A digitally enabled future for the transport and logistics industry
Many transport and logistics providers have made progress in recent years to enable their businesses with digital technology for fleet tracking and management. Some operators have begun reducing paper in their business by replacing physical delivery dockets with tablets and handheld devices. But as the saying goes, a lot done; more to do.
It was created by Three using a combination of interviews with sector experts and a focus group of 15 transport companies.
We hope this eGuide provides useful insight into the sector, and highlights emerging technologies to give your business a valuable competitive edge.
The transport and logistics sector finds itself at a crossroads.
The majority of freight in Ireland is transported via road, and this is at its highest level since 2009
In Q2 2019 42.8 million tonnes of goods were transported by road. This is an increase of 6.1% compared to the same quarter a year ago
The total distance covered by road freight transport in Q2 was 450 million km.
The logistics and transport sector continues to be a cornerstone of Irish business and its connection to the wider world. Between transportation and storage, manufacturing, retail and wholesale, the sector employs over 97,000 people. There are 3,384 operators in Ireland, mainly made up of SMEs, each with an average fleet size of 4.7 vans or trucks. It’s estimated that another 15,000 vacancies will be needed until 2021 to cope with the anticipated growth. Globally, the transportation sector is growing at 4.7% CAGR, and will be worth more than €2,160 billion in 2020.
Three’s research found that 62% of companies in the sector say technology plays a central role in their strategy, while 30% spend when necessary to retain customers or save money. So, the majority of businesses are prepared to use technology, and many already have. Cloud adoption stands at 68% of companies in transport and logistics, leaving almost one third of companies not yet using the technology.
Construction is a major contributing factor to road transport; delivery of goods to road works or building sites accounted for 15.7 million tonnes carried in Q2 2019, making up 36.6% of all road deliveries during that period. This is likely to continue in light of planned housing builds, commercial developments and other infrastructure projects.
As growing numbers of consumers shop online, it’s driving huge demand for delivery services. One in five Irish people buy from their smartphones every week and online sales in Ireland grew 22% in 2019. Customers expect high levels of service and rapid delivery.
1 in 5 Irish people buy from their smartphones every week and online sales in Ireland grew 22% in 2019.
Many small owner-operated transport businesses have benefited from the e-commerce boom from websites like Amazon and many others, which has driven an increased need for last-mile delivery services, even as it creates high customer expectations. There is a growing demand in Ireland for e-commerce operators, including parcel delivery specialists and third-party logistics companies or 3PLs.
45% of transport and logistics providers will improve technology use in their organisations to respond to e-commerce growth.
Technology is transforming the sector. The use of data analytics presents opportunities to improve performance and serve customers better through improved forecasting to scale capacity up or down and plan routes. Adding machine learning and artificial intelligence techniques to data analytics can deliver dynamic routing.
The Irish Government’s ‘Focus on Transport and Logistics’ report, December 2018
But the sector faces challenges, including the ongoing uncertainty surrounding Brexit. In research for the Three Irish Business Mindset Report 2019/2020, it emerged that one in four companies in the sector are concerned about the business climate. Operators are also facing rising costs for fuel, insurance and labour, while margins are low. Availability of skilled staff is also a factor, particularly where certifications to transport goods like hazardous chemicals are needed. Last mile operators are often finding vehicle space going to waste by being empty on the return journey from making a delivery.
Then there’s the encroachment of brand-new competitors into the space. We’re seeing the “Uberisation” of delivery and the onward march of drones that threaten to cut out the middleman between supplier and customer. Transport operators and logistics companies will have to compete to meet high-demand consumer needs.
Looking further down the road, by 2030 the Government is targeting a reduction of 45-50% in emissions as part of its Climate Action Plan 2019. What’s more, it also calls for a switch from diesel delivery vans to electric vehicles (EVs) in the same timeframe. So business owners will need to start devising am EV strategy.
As carbon commitments start to become real for transporters, they will need to ensure efficiency to avoid unnecessary and expensive fuel costs. As fuel prices look set to keep rising, it will force transporters to optimise their operations or diversify to ensure survival.
As the transport and mobility landscape changes rapidly and demand for EV grows, we are seeing many city planners and transport operators relying more and more on up to date mobility analytics.
Jim Newton, Director, CK Delta
In preparing this eGuide, Three interviewed 15 small and medium-sized transport companies in Ireland to get an insight into their experience of technology adoption. The companies range in size from fewer than 10-person operations to 100-person operators, with fleet sizes ranging from 10 vans and trucks or less, to between 21 and 40 vehicles.
