The (Semi) Autonomous State of Trucking

In the last year, the transportation industry has taken great leaps towards the development of a commercially available autonomous vehicle.  A recent analysis by Morgan Stanley shows that the race is not slowing down based on what was seen at the recent VDI Autonomous Truck Conference in Dusseldorf, Germany.

Morgan Stanley has found that there is a broad degree of respect for tech giants such as Google/Waymo, Uber, Tesla and Amazon, who have been spending billions on technological developments in the hope of creating a product that works, and getting it to market quickly.  Regardless of who is first, any OEM will need stable balance sheets to be able to survive.  The analysts expect that significant consolidation will occur as the incumbent OEMs evaluate new start-up entrants and identify potential takeover targets.  At the moment, it looks like it will be the incumbents who will be last to market, as the disruptive tech companies are naturally moving faster.  Waymo and Uber are already testing their vehicles, and Einride plans to make it’s “delivery pod” vehicle available to commercial customers later this year.

This rush to market is giving rise to a number of critics who have concerns over safety.  A recent accident involving an Uber self-driving vehicle, that killed a woman in Arizona, has just added to the fire.  One of the big dilemmas that engineers are struggling with is actually a moral question.  “What should an autonomous vehicle do when there is no right answer to the decision it faces? Is it better to swerve into oncoming traffic or the sidewalk where pedestrians walk?”  Questions like this are hard enough for a human to handle in the heat of the moment.  I would not want to be the programmer that is tasked with the creation of this algorithm.

However, even a situation like the accident in Arizona is not slowing down the roll out of Level 3/4/5 autonomous driving.  Morgan Stanley noted that these developments would have little impact on the progress, and that the main lesson is to ensure the safety and validation of prototype vehicles that are subjected to public road testing.  The report continues to project Level 4 vehicles (driver just needs to be available if the system requires input or during the final mile) appearing between 2020 and 2025 with fully autonomous driverless vehicles by 2030.

Another recent development will speed up this process.  Luminar announced last week that it has developed a new sensing platform that can be scaled to the capacity needed to equip every self-driving test vehicle by year’s end.  The manufacturer claims that this is the most sensitive, highest dynamic range InGaAs (Indium Gallium Arsenide) receiver in the world.  The new LiDAR (Light Detection and Ranging) receiver’s technology, will reduce the cost of these receivers from what originally was tens of thousands of dollars a unit down to $3.  Luminar is one of the first enterprises to focus on economies of scale, creating a possibly disrupting technology.

So, what does this mean to our industry?  First of all, with Einride’s impending launch of its delivery pod that looks like a box on wheels, but is really a self-driving cargo vehicle, is something that should be on the radar of every LTL carrier.  Over the next 2 years the company plans to have a fleet of over 200 of these vehicles (that have a similar capacity to a 24-foot straight truck), running between Gotehenburg and Helsingborg in Sweden with an expected annual capacity of 2 million pallets.  It is currently designed for moving goods from distribution centers to local e-commerce fulfillment centers.  However, it could easily be deployed to run from a cargo hub to customer facilities that have loading docks.  The pods are capable of being self driving or remotely controlled by a human.  Install some cameras in the back, have two-way communications, and local LTL delivery is a very real possibility!

Second, the development of very inexpensive LiDAR receivers means that things like lane detection and back up sensors will soon be available as standard equipment on all vehicles.  You still need to find a driver that knows how to properly back into a dock, but with this sort of technology accident claims from drivers sideswiping another vehicle should be reduced significantly.  With that savings, carriers should see a direct improvement to their bottom line!

Third, this technology will change what your driver does.  It is quite possible that the driver of the future will be running down the Interstate while working on a laptop to arrange his own appointments, finding his own backhauls from either your own network or through a smart network of carriers, many other tasks currently being done by dedicated dispatch staff.  This is potentially how this technology could have its greatest impact.  In short, you will need a much lower operations headcount as the driver to dispatcher ratio will be much higher. You can either increase your customer service staff, or take it as cost savings.

Finally, the driver will get a greatly enriched work environment.  They will potentially become more of a manager, handling many tasks currently done at the terminal.  The decision making will be brought closer to the customer.  Different tacking and communication technologies will be required to help guide the driver, possibly as a decision tree.  This may appeal more to a younger driver and may attract more diversity to the industry. Quite possibly, the recent Hours of Service mandate could vanish because of this tsunami of tech disruption.

