Autonomous Vehicles – The Big Picture

The Need for Common Regulatory Environment

One major thing to keep in mind with autonomous vehicles is that the goal is (or should be) to bring a greater degree of safety to our roadways, reductions in fuel costs, lowering traffic congestion and improving the environment. One large part of the puzzle in keeping the technology moving forward is that all levels of government need to come together and bring the regulations up to speed with the technology. These systems will not have their fullest ROI if some jurisdictions allow them and others do not – especially if you get jurisdictions that chop up any continuity between regions. An example would be if West Virginia allowed a technology on their roads while it was barred in Pennsylvania, Ohio, Kentucky, Virginia and Maryland. Such a scenario will provide a benefit to the state of West Virginia but it is lower than it would be if the other states allowed the same technology. With the above being stated, it appears there is some progress being made on this front to consolidate regulations at the Federal level: The US is speeding toward its first national law for self-driving cars.

Further, there should be a consistent set of regulations not only between states but also between the United States, Canada and Mexico to ensure the safe and efficient flow of trade between the two countries.

Drivers – A New Opportunity

The reality is that a human driver is not going away any time soon. Even if it is only for liability reasons, the need for a “bum in the seat” will remain so that there is a human that can take control in certain environmental situations where the technology still has problems “visualizing”. For example modern lidar and radar systems will allow for the potential of allowing commercial vehicles to have a greatly reduced gap between vehicles. This can provide significant fuel savings, similar to what race car drivers do as they wait for an opportunity to make their move. However, under very sunny conditions some of these systems have difficulty in distinguishing large white vehicles. So that trailer in that it is trying to follow closely sometimes can be difficult for it to “see”! The radar system can help reduce that “blind spot”, but what about a snow storm or a heavy rainfall, two conditions that can also be difficult for either system to work efficiently? These are cases where the vehicle will need to indicate to the driver that they need to take back control of the vehicle to maintain an acceptable level of safety.

Another situation where a human needs to take control is in stop and start traffic. In these cases, it is the sudden decelerations that are difficult for the automation to handle. So one can think of it this way, on a Detroit to Miami run, the truck could control itself for much of the trip down I-75, but the driver would need to take control through the construction zone between Dayton and Cincinnati as well as through the traffic congestion around Atlanta. Finally the driver will still have to be in control in the final delivery section.

Where there is an opportunity for the drivers is to become more like the captain of a ship, ready to take control when needed but able to work on other tasks when the vehicle is managing itself. Depending on conditions the driver could be scanning and sending their paperwork, sending documents to a customs broker or looking for their next load if they are an owner-operator. He could be able to have the time to prepare his own meals with fresh ingredients instead of eating at a truck stop. She could be using in cab gym equipment to do a workout to keep in shape, reducing fatigue and maintaining better health. Finally the driver could be taking training sessions while on the road making it more efficient and timely to keep your driving force up to date with the ever changing regulations or taking courses towards college credits. By giving the profession a more varied work experience we may be able to attract from a wider pool of new recruits.

At the same time we may be able to get modifications to things such as lane departure systems (that take over control of the acceleration, steering and braking systems) to allow for something like back-up assistance. This would take some of the risk out of introductory drivers who have a difficult time with backing up trailers. It could even help out experienced drivers when they have to blindside into a tight dock. The system could be either active (with the driver allowing the vehicle complete control to back up the trailer) or passive with the system watching what the driver is doing and ready to intervene if they start veering into trouble.

Actively Changing the Public’s Perceptions of Trucking

The last area that is a very real threat is the public perception of autonomous vehicles. At the present time there probably are not a lot of drivers who would be comfortable sharing the road with a self-driving vehicle. There are just too many passenger vehicle drivers who really aren’t that comfortable with commercial vehicles being on the road with them at all. So yes, there is a threat that some lawmakers could try to use these technologies as a wedge issue in an election. However there is an even greater opportunity for the industry to use these new technologies as tangible proof of our commitment to the safety of all drivers on the road. For example, there are new collision avoidance systems that can assist a driver in avoiding a rear end collision. The driver might initiate the turn to avoid the hard braking or stationary vehicle in front of them but then the system takes over, looking at what is to both sides of the truck, the speeds that the other vehicles are traveling and what the distance is to the vehicle in front of them. There really is no reason that the truck itself could not see the hazard and start determining the evasive action before the human driver can even process what they are seeing. By playing up the benefits of these systems to the general public we have a huge opportunity to raise the popular opinion of the industry in general with the add-on benefit of then increasing the attractiveness of trucking as a career. Increased safety, the potential of attracting people who would not otherwise look at driving as a career, and lowering the risk profile of our fleets, and not forgetting the opportunities for increasing profitability.

Driver Pay: The Elephant in the Room

Driver Pay: I have been asked to take on this subject on many occasions, and although I have touched on it on and off over the years on numerous occasions, I’ve never really gone at it head on. There is probably a couple of good reasons for this, including but not limited to the fact that this subject is a bit of a rabbit’s hole. It can easily lead many different places once you start heading down this road, and you are likely to disenfranchise yourself with any number of folks, no matter what position you take on these subjects. Having said all that, let’s get at it, as I have said in the past, and it is still true today, at times, there is nothing more illusive than an obvious fact and this is one of those times!

