Freightwaves Reports on Princeton Consultants Freight Transportation Survey

April 28, 2020

How do transportation executives view tech disruptors like self-driving trucks, drones, and Big Data?

Freightways reports on Princeton Consultants’ annual survey, which CEO Steve Sashihara summarized March 27 on a public conference call with Stifel Capital Markets.

Five years ago, Princeton Consultants CEO Steve Sashihara created the Digital Disruption in the Freight Transportation Industry survey. The goal, he said, was to quantify the impact technology was having on the industry, and gauge industry leaders’ views on the disruption these technologies would have over a five-year time frame.

Each of the five technologies — self-driving trucks, drones/robotics, Uberization, Internet of Things (IoT) and Big Data/artificial intelligence — was ranked on a scale of 1 to 4, from no real impact to large impact. Over time, each technology has risen in its expected impact in the survey, although participants seem to be downplaying the roles for most in this year’s survey.

Since 2018, self-driving trucks, Uberization and IoT have seen declines in their expected impact by 2025. Blockchain, which was added in 2019, also declined in this year’s survey compared to its initial ranking.

The survey of 810 executives across the freight industries included 51% who worked for carriers, 15% for shippers, 8% for suppliers, and 26% for financial, educational, media or government organizations.

Sashihara, on a conference call sponsored by Stifel on Friday, said the declines are not necessarily a reflection of the potential disruption of the technologies, but rather, could be attributed to respondents’ feelings that the technologies are no longer forward-looking, as many are becoming more mainstream.

“It’s during the period that it starts gliding back up that it starts to have the value people thought it would have [initially],” he said.

Take self-driving trucks, for instance. In 2018, respondents ranked them as a 2.5 on the 4-point scale, but that has fallen in the past two years to less than 1.5 this year, suggesting that the technology is not close to becoming a disruptor.

“For it to have an impact on our industry, I think the [Department of Transportation] would have to recognize self-driving trucks,” Sashihara said. “If a driver is still burning DOT hours, I don’t think there is a benefit [to having a self-driving truck]. DOT would need to extend driving hours for a benefit. When we surveyed the executives in the transportation industries, I think they are saying it’s not going to have a real impact in the next five years.”

That said, Sashihara seemed to agree with respondents, saying it will be many years, in his view, before self-driving trucks become commonplace unless there are broader structural changes to regulations and technology.

Uberization, too, has declined in respondents’ eyes. Sashihara defines it not as Uber, but the digitization of freight brokerage. The technology has dipped to a 2.5 rating from its high point of almost 2.7, achieved in both 2016 and 2018. The rating is up slightly from last year, though.

Commenting on a common question he receives, Sashihara said companies like DAT and, which have been booking digital freight for years, are not really what Uberization means for most.

“I think the Uberization is as much about getting everyone up to high standards as it is about some mobile app,” he explained. “I personally think Uberization [means] better standards around” freight movement.

Respondents seem to have soured a bit on IoT, but Big Data and artificial intelligence are heating up. IoT has dipped from a rating of nearly 3.5 in 2018 to under 3 this year. Big Data, though, has remained strong, staying close to 3.5 in all years except 2019 when it fell to a rating of 3. It is just under 3.5 this year.

“IoT is cooling off … whereas big data has remained high,” Sashihara said. “It dipped down a bit last year and has come back up again. Our firm believes that IoT and Big Data will [drive] the biggest changes in the industry.”

Asked to explain whether Big Data solutions would remove the inherent bias humans have, Sashihara said perhaps not.

“If we use current human processes and program them in, it basically takes the biases and inherits them,” he said. “It just makes the calculations quicker; that’s not necessarily a bad thing.”

Sashihara noted that many human biases develop in response to a previous action, for instance the addition of an extra hour in a delivery schedule because the facility is notoriously slow in unloading trailers.

“If you just take the human learnings and put them into the machine, [that’s one way], but we should also take machine learning [and use data to draw conclusions],” he said.

Sashihara said companies are, and continue to be, cautious when adopting new technologies, and that gives the Silicon Valley freight-tech startups a boost.

“One of the things that helps the Silicon Valley companies is they don’t have a long [historical] reference,” he said. “Anything that has hardware written on it, you have to ask, ‘Will I be happy three, four or five years from now with it?’ Anything on a high-technology curve, you have to ask [if it’s worth it or if it will change too quickly].”

Sashihara did say that a lot of the technologies have promise and will provide performance value, but companies should be careful when adopting cutting-edge technology and be sure they are comfortable with the risk.

That comfort level is also why more innovation is happening in what Sashihara said was smaller freight — things like parcels and e-commerce.

“The small stuff, highly consumer-facing stuff, ironically is highly visible and where the automation is,” he said, noting the detailed tracking now common in shipments.

Sashihara said the reason for this investment is that more stable industries, such as cold chain and big pharma, had previously made big investments in their supply chains, and the desire to make more investment in technology that makes current technologies obsolete is not there.

Related to that, though, is blockchain. First introduced to the survey in 2019, respondents seem to have already cooled on it, rating it below 1.5 this year, down from almost 2.5 in 2019. Sashihara, though, still believes it will be a major disruptor.

“I think most of us will adopt when it makes sense as a price of business,” he said. “It’s definitely coming; it’s definitely the real thing, but for most of us it’s coming when the customer tells us to use it if you want their business.”

Sashihara noted work the Blockchain in Transport Alliance is doing to develop global standards around the technology as being an important step in the process to adoption. Once companies are able to coordinate on a single set of standards, adoption will grow, he said, adding that the decline in rating could also be due to more people realizing the technology is coming but won’t be as disruptive as first thought.

Since its introduction as a category in 2016, drones and robotics have remained pretty steady in the survey. Respondents have consistently rated their disruption at about a 2.35 and have done so again this year.

Sashihara said the coronavirus pandemic is showing legitimate use cases for drones.

“I think it’s legitimate,” he said. “It’s potentially game-changing in many scenarios. In our current environment with coronavirus, it’s [the ability to] drop masks or medical supplies to remote hospitals.”

Robotics are also showing their worth today, he said, noting that many warehouses have used some form of robotics for years. The technology is proven, it’s just a matter of “when it becomes worth it to change facilities,” Sashihara said.

In terms of business impacts, respondents were asked to rank several areas on their impact by 2025. Not surprisingly, visibility (about 2.6), real-time routing (2.5), exceptions (2.5) and streamlining operations (about 2.4) all ranked highly. Each has also ranked highly during the life of the survey.

Other technologies, such as workforce planning, pricing, inventory management, forecasting and last mile, are proving more volatile in the survey results.

Finally, Princeton Consultants always asks respondents whether they believe digitally disruptive technologies are creating winners (disruptors) and losers (disrupted) in the marketplace. In 2017, only 33% of respondents strongly agreed with that statement. This year, 63% strongly agree and an additional 30% agree but remain unsure how their business should proceed.

“These are real changes that are coming,” Sashihara summed up.

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