Cloud Based TMS: Part III – Risky Business

One valuable reason to move towards cloud computing for your TMS is to reduce your business risks.  Power outages used to mean that both your staff and your customers could be left in the dark.  With a cloud based TMS you just need any sort of internet connection to keep on working.

Here’s how the two compare:

  1. Exposure due to backups. Traditional on-site solutions are generally only backed up to disk or tape nightly.  Depending on their size, you may be backing up SQL databases more often and (hopefully) storing them on another server to mitigate against a single physical server failing.  Unless you are rotating drives/tapes and storing them offsite you are still exposed to disasters affecting your physical building.  With a cloud-based solution, many providers use servers based in multiple locations with multiple internet connections through different providers and likely technologies.  As an example, they may have host sites in New Jersey, Texas and California.  Big snow storm shuts down the east coast? No worries as your data was already replicated to the servers in Texas and California.  Each facility backs itself up to the other facilities and possibly even a separate backup location.  All of this is included in your monthly cost as the costs are distributed between a group of customers.  Want to do something similar with an on-site server?  Now you are looking at large capital outlays to purchase additional equipment, increased monthly expenses (such as for additional IT staff, rent for the remote locations, duplicate software, increased internet bandwidth, etc.) and significantly increased IT complexity. To paraphrase Dr McCoy, “I’m a trucker, not an IT company!”
  2. Power disruptions. With on-site servers you are at risk of a contractor working two or three streets over cutting a line and knocking out the electricity to your office.  That back-up battery that’s connected to the server probably only has 15-20 minutes before it gets to the point that it will start a shut down of your server.  Unless you have invested tens of thousands of dollars for a backup generator you are probably stuck waiting for the local utility company to send out a crew and repair the break.  During that time, you may or may not have phones, so your customers may have difficulties reaching you.  If you host your own e-mail, then that server is also going to be down.  Even if your customer can reach you, you have no visibility as to where their shipment is and you are unable to enter orders or dispatch loads.  In short, you are stuck waiting for someone else to get you back in business.  With a cloud-based solution, it continues to operate even if the lights are out in your office.  All you need to be able to continue providing to your customers is a laptop and a cell phone.  If your router is down and you can’t get to the internet that way, most cell phones will let you tether a laptop to it so that you can share its data and get back to work.  Yes, cellular data can be expensive, but it is likely less costly than losing orders because you can’t access your system.
  3. Cybersecurity. Cloud based solutions are based on keeping security up to date as they have skin in the game.  Yes, a hack into your data will be painful, but to the provider it could put them out of business.  So, they will use things like the latest encryption technologies, 2-factor authentication as well as a team of networking professionals that monitor for intrusions as well as do their own testing to make sure that the bad guys can’t get in.  Think that having an onsite server will prevent this? Wrong.  Your network is connected to the internet, so you do have exposure.  Has your staff applied the latest security updates and patches to your servers and routers?  Is there a user with administrator privileges that has a weak, easily cracked password?  Did your consultant forget to remove any default users or passwords from your routers?  You probably do not have a person who spends their full time on these items and that is what a hacker is counting on.
  4. Updates. Most software that is hosted on your own servers require being taken offline while updates and patches are applied.  That means paying overtime to have these applied during off hours or it means that your system needs to be taken down and users left waiting for the process to complete and let them back in.  You are probably only doing updates a couple of times a year, leaving you exposed to any security flaws or just not taking advantage of the latest features that could be saving your organization time and money.  With a cloud-based system applying updates are the responsibility of the provider who has the staff to be able to perform these in a way that keeps any down time to a minimum (if not eliminate it entirely).
  5. Multiple ways to use the system. May cloud based providers allow you multiple ways to access the system.  This means you get the choice of how your people work – a desktop/laptop, a tablet or even on their phones.  It may be through a website or with an app.  Regardless of what method it means that YOU control how your people work and where.  Need to outfit an after-hours dispatch person? With the cloud it is no problem – you no longer need to provide a laptop and some sort of VPN connection as you could even just use a $100 tablet.  With server-based software you usually must install software on each individual computer and then provide the connectivity to the server.  This takes more time and it offers less flexibility.
  6. Disaster Recovery. Have your own server and there is a disaster that wipes out your office building?  Expect to be down for at least a couple of days while you source and equip a new server, find a building to locate it in (if it has the necessary networking connections), load it with an operating system and the required software.  Now you must hope that you have a recent backup that is complete and then cross your fingers that you can restore it.  Even if you have the backup from the night before you are still going to need to recreate some orders to cover the time between when the backup occurred and when the disaster hit.  With a cloud-based solution you were only down as long as it took you to get computers and an internet connection for your people to use – most likely some of them never left home before getting back on the system.  The cloud-based system most likely exists on multiple servers that generally are in multiple locations.