The obvious fact here is that we live in a free-market society whose economy runs on a supply and demand structure. The market will dictate the remuneration you’re paid, determined on the specialty of your trade, or skill in conjunction with the scarcity of workers in your sector. So if one is to put forth the position that drivers are vastly underpaid the argument that there is a driver’s shortage holds no water and must be false, you simply can’t have it both ways. If you don’t believe me, talk to any economist about this situation.

To do the subject justice, it might need more than one article, it will definitely need your input, so please give me your feedback, and I want to hear from you on this – both company drivers, owner operators and executives. I will give you my opinion on the only two paradigms that matter in this subject, first the driver’s then the company’s.

Driver Perspective

When I look at this subject from a driver’s prospective I don’t blame any of you for being completely confused, over the last 3-4 decades you have been heard and been repeatedly told that there is a driver shortage, and it is at a critical stage. Problem is, if this is in fact, then why hasn’t the average driver wage reflected that reality, depending on where you search or who you ask, you keep seeing average annual pay rates between 50K and 65K, what gives? Meanwhile, you just paid your plumber $120 per hour unclog your drains??.

Obviously something is amiss, and has been for quite some time, extreme shortage and 57K annually don’t add up. To be accurate there are companies out there that pay their driver’s markedly more than this, and likely some that pay much less this is the average – the range I found was from 38K to 100K. The typical driver take home is greater for the most part than that of the general average over all sectors no doubt, but again I can see a high frustration level when folks in this profession are continually told of the dire situation that the industry is facing with its overall lack of drivers.

It’s hard to bridge the gap between what we continually hear from industry trade magazines, and the national press, and what we see in the numbers and average pay scales, the two don’t add up. So whats one to do if you’re a driver? A number of things come to mind especially in light of the fact that any number of driver surveys over the past couple decades reveal that money is not always the least satisfying element of the job, nor the top reason for a driver to quit their current carrier.

There are two messages here; One is for the drivers to first, and always be checking the market to ensure that your being paid at or preferably above market rates for your services. If your research reveals that you’re not, I would have the discussion with your employer, and let them explain their perception of the situation. The second message is of course for the employers – you have to make your driver’s pay packages understandable (even customizable), and manage very closely the relationship between their expectations and your expectations. I might suggest an average base pay rate certainly no less than industry average for your sector is a good platform to start with, then a gain-share bonus plan predicated on all the familiar touch points, fuel burn, accident free miles, longevity, production – whatever those KPIs are for your company. These bonuses should provide the driver with the opportunity to get to the top of the range of driver wages in your area. Finally, and the most critical part of the strategy, is they need for these gain-share bonus plans to be obtainable, under promise and over deliver, what a concept right! You get this part right, and the word gets out you may have something, you’d think anyway, reality might be a bit more harsh, because surprise-surprise there is another twist waiting around the corner and it’s called a Human Resources Strategy and Driver Satisfaction.

Do assuming the driver has done their homework, they are now aware of where you stand with your company’s  payment schedule relative to the rest of the market in your area. They can stop looking for greener grass,  and focus on delivering the goods now right?  Not quite. I have discussed Maslow’s hierarchy of needs in previous articles and that we as human beings are driven to needs is a sequential order as is in our nature as human beings. For us to truly enjoy the sense of Physiological (or money) needs we have achieved we now need to move on to the Safety level and then of course up to the belongingness, esteem and finally self-actualization levels. These universal laws drive everyone from the Driver Seat to the C-Suite (no one is immune). If a company decided to lead the industry with their wage package, they will still be challenged to retain their drivers unless they offer an entire package that includes a sense of community and all that goes with it.

Is there a driver shortage? To me the numbers reflected in driver wages would suggest there isn’t, not that I can see anyway? It’s more aptly described as a Driver Churn problem. The churning of drivers in the industry is more a reflection of companies not spending near the amount of focus on their retention efforts than they do on building very efficient recruiting departments, and the vast eco-system of businesses designed to simply get people in seats – as opposed to keeping them in seats – with a true sense of purpose. When I ask most executives their turnover rates very rarely do I get a definitive clear answer, there is usually some hesitation and what looks to me as a very loose estimate of where they are at. This needs to change and until carriers realize that this subject needs to come out of the closet and be a daily focus moving forward we will as an industry continue to confuse driver shortages with driver wages levels.

 

 

 

Autonomous Vehicles – They Are Already Here!

Back in the winter we took a look at how an autonomous vehicle works  (click here to read that post).  Since that time there have been more entrants into the field, along with numerous test vehicles.  Let’s take a look at where the technology is and where it is going.

Autonomy is a Progression not Just an End State

First we need to address a popular myth – autonomous vehicles are not just self-driving!  The reality is we have had trucks with a degree of autonomy for years.