We asked them why they implemented technology in their business; most of them (80%) did so to improve customer service; 73% did it to make their operations more efficient. For others, key reasons to enhance technology were: to comply with industry regulations; to make it easier to do business with large customers and multinationals; and to reduce costs.
The two most widely adopted technologies among the transport companies are:
to communicate with customers (used by two thirds of our sample customer group)
(used by 60%)
The next most commonly used technology is fleet management systems, which five out of 15 companies have implemented. Digital delivery dockets, vehicle checking systems and enhanced dashcam management systems are the next most popular technologies, with four of our sample companies using them in their business.
An overwhelming majority of the customers we spoke to said that improving technology had helped their business: six out of 15 (40%) said it had made a measurable difference, while seven out of 15 (46%) said the experience was partly successful.
Looking to the future, mobile devices are way out in front as the technology that transport companies plan to adopt over the next three years.
More than half of our survey group (eight out of 15) plan to roll out smart handhelds or tablets for capturing electronic signatures and proof of delivery. The next priority is vehicle checking systems, followed by asset tracking services, which one in five of our sample group intend to bring into their businesses. Two of our group plan to roll out vehicle telemetry, and two said they will implement GPS tracking. However, electric vehicles are far down the road for our group. None of the 15 respondents currently use EVs in their fleets.
Transformation is already happening in the industry.
Data is the fuel of the intelligent transportation and logistics sector. Powered by a range of digital technologies including inventory management, and route planning, smart transportation leads to increased efficiency of operations, lower fuel consumption, greater flexibility with delivery and scheduling, and optimised customer service. Here are some of the digital technologies that are available right now, offering rapid return on investment and getting to work on enabling greater efficiency.
Telematics and in-vehicle GPS systems let companies of all sizes track and monitor their fleet, collecting and sending data about driver and vehicle performance like location, speed, acceleration, fuel consumption and rest periods. These systems help SMEs meet delivery times, reduce insurance costs, improve the performance of their vehicles and become more efficient in route planning. They’re an essential building block in the move towards smart transport and connected logistics. The next stage will be for fleet managers and companies to analyse this telemetry data in real time to gain insights about deliveries sooner, and make business decisions faster. To avail of this, they need to ensure their systems are open, not proprietary, to be able to combine data more easily and get true value from analytics.
There are many potential applications for IoT in transport, including optimising assets so that vehicles with spare capacity are used for extra journeys, or reducing inventory costs while goods are in storage. Embedded IoT sensors also help to optimise fuel consumption, schedule planning and management. Sensors attached to a particular asset within a consignment can send information about their location, so that operators can give customers up-to-date information with accurate delivery times.
The ability to provide ongoing vehicle checks for temperature-controlled deliveries is becoming a key differentiator for many delivery companies looking to compete in sectors like pharmaceuticals, which need live updates to ensure sensitive products arrive at their destination in perfect condition.
IoT sensors in refrigeration units can provide this level of oversight, and it’s helping some far-sighted transportation businesses to pass the rigorous compliance and quality checks that large multinationals require. There’s a shift happening away from providing detailed and lengthy reports of sample temperature data. Today’s fleet manager just wants to know if the temperature has gone outside a specified range. This information can be condensed into a single, simple notification about exceptional events. This way, managers have full oversight without being drowned by data. In another development, connected cameras mounted at the rear of a truck can trigger a video recording every time the door is opened, which generates an additional proof of delivery for particular loads.
With the Internet of Things, when you have a vehicle tracking system installed on trucks, you can analyse how efficiently a driver is driving, and you can have a discussion with them about that, such as if they’re causing undue wear and tear on a vehicle. Or, you can produce reports on the types of work you’re doing and see where all trucks are going on a certain day. You have a lot of reports and information you can pull out like job profitability; you can analyse how often a certain trailer is being used; is it not being used enough, or is it in danger of overuse and breaking down? By going digital, you become more aware of your assets and you can utilise them more efficiently when you have the information in front of you.
Gary McCarthy, Director, FMC Haulage
For many transport and logistics businesses, paper is still king – but that’s changing. Eliminating paper is a key first step to unlocking efficiencies, managing risk, and ensuring regulatory compliance.