In summary a cloud based TMS includes a whole host of disaster recovery and business continuity solutions within your monthly fee.  These items “just happen” – they don’t need any intervention on your part.  To try and recreate these with an on-site solution requires large amounts of capital and ongoing expenses, if you can get the skills and facilities to make them happen.  If a disaster happens, it will take days to get an onsite solution back up and running while the cloud solution never went down.  Think you can’t afford to use the cloud because it’s too risky?  The real question is can you afford not to and will getting that wrong put you out of business.

Trucking in the Cloud: Part II

Some of you will read this and say: “I don’t want my company data on the cloud, I just don’t trust it”.  Others will think: “sign me up – I have better ways to use my capital”.  Both opinions are valid but both may be overlooking a few opportunities and risks.

First of all, let’s look at why you would want to use a cloud-based TMS.  At the very basic, IT is not likely one of your core competencies.  Moving freight, delighting customers, keeping the equipment in shape and attracting drivers are what you want to be spending your resources on, not owning and maintaining servers or software.  TMS Software essentially offers a service that allows you to provide those core competencies.  So why not treat it like a service and pay for it that way?

Capital Spending Model versus Expense Model

Traditionally you would spend around $10,000-15,000 or more to purchase and license an server running Microsoft Windows.  Possibly more if you required SQL Server.  Then you make a large investment in purchasing a TMS and then getting the necessary user licenses.  This all shows up on your balance sheet as a capital item.  Most likely you had to finance it, reducing the amount of capital available to put toward rolling stock or other assets that direct impact your core functions.  You needed a special room to house the servers and networking equipment.  You needed to provide air conditioning specifically for that room, as well as a fair amount of electricity to power everything.  A cloud based TMS is accessed over the Internet with a secured connection. It requires no equipment other than a desktop or laptop pc (and some can even be used with mobile devices).  As a service, the monthly costs are expensed and it will have a minimal impact on your ability to borrow money.  An additional feature is that you pay only for what you use as the solution tends to be scalable.  Had some turnover this month and are down 3 users?  Make a quick phone call and you pay for 3 fewer users this month.  Opened a new terminal?  Make a similar phone call and you can have users up and running within minutes.  If you owned your own server you would still have already prepaid for those user licenses and would incur some depreciation expense regardless if it was used or not.   You would also have to go through the help desk, get someone to log onto your server, install additional licenses and then have your IT staff install the software.   That’s a lot of overhead that could be better used elsewhere (or just added to the bottom line).

It’s all about trust and security

Let’s address the trust issue.  Most cloud offerings have made gigantic leaps in terms of security.  The use of technologies such as private or shared keys, the latest in encryption and multi factor authentication will ensure that your data stays safe and only seen by the people you authorize to access it.  In a nutshell most cloud providers can offer you the same or better level of security as having the server in your location.  In many ways, unless you maintain a large staff of IT professionals onsite you might actually be exposed to more risks having your data inhouse.  Has your team applied the latest updates to the server?  Are there any vulnerabilities in your router that a hacker could exploit to create an unknown backdoor? These are some of the many items that the TMS provider will provide for you at a much lower cost than doing it on your own.  Hardware upgrades, failover backup servers, backup storage and management, the application of software updates – these all become part of the service that you are purchasing.

Collaborate in Real Time

An additional feature of a cloud-based TMS is the ability to allow customer access to some of their data without putting your data at additional risk.  If you host your own server then to give a customer access you need to open up your firewall, expose that server to the outside world and rely on either internal staff or a consultant to make sure that they only allowed enough access to provide what the customer needs while preventing the hackers from getting in.  A cloud based TMS takes care of the security for you as they have the scale to have dedicated professionals to manage this as well as test the system for intrusion prevention.  Now you can quickly and easily allow a customer to get real time updates on their loads, put in tenders and get their own proof of delivery documents.