The National Highway Traffic Safety Administration lists five levels of autonomous vehicles:

Level # Level Description
0 No automation The driver is in full control of braking, steering, throttle and power at all times.
1 Function-Specific Automation One or more specific control functions, such as electronic stability control or vehicle-assisted braking, operates automatically.
2 Combined-Function Automation At least two primary control operations, designed to in unison to relieve the driver of control of those functions, operate autonomously.  These combined functions might include adaptive cruise control in combination with lane centering.
3 Limited Self-Driving Automation Vehicles at this level enable the driver to cede full control of all safety-critical functions under certain traffic or environmental conditions.  The vehicle monitors changes in those conditions requiring transition back to driver control.  The driver is expected to be available for occasional control, but with sufficiently comfortable transition time.
4 Full Self-Driving Automation The vehicle is designed to perform all safety-critical driving functions and monitor roadway conditions for an entire trip.  Such a design anticipates that the driver will provide destination or navigation input, but is not expected to be available for control at any time during the trip.  This includes both occupied and unoccupied vehicles.

 

Using the NHTSA’s criteria, very few trucks on the road today do not meet at least level 1 (and many newer ones meet level 2) on the autonomy scale.  Have ABS?  Then the vehicle has some degree of autonomy!  Joe Q Public hears the term autonomous trucks and his/her mind goes right to the extreme end of the scale, and gets scared of the idea of 80,000 lbs running down the Interstate with no driver.  It’s no wonder that there is resistance to the idea.

Another myth is that these vehicles are likely to eliminate driving jobs in the near future.  In December 2016, the White House Council of Economic Advisors released a report stating that between 1.34 and 1.7 million driving jobs are threatened by this technology. That figure represents almost 50% of all heavy duty trucking jobs in the United States.  This is a huge overstatement of where the technology currently stands.   It is also at odds with the vision of some of the OEMs, Daimler Trucks in particular.  Daimler  believes that Level 2 and Level 3 autonomous vehicle technology is best suited for on-highway applications.  This means that the truck will be able to drive itself under certain conditions, but a qualified driver is still required under other circumstances (for instance, while doing final deliveries or in a snow storm or other weather-related event).  By reducing the workload on the driver, we may be able to recruit either newer drivers into the industry or possibly retain some of our older, more experienced drivers better than we do today.  Daimler’s vision sees the driver as more of a captain or supervisor role – watching and overseeing what is going on but at the same time ready to roll up their sleeves and take over when necessary.

While the current administration is looking at ways to reduce the regulatory burden on our industry, the legal community will likely offset any regulatory ‘wins’, resulting in a likely gradual easing into (more) autonomous vehicles.  Second, the currently commercialized lidar and radar navigation systems still have shortcomings under certain conditions (such as having difficulty seeing van trailers that are painted white in bright sunshine or if heavy rain or snow is present).  The last thing out industry needs is another high profile accident – especially one caused by a ‘driverless’ vehicle.  Such an incident could derail the progression toward further autonomous systems, or at very least bring on another round of onerous regulations.   There is some uncertainty over how current regulations will impact the adoption of this technology.  How will HOS regulations apply – will the EOBR make an accounting for autonomous driving time?  Will operators of these vehicles still have the current 10 limit of driving or will self driving time be counted differently? Will these operators still need the 30 minute break after 8 hours on duty if the truck is in autonomous mode and they have the ability to do some limited moving around, getting and preparing food, etc.?  Further, what qualifications will the operator need?  Will they require a full CDL or will they be able to have a different class of license?  There’s still a lot to be hammered out.  That doesn’t mean that these are show stoppers – there are too many potential advantages of driver supervised autonomous vehicles.

Each model year progresses us further and further along the pectrum.  Will we ever have level 4 as a common option?  Maybe not in the short or medium term, and maybe not in the way people think of them now.  However, level 3 is within our grasp and it promises to be either a game changer, or at least a way to shake things up.

Next week we will examine some of the opportunities and threats that this technology could bring.

Blockchain Technology – Final Post in Series

In the last of the series, we take one last look at more areas that Blockchain technology could make an impact in transportation.

Vehicle Maintenance

The entire life history of a truck or trailer could be stored as part of a Blockchain. This could start at the factory when the manufacturing order is put into the OEM’s ERP system. Additional entries could be made when components are added to the vehicle, possibly through barcode scanners (and eventually RFID) that pick up the component information (make, model and possibly serial number of each part). When the truck has been handed off to be transported to the dealer, that information (carrier, was it bunked, etc.) could be included in the chain. The dealer PDI and any dealer installed equipment will be recorded. Finally once it goes to the end customer, their maintenance program could continue to provide date that adds to the chain. Additionally one could include all licensing and permitting information as well. A complete history of each unit can be formed. This information could be shared between parties – for example between the owner, the dealership and the OEM – to allow for a complete picture regardless of who is working on the vehicle. Belt got changed on the road, no worries, your dealer will know who did it and what belt was put on it. Part warranty – got that covered as there will no longer be any doubt as to when it was installed and by whom. Taking it a step further, the OEMs can have access to mean time to failure information and then work with the dealers and customers to customize preventative maintenance programs and recalls to proactively deal with issues that other customers are having. Think of it as having access to the fleet knowledge of thousands of trucks instead of just your own fleet in terms of what is causing issues with a specific model or engine.

