and pricing. Most of them [though none of the above] have failed because they don’t know how to do that. However, if you don’t automate [part of your own processes for speed and efficiency, they will] kick your butts out of the industry. The power of the technology is so great that if you simply lay back and depend on your experience and relationships, you will fail. It’s [a question of] whether you automate, or they do. You know what has to be built into that technology – you’ll know how to use it to make your relationships, pricing and other expertise all that much better.

In short, as we’ve reported previously, automation is coming to back-office processes — location tracking, pricing, billing and invoicing procedures, sourcing of capacity (putting load choice more and more firmly into the hands of owner-ops’ communications tools) — much more quickly than it is  likely to be implemented in high-speed heavy vehicles on public roads, as John Larkin of Stifel Financial also emphasized during one panel with Perry.

Larkin offered something of a realistic counterpoint to the prognosticators who say the technology puts the long-haul operator’s livelihood right in its crosshairs in the very-short term — in Larkin’s words, “these educated elite people who are wondering what we’re going to do with people who are automated out of a job.” Larkin put the attraction of autonomous vehicles to carriers in the context of what you’ll hear from carriers large and small around the nation today (and in most any year going back to 2009, I’d wager): that hiring, contracting and employing quality people within the financial constraints on the trucking business that exist is increasingly difficult work.

Increasing levels of automation offer an evolutionary path to business growth without big new investments in the same level of “human capital,” as the biz analysts might say, as was required in the past. Yet Larkin also echoed the sentiments in Perry’s quote above: “I think the industry is going to be different 10 years from now than we see it today as a result [of various types of automation, but] OTR trucking and last-mile delivery will be the last things automated” given the chaotic environments that are the nation’s increasingly congested highways. The Connected conference venue sits right off the North Dallas Tollway, which Larkin said might more appropriately be dubbed the “North Dallas Speedway,” scantily patrolled by law enforcement and with a speed differential between 40 and 100 mph among four-wheelers utilizing the route time to time, he added.

“How do you take an 80,000-pound vehicle and inject it into that environment and be safe?” he asked. For those who want it done, “getting highway safety lobbyists convinced of that [possibility will be] a big challenge. [There will be] opposition from the railroad industry, and organized labor will be generally opposed.”

In the meantime, noted broker Jeff Tucker of the Tucker Company brokerage founded by his family two generations ago, businesses have “got to use” technology that makes sense from an efficiency standpoint, noting like many brokers his company’s integrating load-tracking information into it’s POD processes, not fullproof by any stretch. (One carrier he mentioned always appeared to have delivered via the tracking data whenever it was within a mile of a receiver’s facility, whether they’d unloaded or not.)

But Tucker himself is bullish long-term on the survival of businesses with real expertise and utility within the supply chain, whether brokerages or carriers, and no matter how much automation is available in the short term. Speaking of brokers, Tucker offered as a for instance in the history of companies founded with something of a goal of “disintermediation,” or elimination of the intermediaries from the business: “DAT … was founded,” he said, “to bring shippers and carriers together. Guess who used it? The intermediaries – we’re the ones with the relationships. If it was just as simple as finding a truck with an engine running and agreeing on a price to get a load covered, it’d be easy to blow everybody here out of the water.”

Shipper customers may have some technology to manage their own freight, but Tucker finds many “don’t know how to use their [Transportation Management System] software – customers give us orders with no possible way of being filled unless we go to town.”

In short, Tucker suggests for those well-established in trucking business today, keep on keeping on, and look closely for opportunities to innovate in your own business, whether with new technology or without. Innovation — which Truckstop.com CEO defined simply during his talk opening the conference yesterday as “two or more ideas combined that benefit the organization/individual” — however small the example, is your best play to remain in the game for the long term.

As Cole’s definition illustrates, total originality of thought is not the sole goal in actual innovation, rather utilizing the tools and ideas that are available toward new processes. This morning, Truckstop.com Chief Relationship Officer Brent Hutto told the story of a something recent book about inventor Nikola Tesla, whose several patented inventions were used by a different thinker to invent the long-range radio transmission.

“All innovation,” Hutto (pictured) noted, “is built on previous innovation and discovery. There’s really not a whole lot of completely original thought.”“All innovation,” Hutto (pictured) noted, “is built on previous innovation and discovery. There’s really not a whole lot of completely original thought.”

Most everything new under the sun is built on something that came before, Hutto emphasized. Look around for the partners who can bring to bear new ideas for your business.

Examples? What have you innovated that changed the way you operate to benefit the bottom line?

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