Some cloud based TMS systems also allow for access with mobile devices.  This is something to look at if you have staff visiting customers or have on-call staff at night or on weekends.  Giving these users the ability to access the TMS system with either their cell phone or an inexpensive tablet device means fewer hours spent in the office (and possibly reduce overtime costs) and eliminates the need for providing laptops and VPN technologies that allow a user to have more access to your network than you may want them to have when they are not in the office.  Losing a $150 tablet is not as hard to swallow as a $1000 laptop and there is less likely that the tablet has any proprietary data on it.  Force the user to enter their password each time they log in and that tablet will likely have next to nothing of value to your competition.

So Who Offers a Cloud Product and Who Do I Look At?

The big players like TMW and McLeod offer a hybrid where the equipment can be hosted offsite under their management.  Then there are providers who focus more on smaller carriers like Strategy Online, Transcount, LogistaaS, Pantonium, Roadnet, Accellos and many others.  Some companies do a full cloud product that is accessed through a browser and some require a locally installed program and then access the data through the Internet.  If you are looking at minimizing IT time, a browser based solution is preferred as the provider takes care of everything.  Locally installed software still requires someone to install updates, ensure that it is configured properly and then maintain it.  Regardless of which option you decide you will be on the way to improved flexibility, lowered costs and back to focusing on why your customers want to do business with you.

Trucking in the Cloud: Part I

Giving up control is hard for everyone. Being the guinea pig also can cause some digestion. These two ideas have been, in my opinion, the biggest obstacles to the adoption of cloud-based software and services. In reality, these worries were well-founded – in 2002!

Over the past four years, I have been continually bewildered by the slow adoption of cloud-based tools, that may help companies work more effectively, and reduce risk. In an industry with historically low margins, I would have thought that trucking companies would be the first adopters of tools to reduce capital investment and improve efficiency. It is now irrefutable, you need to stop replacing those aging servers, and putting band aids on legacy infrastructure.

In the early 2000’s, in would be common for companies to discuss (with pride) their large server rooms, and physical technology infrastructure. Usually this physical infrastructure was supported by specialized hardware administrators – many that also carried ‘specialized’ salaries. Around that time, Gmail, Hotmail and Yahoo leveraged the public’s desire to connect into some of the first set cloud-based eco-systems, and this world showed promise for the eventual migration into the business world. Google, via Gmail laid the foundation for a cloud-based working environment via the combination of Gmail, Google Calendar, Google Docs, Chat (Hangouts) and Drive. This combination is now know simply as G Suite. G Suite provides different levels of service which can be customized to the unique needs of every business. Further, building on it’s open-source platform, there are literally thousands of time-saving ‘plug-ins’ and ‘extensions’ for each of their various tools to improve the efficiency of every business (editor’s note – l am a long-time G Suite customer).

Seeing the future, Microsoft launched the beta version of Office 365 in 2010 after witnessing the growth and success of G Suite (formerly Google Apps for Work). Office 365 has seen rapid adoption from those companies which were born and raised on Word, Outlook and Excel. The combination of both cloud-based and desktop applications is hard to compete with.

The massive adoption of Office 365 and G Suite should be the indicator to all businesses that it simply does not make since to be hardware maintainers anymore. But how do you know what service is right for your business? Instead of trying to put together my own comparison of these packages, this blog post provides an excellent (third-party) review of G Suite vs Office 365.

In my previous career, I faced continued resistance from our IT staff about the adoption of cloud-based tools. Instead of taking this resistance as a set of well-founded facts, I should have done more research to understand that this resistance was the result of two factors: 1) Job security; and 2) Skill Gap. Moving to the cloud is not only a capital-saving exercise, it will also reveal and attract better talent, which will better position your company for the long term. Moving to the cloud will cause turmoil, and some of your IT staff will resist (some may not be there when you complete the process). However, instead of making a trucking company stay up to date on security and technology infrastructure best practices, you can leverage Microsoft, Google, Dropbox, and others and instead deploy the same or new human assets on building applications in those cloud environments to improve your profitability – or save your bacon!

In the next post, we will continue our exploration of other cloud-based tools, including the evolution of the TMS.