If the data is anonymously aggregated it could be made available during the purchasing process to improve the specifications in a more data-driven fashion. You may have been spec’ing your trucks in a certain way based on your own experience. However another fleet running similar lanes may be finding better success with a different spec. Right now you are constrained by your relationship with the dealer to bring that information to you. If maintenance data was in an anonymous Blockchain you would have that data at your fingertips, ready to help you potentially improve your decision making process. Finally, this data could be shared with the DOT and other regulatory bodies as proof for audits. With such a system, trucking associations would be able to lobby for reduced scale inspections for carriers that are using such a system and meet agreed upon criteria in terms of compliance.

Capacity Monitoring – Will Load Boards be affected?

Right now when we get stuck needing a load to get your driver back home we generally turn to the load boards where you can get stuck with bad freight and/or low rates that could get undercut by someone else. A Blockchain can help this situation. By allowing a degree of visibility of other members of a Blockchain you can open up the possibility of being able to lane balance with multiple carriers. By granting access to the Blockchain the group can control the quality of the carriers involved, reducing risk and eliminating the need to perform carrier compliance and due diligence. Once a member is approved everyone has visibility to their level of compliance. This additionally would be something that you could bring to your customers in terms of proof that your partner carriers meet the same qualifying criteria as the customer wants. Such a system allows each participant to see where the other’s fleets are or alternatively, where the other partner’s have loads that they need to cover. All parties can then react quickly to changes in demand throughout the network and anticipate where and when those changes may occur. This scenario also provides a level of evidence of past performance history. This will further remove any distrust between members and reduce dispute resolution costs between the parties. This is an example of why a distributed database of information if valuable to everyone in the supply chain – consumers included.

Payments and Pricing

Finally, payment processing and settlements could be securely handled through a Blockchain. All the necessary information will be visible between both parties to the transaction which will allow for the possibility of automating the settlement process. This should result in lower freight auditing and processing costs. Additionally, the invoicing process will have the potential of also being automated by setting up rules that get triggered as information is made available to the chain. As an example, if the vehicle breaks a geofence around the delivery customer, that would get entered into the chain as one of the required data points. Submit a scanned POD to the chain and that may be the second requirement (eventually no POD will be needed – RFID will take care of all that and the chain of custody). Get a second GPS location leaving the geofence could be the final requirement that gets fed into the chain. Meeting all those criteria could then trigger the invoice to be generated and entered into the Blockchain. At the customer’s end they would also set the invoice and go through their own set of required data that they will examine the Blockchain for. Once those criteria are met then the payment is automatically queued for a period as specified by the (smart) contract. The ability for either side to audit is there because of the openness of the data. By consistently meeting those criteria each party raises their level of trust in the other, resulting in the incumbent being much more difficult to be removed as long as they continue to perform at the desired level. A secondary benefit is that scorecards can be produced quickly and efficiently by either party and could result in the ability of both sides to collaborate and make improvements in a data-driven manner. Think of the overheads you could save, as well as freeing up employees to handle greater value added (revenue producing) activities.

Blockchain – How Can We Use it in Transportation?

The last two articles have looked at how a Blockchain works.  For any of you that missed those articles, a high level summary is that a Blockchain acts as a shared ledger system that tracks and monitors all transactions.  Every transaction is interconnected to both the previous and the subsequent transactions using mathematical formulas.  Because of this interconnection, any changes or revisions to the ledger are obvious as certain checksums will no longer match the original transaction.  This results in all parties to the ledger having a high degree of trust in the data because of these checks and balances.

Now for the money question – what does this mean to the transportation industry?

In short, accountability and transparency are two of the largest items, and they both contribute to enhancing the level of trust between all parties to the transaction.

Fraud Prevention

Fraud detection is a very basic thing that a Blockchain can prevent.  Every transaction takes place is visible to all parties to the Blockchain and nothing can be removed.  As a result there is a high degree of accountability provided.  Any changes or revisions will be part of the record.  This transparency in turn removes the opportunity for fraud.  As an example, unauthorized double brokering (or if the contract forbids it, any brokering) could be eliminated.  There would be a clear line of events showing the tendering of the load to a carrier or logistics company.  If that company decides to broker the load out, the carrier it goes to becomes part of the record and it will be visible to all parties.  If that carrier then decides to double-broker the load, it will become obvious to everyone fairly quickly.  So, that company that took your load and then turned around and gave it to someone else, just got caught.  You as the original carrier/broker may decide to allow this, but you get the choice, you keep control and the entire process plays out in a transparent way.  Now the shipper knows what carrier will be coming to load their product and who will be making the final deliver to the customer.   Additionally any carrier selection requirements (insurance, safety record, etc.) can be cross checked to ensure that any carriers used by the broker meet the same qualification standards as the party that the load was originally tendered to.

