We live in an exciting time where amazing technologies are disrupting various industries. Netflix destroyed the movie rental industry through SaaS for rentals and moved it to the web. Dropbox made file synchronization simple and took it all to the cloud. Uber came like a hurricane to disrupt the taxi car industry, and we have yet to see the eye of the storm.
So where will the disruption come in the trucking industry? In an age where we can watch our Uber’s location as it arrives, where we’re building advanced rockets to send people to Mars, and where we can now reprogram cells to fight disease, why is the trucking industry two decades behind in technology adoption? Fax machines are used to send and receive paperwork. Phone calls are needed to get the location of a shipment. A combination of emails, phone calls and craigslist-type postings (loadboards) are used to book freight.
Due to the heavy fragmentation in trucking, trucking companies and drivers are slow to change their ways to adopt new and emerging technologies. There are over 1.3 million trucking companies in the US, yet 97% of them have fewer than 20 trucks. Smaller companies are less likely to invest in automation technologies such as EDI due to the low ROI achieved for their company size. Couple that with slow scalability for asset-based companies and these expensive solutions become even less appealing.
Brokers and shippers often invest in technologies to improve their operations. These technologies not only help with organizing the vast amount of information involved in shipping, but also help speed up the operations and provide some degree of connectivity with their customers. For example, if a broker has a shipment, their Transportation Management Software (TMS) may help them narrow down carriers that run that specific lane and even filter by their internal rating for carriers. These technologies, though powerful, are still limited from the lack of connectivity with the smaller trucking companies they work with. Phone calls and emails must still be sent to the carriers to see if they have available trucks for a shipment.
A handful of startups are attempting to disrupt booking of freight through on-demand economy concepts. We have yet to see if these startups can bring some order to this highly fragmented industry by using mobile and cloud technologies. Other startups are focusing on real-time connectivity and visibility. At Loadtap, we’re focusing on bridging the connectivity between a trucking company’s driver to freight brokers, 3PLs and shippers by providing real-time visibility on the location of the truck. Furthermore, we are using the location data to boost load booking times with a company’s internal network of truck carriers.
Founders of startups are attracted to the trucking industry due to its size, fragmentation and low technology adoption. Disrupting trucking will require more assistance and guidance than traditional markets due to the high degree of fragmentation and slower technology adoption. Furthermore, partnerships with industry specific softwares to help startups scale will be necessary for faster market penetration. Trucking is ripe for change, and it is only a matter of time before we see several startups take this age-old industry into the digital age to foster a higher degree of productivity and efficiency.