Smart Capacity and Smart Contracts: More Value for the Asset Heavy

One potential use of smart contracts is to create networks of smart capacity with multiple cooperating carriers. In effect, these networks will create their own virtual 3PL, using a group of trusted carriers to service customers as a single entity.

One key aspect of smart contracts is that they assume there is a certain level of trust between parties.  In terms of smart capacity, this is crucial.  For starters, each carrier within this network must be carefully vetted for insurance, safety, maintenance, driver standards, equipment standards, etc.  This should be similar to how you handle things when you broker your excess freight currently.  In this case, the vetting is done before gaining admittance into the group.  An additional feature is that all parties to the capacity network trust the others to properly vet new entrants.  Once a new carrier is approved by one member, all the other carriers must accept and trust that vetting.  For example Carrier X is vetted by Member A.  Member A does the due diligence and deems Carrier X to meet the criteria for admission.  The other members of the group no longer need to vet Carrier X as the trust relationship has already been established.  The burden of carrier compliance is now shared throughout the group, reducing each member’s costs. As the use of blockchain is adopted by government, insurance and truck and trailer OEMs, the direct and indirect costs related to compliance and monitoring will decrease significantly.

Once a carrier has established that they meet the necessary criteria, they must maintain that level of compliance.  By using Blockchain technology and smart contracts, all parties to the network will see any areas of non-compliance and the smart contracts will become a form a self-policing.  If the carrier no longer meets one of the smart contract’s criteria, they will no longer be active within the smart capacity network.  For example, if a carrier needs to maintain a CSA HOS score below a certain level, and they have an incident that puts them above that threshold –  the smart contract will prevent that carrier from participating.  No other intervention is required by any other party to the network.

Now, here is what separates smart capacity networks from traditional ‘Power Only’ relationships. Consider this scenario, Shipper 1 is a party to this network, through a separate smart contract with a lead carrier (the one with the relationship) – Carrier A.   Carrier A is the lead carrier for this account, but has entered into this network to help handle the capacity requirements.  Shipper 1 needs a load picked up in New Mexico and delivered into Chicago.  Carrier A currently has no trucks in the New Mexico area.  However smart capacity group member Carrier B does have a truck that will be empty in Las Cruces later today.  Using smart capacity, the network understands that lead carrier A is unable to perform the move and will automatically assign the load to carrier B who is able to execute the contract.  A few things have happened here.  One – the shipper has their freight moved on their desired date and with a carrier that they know meets their criteria for doing business with.  Carrier A will not be potentially running a truck with a lot of deadhead miles to meet the service levels that shipper 1 has set forth.  Carrier B has secured a load for their truck without having to use broker freight for their backhaul.  And here is the best part – this happens automatically without any intervention from any of the parties the smart contract controls it all. Finally, each participant can enter into separate smart contracts with shippers, and utilize the smart capacity network, as long as the pricing, network and equipment can fulfill the criteria established by the smart contact.

At its most basic level, smart contracts and smart capacity will use a predefined set of rules that determine who may participate, and govern the actions taken to fulfill the contracted service.   These criteria are coded into the smart contract and the software then automatically makes decisions based on that coded logic.

A few things to keep top of mind regarding smart capacity. One is that all parties to the network have visibility to all other members.  So, in the earlier example, Carrier A knows where all of Carrier B’s equipment is and Carrier B knows where all of Carrier A’s equipment is.  Two, all parties have visibility to the loads that the other members are doing – within the confines of the smart contract. Three, all participants must agree to allow the network to optimize the entire system, not just each company optimizing on their own, and in isolation.  This does involve individual actors giving up a degree of control, however, if the underlying coding and logic is correct, then each party should maximize its profits.

In an ideal situation, each participant agrees to a set contract pricing that each customer has with the network.  However, a smart contract is able to have the logic required to allow each carrier to have different prices within the smart capacity network. This would also provide a measure of defense against accusations of anti-competitive behavior.  Further, each carrier would have the ability to decline the load. If a shipper throws a curveball to the network, which makes the load less palatable, the contract between the lead carrier and the shipper would automatically adjust to make the load (potentially) more attractive to the network, which could include pricing, accessorials, appointment times etc.