Supply Chain Transparency

A further use will be maintaining compliance with the myriad of new rules and regulations such as FSMA (Food Safety Modernization Act).  The entire chain going from production on the farm, to the processing plant, to the truck, and finally to the distribution center could all be tracked.  Any tracking or monitoring data could be tied into the Blockchain (for example, if you have a reefer with a mobile tracking system that can track the temperature of the load).  Additionally the condition of the load can be tracked at each hand-off.  What this gives is clear line of evidence at to where any issues may have occurred.  Consider what would happen if you were hauling a load of fresh meat and the final receiver rejects the load.  If the data your company provided to the Blockchain shows the condition that the product was loaded onto your trailer and that your temperatures did not deviate from the shipper’s instructions, then everyone will have the evidence that shows that the trucker did their job properly and thus should not be the target of a claim.

For standard dry freight, there is now a clear trail of the condition of the merchandise as it goes from shipper to cross-dock and so forth.  For people doing LTL (especially if you do any interlining) this will be of great importance when it comes to OS&D.  However, it will mean that your dock staff need to take even greater care in doing piece counts and inspecting the condition of everything that enters and leaves your dock.  In fact photographing the condition of the goods may become an additional step in providing evidence.  You may even consider going to the step of having your drivers photograph the condition of the goods at pick-up. This will all get entered into the Blockchain and all parties will get to see where any claims were caused and deal with the correct party.  Some skids of product could be handed off to multiple carriers on their way across the country – possibly more if the originate in Canada or Mexico.  This eliminates unnecessary “he said, she said” disputes made by an end receiver.  A quick scan through the ledger will show the condition as it passed through each carrier and/or terminal.  Additionally this will require us as an industry to put further pressure on shippers to allow our drivers onto docks into order to inspect both the condition of the freight and how it is secured.  However, if a shipper refuses to allow this to happen and seals the trailer themselves, that part of the transaction will be recorded and becomes part of the chain.

The big picture view is that while there will be additional accountability on our industry, but it will be a shared accountability.  If a carrier is already doing things right, this Blockchain WILL improve their profitability.

The Driver Issue: A SWOT Analysis

There has been a seemingly endless array of discussions over the past decade about a driver shortage. This is fact, and whether you agree there has been a shortage or not, the many doom and gloom statements coming from every direction continue to roar on. As many know, I for one can argue both side of this issue, but I lean towards there not being a shortage of drivers (qualified drivers, that’s a different story), but I digress. As an aside I thought I would do my own quick SWOT test on the issue, and here is what I see:

 

STRENGTHS

 

Let us look at the reasons why one might want to enter this industry. I will try and be impartial but this will be somewhat slanted to my own experience, my apologies up front. The solitude for me was an attraction; don’t get me wrong I enjoy interaction with friends and relatives for the most part but I am also a person who is quite content to be left on my own for extended periods of time, I’m quite fine in my own space. This industry will allow you to see almost any part of North America if your interested in seeing new spaces, and places, as I was when I was entering the industry –  this is certainly a plus. If you happen to be entrepreneurial, as I am, then the trucking industry is definitely for you. Further, if you like independence (I know that many will argue that technology has taken much of this away but I still see it as a plus), the person behind the wheel still has to make a thousand decisions on there own each day the are on the job.

 

WEAKNESSES

 

There is likely a variety of issues at play here, not the least of which would be that it takes guts. You have to have a certain level of self-confidence, and courage, to think that you can handle a truck and a fifty-three foot trailer in and around the type of traffic and congestion that is prevalent today. Think about it, it’s not for everybody. Now add to this the elements that come with the job, to some degree an uncertain income level certainly fluctuating income. Lets not kid each other, it’s okay to good at best, it is not excellent, not by a long shot. Very few drivers could divide their pay checks by the total number of hours spent on every element of their work week and say that it is outstanding for what they do. Depending on circumstances, an uncertain workweek, and irregular lifestyle, and you have to enjoy being on your own – a lot. You would also be entering an industry that tends to eat it’s young with excessively high turnover rates. As of the writing of this article no implemented minimum training standards or finishing standards for the entry level folks. Your family life will likely be strained to say the least, and the reduced lifespan of a professional driver all adds up to a less than a rosy picture,

 

OPPORTUNITIES

 

There are any number of initiatives that could be enacted to create a landslide of new entry-level drivers to the industry if the industry has the courage to go after them. First would be to stop eating each other’s dinner when it comes to rates. Drivers need to make more money. Why do drivers, who happen to work for private fleets, make substantially more money than those from the for-hire industry. Think about it, because carriers bid each other down to the bare bones to get the business, if I were a shipper, knowing this, I’d let um go at it too. We need a GOOD solid entry-level minimum training standard, and a good mandatory finishing standard adopted nation-wide that the industry would be forced to comply with. If I had my way violation of the minimum standard put lives at risk and there would be mandatory jail time for violators. Think back to the wheel offs we had twenty years ago, government said mandatory 50K fine per future infraction, industry responded with mandatory certification of all wheel installers. But a school blatantly cuts corners on training and for the most part they got a slide, a slap on the wrist. Does anyone research where the individuals were trained after there is a preventable accident? NO, makes my blood boil!