In summary, a smart capacity network is one that uses Blockchain to distribute information to all parties of the network, as well as Smart Contracts to automate the policing and compliance features of the transaction.  The smart contracts can monitor progress, dictate courses of action and ensure compliance.  Once all parts of the smart contract have been fulfilled the contract could automatically trigger payment for the service rendered.  This has the potential to greatly reduce overhead, by automating many common dispatch items as well as remove the need for third-party freight auditing as the contracts will provide this data in real time.  Capacity and equipment will be better utilized, and shippers get to know that any carrier that touches their freight will maintain a minimum standard of care and compliance, without having to vet each and every carrier.  All of these features will result in reduced costs, and greater profits for all participants – a truly symbiotic relationship!

Next week we will examine how smart capacity networks could optimize for Hours of Service capacity, something which will become more important in the upcoming months.

Blockchain and Smart Contracts – A Bigger Industry Disruptor Than ELDs

We have previously discussed what Blockchain technology is. In short, it is a way to enable value and asset transfer across a wide range of industries and use cases – with total transparency. Blockchain will be a major disruptor for financial institutions, remittance companies (third-party freight companies) and many other transactional ‘middlemen’ (people, services, companies). Briefly, Blockchain systems use a chain of secure records to expose the details of transactions to all approved participants and distribute records across a network of participating computers (decentralized). This eliminates the need for a central authority to maintain records and makes processes more efficient, and ultimately cuts costs.

Sandeep Kar, Chief Strategy Officer for Fleet Complete at the recent Connected Fleets USA event in Atlanta listed the following as among the many benefits of Blockchain:

  • Accelerated payment, better security and reduction of fraud
  • Simplified claim settlements
  • Improved traceability and trackability
  • Elimination of the middleman, which cuts costs, reduces paperwork and shortens the supply chain
  • Reduction in the cost of regulations and compliance
  • Increased transparency of price, ownership and the entire process

Kar further summarized the challenges to implementing Blockchain in the logistics industry:

  • Lack of initial knowledge, skills, expertise and trust in the technology
  • Limited easy availability of cryptocurrencies, which may or may not be coupled with a Blockchain system
  • A bias towards the established infrastructure
  • Lack of a central authority to mitigate risk
  • Potential cryptocurrency volatility because no central authority governs cryptocurrencies

Smart contracts work with Blockchain to facilitate the automation of many processes within multiple industries. Smart contracts are based on a Blockchain technology called Etherium. The programmer behind Etherium (Vitalik Buterin) has described a smart contract as “a computer program that directly controls some digital asset”.

Smart contracts go further than traditional legal contracts that define the rules around an agreement between multiple people or parties, by actually enforcing those rules and controlling the transfer of currency or assets under specific conditions. An asset or currency is transferred into a program and the programs runs code that at some point determines whether this asset should go to one person or back to the other person. Jeff Garzik of the Blockchain startup ‘Bloq’ says that “smart contracts guarantee a very specific set of outcomes. There is never any confusion, and there’s never any need for litigation. It’s simply a very limited, computer guaranteed set of outcomes.” Buterin foresees the development of standardized templates that users will be able to use, similar to the standardized contracts we currently use. This will simplify the process and eliminate the need to custom code each and every contract.

Now, enough of the theories and technical jargon, how will trucking companies utilize (and profit) from Blockchain based technologies?

A trend right now is for larger trucking companies to enhance capacity by partnering with other companies to more effectively utilize capacity and optimize for time, location and ultimately gross margin. Right now, subject to the sophistication of the company, that is a difficult set of tasks. You are dealing with multiple databases and datasets, not to mention the human and environmental elements.

The use of Blockchain and Smart Contracts could provide the necessary framework for trucking companies to take more control over the supply chain of a shipper, while optimizing their capacity and the capacity of carrier partners – who are party to a separate smart contact with the lead carrier. The image below, gives you a rough idea on how this would work. The caveat is that each company in the preferred network would have to add data to the Blockchain within the terms of the smart contract between them and the lead carrier.

Once a contract has been successfully fulfilled (or not), the Blockchain technology will create a transparent and open performance history record. This is a trustless record, as the parties know that the records cannot be edited. Essentially the data is flawless and not open for dispute.

Think of the above as an automated Shipper and Carrier Scorecard – one that will drive better decision making for all parties.

Would be great to hear from more of you regarding possible use cases for Smart Contracts in Trucking.

An Electrified Future for Trucking?

Electric Trucks – Could This Be the Future of Your Fleet?

This week photos of Elon Musk’s new Tesla semi-truck surfaced on Reddit.  The picture showed a silver truck with bluish streaks running from front to back and it looked very similar to an image that Musk tweeted earlier this year.  The vehicle is slated to be officially debuted on October 26th.  Nikola Motors unveiled an electric truck last year and both of these vehicles have a likely production date of 2020 or 2021.


So what do these mean for the future of the transportation industry? 

Initially these are likely going to be local or regional trucks as the newest technology claims to give the vehicles a range of only 200-300 miles.  So these will be good for short haul but anything longer will either require the use of relays, some form of intermodal transportation, or the use of diesel powered vehicles.  Some industry observers have speculated that a tractor solely run on electricity could have operating costs that are up to 70% less than diesel power due to the lower maintenance costs.  For example an electric truck will not need oil or many of the filters that add to the costs of a standard preventative maintenance program.

How does this stack up with current electric medium and heavy duty vehicles? 

The Tesla claimed range is double to triple the current single charge ranges of vehicles currently on the market.  Navistar is introducing a yet-to-be-named vehicle with a range of 112 miles.  This vehicle is being developed with its recent partner Volkwagen AG Truck and Bus, for the North American market and will possibly be based on models that Volkswagen is currently testing in Austria, that offer a payload of 39,000 lbs.  Cummins has announced the AEOS, a tractor solution with a 140kWh battery pack that is expected to have a 100 mile range.  Plans are for the AEOS to begin sales in 2019.  Finally Mercedes Benz is testing prototype fully electric trucks with a 125 mile range, and a payload of up to 57,000 lbs.  What makes the Mercedes option truly revolutionary is that the motors are directly adjacent to the wheel hubs on the rear axle.  This technology was developed for the Citaro hybrid bus sold in Europe.

Some limitations:

First of all charging is slow and stations may not be available where you need them.  As a result these vehicles will initially appeal mostly to fleets operating city trucks for either p&d, or final delivery operations into cities.  Daimler Trucks is currently working with a company called StoreDot to develop a quick charging solution similar to what Qualcomm has developed for cell phones  – if you have a recent Samsung phone you will have seen this in action.  As we all know, down time costs money so if a fast charging solution can be developed then these ranges may start to work for longer haul operation.  For example, if the Tesla actually can achieve a 300 mile range and a fast charger (ideally under 30 minutes to a full charge) a network (similar to or in addition to their current car charging network) can be created, then the industry may be able to make an electric vehicle work within the existing HOS framework.  Given that we are looking at a couple of years until these units hit production lines that is definitely within the range of possibility.  Just as I am writing this, Rolf Lockwood of Today’s Trucking and HDT is reporting that the Cummins prototype will have a charging time of only 20 minutes.

Another option is the way that Nikola Motors is handling this problem is with a hybrid hydrogen/electric power train.  This basically will give you a truck that will use a hydrogen fuel cell to recharge itself, giving the potential for a greatly increased range.  Nikola has teamed with Bosch to use its eAxle technology, that also puts the motors, the transmission and the power electronics in a single modular unit.  This is an existing technology and it will help Nikola get to market sooner than if they tried to develop it on their own.

So what still needs to happen?

First off, a charging network for commercial vehicles is pretty close to non-existent. It’s really going to require larger truck stop operators and/or state rest areas installing commercial vehicle charging stations.  For that to happen there will need to be a way to create a standardized charging cost or the development of some sort of card lock system that meters out the electricity needed.

Secondly, a standardized fast charging solution needs to be brought to market (and preferably done quickly).  For this to get widely adopted charge times need to be kept short so that there is no adverse impact on HOS compliance (unless the rules are modified to allow for charging delays).

Third, in many jurisdictions the price of electricity may hamper adoption of this technology in some areas.  Hydro Quebec publishes an annual survey of electricity prices in 25 major cities across North America.  Based on what this study presents, an electric option will be most profitable in cities like Calgary, Winnipeg, Houston, Chicago, Detroit or Miami, all of which had rates below 8 cents per kWh. Meanwhile the costs in cities like Boston, New York, San Francisco or Toronto are all above 13 cents per kWh, meaning that an electric option may be less attractive to fleets that operate in those centers.