 

THREATS

 

Biggest threat for me in attracting new drivers and keeping what we have now is our own complacency; Ontario is being watched by the rest of North America because of the work being done on a new entry-level driver training rule. I’m sure this group is watching our industry brothers south of the border as they craft a federal rule. It took a long time to get here; private agendas, and short cuts have prevailed again with the elimination of the mandated 30 hours behind the wheel. To me this is the single biggest threat out there right now, the threat of private interest who may dictate a weak rule for their own financial gain. Scares the crap out of me that we will get a watered-down version of training designed to put pupils in classes and in seats, rather than the top quality entry-level drivers we need, and this industry deserves.

 

Canada and the US are all at critical stages in the industry’s maturity, we will either move the bar up, as is my hope, or we will legislate another round of minutia that will not change a thing –  I’m flipping a coin right now! So there you have it my SWOT test. In conclusion, more money in the driver’s pockets, better training and finishing programs and we’ll be halfway there. Space limits many other observations and this is a good start. Please let me know your thoughts.

Blockchain Part II – Trusting the Process

Two weeks ago, we took a look at what a blockchain is.  This week we will build on that base and will start to take a look at potential uses for the transportation industry.

One area that we did not go in depth on was how does a blockchain encrypt data.  Let’s look at a simple example based on one that recently appeared in the Economist.  The data from each transaction in the blockchain gets put through a cryptographic “hash” function that will distill it down into a string of numbers with a fixed length.  This will create the “header” to the data that will be stored.  This “hash” is a one-way street.  While it is relatively easy to go from the data to its hash, it is next to impossible to go from the hash to the data.  What this means to us is that if you make one, seemingly insignificant change to the data, this hash function will return a different value.  This is how any unauthorized changes get noticed.

Let’s back up a bit.  A cryptographic hash function is basically just an equation that takes the data and uses a formula to turn a specific transaction set into a number.  This could be as simple as A=1, B=2, C=3, etc.  Alternatively it could be much more complicated, rearranging the alphabet and numbers, giving values for special characters, etc.  Once the equation has been done once, the program will look at the length of the result and determine if it is the right length.  If it is too short, then it will get padded with some additional zeros.  If it is too long then the result will go back through the equation to get reduced (similar to when we all did reducing fractions back in grade school).

Take a set of 4 transactions – for our purposes, consider them to be 4 different pro bills.  Each pro bill has a shipper, consignee, piece count, weight, and rate.  The data on each pro bill are different.  A blockchain will run that data through a mathematical function to create the “hash” value of a length specified by the application – let’s say 16 characters for this example.  Pro bill A will be put through the function and get a unique hash.  The same will happen with the other 3 pro bills.  Now the program will take the hash values for pro bill 1 and pro bill 2, run them through the function again to get another unique hash value.  The same will happen with pro bills 3 and 4.  This system of combining is called a Merkle Tree.  Now we take these two hashes through the function again to get a final hash that will get put into the header along with a date stamp and a special value called a nonce.   For now consider the nonce to be a random value that helps to make cracking the security difficult and time consuming.

For a very simple example, let’s assume that the data set only includes numbers.  Additionally the equation only adds the numbers together with the hash value of the block before it and then ends with a count of the numbers involved (example – 983 would give a count of 3). The hash needs to have a length of 8 characters.  A further simplification is that we will not use a date stamp or a nonce value – they are not necessary to see what happens.  The first transaction is for 234 pieces, 2 skids, 4213 pounds and a declared value of $8000.  The equation will calculate this as 0+234+2+4213+8000 = 12449.  The count is 12.  So far we have 1244912 which is only 7 characters long.  To get to a length of 8 we will pad this with a single zero at the start to get a value of 01244912.  Now let’s say we have a revision and this now weighs only 4210 pounds.  This goes through the addition to get a value of 12446.  The count is still 12.  The result is still only 7 characters so the padded result is 01244612.  As you can see this does not match the original hash, indicating that something has been changed.  The header does not tell you what has changed only that something does not match.

Now that this first block has been entered into our chain, the hash value from this first block will serve as a value that contributes to the hash of the second block.  In our example we then would have a first value of 01244912 and then add the other pieces of information to it, do the count and then see if the length is ok.  What this means is that any changes to previous data blocks will also be exposed.  The big “so what” is that this creates a secure and transparent ledger that will allow a member to follow a chain backwards and be able to easily note where changes have occurred.   You will still have to examine the records to see what has changed.  However if the values match then you can trust that things have not changed and that you can trust that block of information.  In effect other parties have “audited” the transaction and also agreed that it is the same, something that you are likely (currently) paying someone to do.

Next week we will look at more practical examples of what a blockchain can (will) do for your trucking business.