Finally, these vehicles are not going to hit a commercialized stage for at least a couple of years.  A breakthrough in battery technology could render many of these concerns mute.  Tesla and Nikola have stated that they are working towards 1000 mile ranges – similar to what we get with a diesel powered unit.  If that happens, the perfect storm of reduced emissions, lower noise pollution and lower operating costs will create a real game changer.

3D Printing – Disruptive Technology for Your Shop

How many times have you faced unnecessary downtime because your local dealer did not stock the part you needed? Need a door handle for that 1971 Diamond Reo C-116 that you are restoring as a show truck? Or a tie rod end for a Cascadia on the weekend after the dealer has closed? In both cases, you are either stuck making a lot of phone calls and praying that someone has stock close to you or, in the restoration case, you have to troll the internet and hope that someone has a used version of what you want in decent shape. 3D printing has the potential of being a game changer for you.

Currently some of the OEMs are using 3D printing on a limited number of parts for older models instead of stocking them. This gives the potential to quickly produce one off parts as they are needed instead of scheduling a short production run, pay for machine set-up charges and then keep them in a warehouse and hope they sell. To the end user it means that obscure and rarely needed parts can be available to you within days instead of being on back order indefinitely.

Check out this video:

The next evolution will be for those parts to be printed at your local dealer, reducing the lead time even further. As an example, your local Freightliner dealer will no longer need to keep plastic trim pieces for a Sterling, a FL120 or any other discontinued model in stock. If they don’t stock them you can get them within hours (depending on the complexity of the part), possibly within the same lead time as they currently take to pick your order out of their warehouse.

The ultimate use of this technology would be for the carrier to have a 3D printer in their facility with the ability to print their own parts. Imagine putting in an order to your dealer and within minutes they can send the CAD file to a connected computer in your building and then the part starts printing as your mechanic waits. Eventually the diagnostic device connected to the truck will have the ability to “phone home” to your shop, let you know what is needed for the repair, allow you to authorize the parts purchase and then print it before the truck arrives. While not all parts will be able to be printed, a large number will be reducing your inventory carrying costs potentially down to just tires, fluids and filters.

3D printing eventually can bring a near “just in time” inventory system to every shop. Currently these printers work best with all plastic parts but printers with the ability to print with metal alloys are starting come on the market. Where there will be concerns will be for parts that require specific metal alloys and/or densities to meet quality or safety requirements. So, it will be a lot harder to properly print that tie rod end than it will be to print that door handle. However, only a couple of years ago these printers were only able to make small solid plastic parts. Now they are able to print the insides first and then create the outer casing for much more complicated parts. Mercedes has recently announced that they will be printing certain parts at their regional warehouses on demand. The other OEMs will be following soon. The economics of using 3D printing instead of carrying inventory give more than ample justification for moving towards printing where possible. This will drive further innovations in terms of size of the printers, what sort of materials they can use and how complex a part they can make. This will in turn reduce the cost of the printers, eventually making them affordable to even small repair shops or to be put into your smaller terminals.

Eventually we will see even the major parts suppliers like an Eaton sending the CAD files for you to print a complex component like a replacement transmission gear or have Cummins send you the ability to print an oil pan all as you wait. On the OEM side, this sort of production may encourage additional research into composite materials that will allow the components to be lighter and stronger than today’s parts.

The benefits of this technology will be felt all through the supply chain. Manufacturers and dealerships will no longer need to stock parts for out of production vehicles. Short production runs will be eliminated with their inherent high fixed costs as the tooling and set up charges need to be amortized over a relatively small number of parts produced. Unnecessary shipping and handling charges will be eliminated as the parts will be produced closer to where they are needed. While some manufacturing jobs may be lost, more parts production can be brought back from overseas as the printed parts will gain a competitive advantage over items sourced in foreign countries. Some clean up and finish machining may be required and will be much better handled by local suppliers. End users will benefit by reduced lead times, reducing or eliminating the need to inventory certain items and carriers with older equipment may be able to extend the useful life of those vehicles. There will be a limitation on what can be printed (for example a brake shoe will be difficult to produce this way due to unique mix of materials that go into them) but over time these limitations will get overcome. Reduced costs and reduced downtime make this a win/win technology that’s coming to a shop near you sooner than you may think.

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.