 

Commitment: The Foundation of Retention

OBJECTIVE: The importance of commitment to success in improving driver retention is vital – and it starts at the top. Here we look at what must be done to ensure that leadership is committed and that the entire company knows this.

Commitment throughout the organization will be important to the success of improving Driver Retention. But commitment is especially important among the senior management team as they are setting the example for all others in the company. To consider and then decide to embark on a project to improve Driver Retention means that senior management have looked at the problems of excessive costs associated with poor retention, recognized that significant planning and effort, affecting the entire company, must be undertaken and that this effort is warranted by the significant savings and service benefits that will be the result.

Put this way it is very obvious that the work we are about to undertake is strategic in nature. It is Strategic because we will be investing time, confidence, and responsibility in company employees well beyond the driver team. In the process we will be transforming the company from one that has a victim mentality about high driver turnover into one that is a positive, supportive and service-oriented place to work – a winner. We will become a company where people, drivers included, want to work. A transition like this is obviously strategic in nature.

Commitment is one of the most critical ingredients to the success of any effort intended to bring long-term improvements to the way business is done. This commitment must come from the directors of the Company and it must be very visible – and active. It must be genuine and it must be unwavering. After all, people throughout the company will have important roles to play and their commitment must be inspired and supported by the commitment they see in their leaders. In short, Company leaders must be seen to walk the walk and make the same commitment that is being asked of the rest of the company departments.

In addition to fostering commitment among the staff, the senior-level commitment must be lasting, since this is a lengthy project, and it must be unanimous among the leaders. This last aspect is sometimes difficult to ensure, but it is important that the leadership team speak and act in unison on the need for the company to make the significant changes necessary to reduce Driver Turnover. At the senior management level this means that a personal commitment must be requested and delivered by each member of the management team. Like a lot of strategic planning initiatives, it would be a good idea to make positive and supportive engagement a part of the personal performance criteria for managers during this project.

Let’s acknowledge that achieving and maintaining commitment among the leadership team is not something that can be accomplished just by asking for it. There are very natural and predictable obstacles along the way and perhaps the most common is the difficulty we all have with adapting to change. This is natural – we all strive for stability and then along comes a new idea or a new process or a new direction and we naturally question and resist the change. But the management team has targeted real benefits for our company and our employees. We have agreed to undertake reasonable steps to achieve great results.

We have agreed to change.

Turn that agreement to change into a commitment to change. We have a commitment to reduce Driver Turnover. We are committed to making our drivers a Strategic Advantage for our company. Achieving and maintaining commitment will require us to periodically re-visit our plan and objectives to remind us that the change we are undertaking is worth it. Do this regularly to reinforce the commitment among the team. Do this so we do not fall back into old habits. In fact, be on the lookout for any wavering of commitment and the creeping in of those old habits.

So, what other benefits can we expect by recognizing the importance of commitment and then taking specific actions to achieve it? We will create a culture throughout the organization that sees and comes to expect a management team that means and does what it says. Secondly, it will deliver proof to the management team that they can achieve significant results by working supportively together – and they can use this approach to be successful in other important projects.

We are getting ready to draw a line in the sand. There was probably some bell weather or watershed moment that brought you to realize something must be done about your high Driver Turnover rate. Keep that motivational “trigger” in mind as we go forward – the one that drove home the need for us to do something serious to improve Driver Retention. This is important because the team must be in unison on this project for it to have sustainable impact, so make it a practice to occasionally remind ourselves of what motivated us in the beginning. For our company it was the fact that our safety and accident rate was getting out of control. Before we knew it our insurance costs were going up, our service was declining and we were constantly fighting fires. It had to stop – and improving the stability of our driver workforce was the obvious place to focus. Your motivation might be different. Perhaps you simply cannot find enough drivers to feed the turnover beast. Or maybe you are seeing your profits decline due to excessive costs associated with hiring and general inefficiencies. The ironic thing is that whatever caused you to start on this process you will reap the same rewards – reduced accidents and their costs, lower recruitment needs and those related savings and, finally, a general improvement in efficiency and quality that will drive better profits.

 

Blockchain – What is It and What Does It Mean to Me?

There has been a lot of buzz lately about “Blockchains”.  You may have heard about them in association with Bitcoin or referring to them as “the new internet” or a “disruptive technology”.  Over the next few weeks we will take a look at what they are and where they may fit into your company’s future.

For those of you not completely familiar with it, Bitcoin is a virtual or cryptocurrency that has no intrinsic value and unlike the Dollar or Euro, there is no government or commodity that acts as redemption base for it.  It has no physical form and exists only in the decentralized Bitcoin network.  The obvious question is “how does it have any value?” The answer is that there is a sector of the population that has gained a level of trust in how Bitcoin is administered and the level of risk it carries in terms of holding its value.  A second question is “how do I ensure that this cryptocurrency has not been double spent?”   With paper currency it’s simple – you either have a dollar in your wallet or you don’t.  With a payment card, you either have the money in your account (or available credit) to be able to cover the transaction or you don’t.  However, each of these methods has a cost and some level of inefficiency to them.  If I pay in cash there is the risk that someone may mug me before I get to the store or that I might lose my wallet.  With a payment card there is the risk that someone may have skimmed my information and is making unauthorized transactions out of my account.  These are some of the problems that a Blockchain is designed to minimize.

Don and Alex Tapscott, authors of Blockchain Revolution (2016), have referred to a Blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”   Let’s just take a minute to let that sink in.  This is saying that a Blockchain could be used anywhere that a current database is used, especially anything of value that needs to display a level of trust and value.  But as one of my former professors used to say – “so what” – we all have invested large amounts of capital into various database applications that run our operations, accounting, payroll, etc and for the most part they are working just fine, thank you.  Why would I want to change?  To figure that out, let’s take a look at how a Blockchain works.

Consider a spreadsheet with all of your transactions on it.  Now picture that spreadsheet duplicated across all of the computers on your network in a way that each spreadsheet is continually updated each time a transaction is made.  At a very basic level, this is what a Blockchain looks like.

Information in a Blockchain exists as a shared and continually reconciled database.  The Blockchain is not stored on any one computer, allowing for instant mitigation against a single piece of hardware failing.  Because it is not stored in a single location, the transactions are public and instantly verifiable.  Because it is not centralized, there is nothing for a hacker to corrupt.  Further, by being hosted by multiple computers the data is easily accessed by all users.

Going back to the spreadsheet example, today most databases are like an Excel spreadsheet in that you can’t have two users making changes to it at the same time.  One person “locks” the spreadsheet, makes their changes and then sends it to the other party and has them make revisions.  The first party has to wait until they receive it back so that they can make any further revisions.  That is how standard database technologies work – the record has a lock put on it and no other user can make changes to that record until the lock is removed.  A Blockchain is more like Google Docs (or Google Sheets) in that both parties have access to the same document at the same time and that single version of the document is always visible to both of them.

Think of all of the applications where this sort of sharing could create huge efficiencies.  In our industry, just think of how many times your employees have to wait for a customer to send them revised orders when a stop location or a quantity is changed or if you got waiting time charges out of them.  How much more efficient would it be to just have one “living” document so that changes can be seen instantaneously?  You don’t need a Blockchain to get that sort of sharing, but they do provide a number of advantages towards facilitating it.

A Blockchain has a built in robustness due to the storing of blocks of information that are identical across the network.  As a result, a blockchain can’t be controlled by a single entity and it has no single point of failure.  TEDx speaker Ian Khan has said that “as revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability.  No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved.  Above anything else, the most critical areas where Blockchains help is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”

Blockchain networks live in a state of consensus as it automatically checks in with itself every 10 minutes and reconciles every transaction that happens within that interval.  Each of these groups of transactions is called a block.  Two important things come out of this.  First the data is transparent because it is imbedded within the entire network.  Second it eliminates corruption as altering any unit of information on the chain would require a huge amount of resources to override the entire network.  Every transaction gets a timestamp record that is “hashed” into a chain of proof of work that can’t be changed without redoing the proof of work.  This “hash” is a link to a previous block.  To alter a block means you have to alter all of the subsequent blocks because of the ties between them.  It would also require the collusion of the majority of the network.  This results in a transaction ledger that is effectively permanent.

There are two different types of Blockchain that can exist.  First is a public or permissionless one similar to what Bitcoin uses.  Alternatively you can have a permissioned (or private) Blockchain.  A private Blockchain does have a few limitations such as reduced transparency due to the validators being vetted by the network owner. They also have a reduced network effect because they are by definition of a finite size as the network owner only allows the users that they want to access the network.   A potential risk of a private Blockchain is that it reduces the number of machines that a hacker would need to take control of to achieve a network majority for any changes.

Each computer on the network becomes a node and automatically gets a copy of the blockchain.  This allows the node to validate and relay transactions.  This feature is what makes it a decentralized technology.  As a result, transactions are done on a user to user (or peer to peer) basis.  This allows for mass collaboration – in effect think of a Google Doc that has thousands or millions of people using it simultaneously.    How one can leverage that ability is what we will look at next week.

Twin 33 Amendment Defeated

(via Truckload Carriers Association)

TCA would like to thank our dedicated members for your hard work over the last several days in helping us defeat a potential amendment on twin 33-foot trailers. This amendment to the House Transportation Housing and Urban Development (THUD) Appropriations bill, would have mandated the use of twin 33-foot trailers nationwide. TCA members across the country made calls and sent emails to their members of Congress to urge their opposition.

The Voice of Truckload was heard loud and clear, and no amendment was offered during the full House Appropriations Committee meeting late Monday night.

None of this would have been possible without the dedication of TCA members of all sizes. TCA will remain engaged in every trucking-related issue on Capitol Hill. As we move forward, we hope that we can count on you to continue advocating for the Voice of Truckload.

For more information on other TCA Advocacy and Industry initiatives, click here.