In the past, a truck might leave the base on a Monday and not return until Friday night. That can mean delays of up to a working week to process proof of delivery dockets and raise invoices, which directly affects cash flow. Equipping drivers with rugged handhelds and sending delivery information to the mobile device improves the customer experience and puts the business back in control.
Connected logistics enables real-time updates, interoperability, and easier access to information for better decision-making, while driving enhanced operational efficiency and increased productivity. Operators can alert drivers faster to changes in delivery schedules or priorities. And as environmental concerns compel the industry to go green, reducing paper can help towards meeting sustainability targets.
“Chasing paper all day long,” is how Gary McCarthy describes running Frank McCarthy Haulage back in 2014. But since that time, handwritten jobs in a diary and drivers submitting hard-copy forms have given way to mobile handsets and rugged tablets. Every delivery job at the company is entered into a system as a job card with all the details a driver needs available on their device, along with any special instructions. Gary overcame the challenges of running the business by paper by developing an app that’s loaded onto smart handhelds in every truck the company owns. At a glance, drivers now see vital information that includes delivery details and coordinates, along with general industry guidelines or instructional videos.
The app has a drop-down menu that lets drivers fill in the history sheet of every delivery, ensuring full traceability which is especially important for consignments like animal feed. This way, the information is available straight away, whereas with paper there could be long delays to gather all of the necessary records.
“It makes everything so much more efficient. I’m able to handle so much more work because I’ve gone digital and the workflow has been streamlined. I can find the information I need in seconds,” says Gary. “For the driver, the various aspects of our work, like safety, tachograph regulations, guidance sheet on ports, or customer transport safety documents are all on the tablet, which saves a lot of time and makes the employee more productive.”
While there is some upfront investment needed in hardware, as well as a monthly subscription to the app software, Gary stresses that the outlay soon starts paying for itself. You’re going to save so much time, so many man hours and be so much more efficient in your operations. It changes the way you work.”
He’s also keen to emphasise that the technology is affordable even to the smallest of SME transport operators. “This is very simple; anyone can do it. you don’t have to be a big multinational to come up with a system like this. When we started, we had six trucks,” he says.
The result of embracing technology has been increased efficiency, where the company can do much more with the same number of employees. Another benefit has been improved customer service. “Using technology allows us to improve response times and accommodate any special customer requests or be more flexible with our delivery. By keeping the customer in the loop, we enhance the customer experience – and it gives us a more productive and secure future. We focus more on creating value for our customers and less on mundane, paper-based tasks,” he says.
Having seen the impact on his own business, Gary set up Elevate to market the technology to other companies in the transport sector and help them improve their business by moving from paper to digital. One customer alone had amassed 30,000 timesheets in five years. “Can you imagine trying to organise 30,000 entries on paper? By going digital, that information is all in one place,” Gary says. “Anyone who sees the technology in action gets what it can do, and they want it for their business. It makes their employees productive anywhere, and it moves the business away from old, slow processes.”
Data analytics deliver better business decisions sooner.
Transport and logistics operators can now benefit from vehicle-specific information which gives even greater insight about fleet performance – in real time. This can tackle one of the single biggest costs in transport today: maintenance. When a breakdown occurs, the unplanned repairs can take a vehicle off the road for hours or days, leading to extra costs of unscheduled driver downtime, dispatching another vehicle or hiring a new one, transferring the consignment, and ultimately to delays in deliveries which impacts customer service.
IoT sensors are now available as standard in cabs and trailers, taking hundreds of measurements about performance, including oil, fuel and coolant levels, battery and alternator performance, belt slippage, braking systems, axle load, tail lift, distance travelled, and tyre pressure.
Before, this detailed information was only available when a mechanic was physically checking the van; now, by connecting these sensors and sending the data back to the cloud in real time, transport operators have a live view of every vehicle in their fleet.
Using cloud analytics, they can anticipate potential issues and avoid sending a vehicle on the road with a component that’s at risk of failing. This is true predictive maintenance. In real time, operators can quickly assess and mitigate any risks by deciding to bring in a truck or van for scheduled repair – eliminating unplanned downtime and saving costs.
Analytics can also transform route planning and delivery scheduling from a static plan at the start of a day or week to a dynamic rostering system. In an increasingly connected world, operators have the opportunity to continuously update route schedules and other operational plans. By combining IoT sensor data from their vehicles with a broader view of the transport network, they’re able to make the most cost-efficient and operationally efficient decisions for their business. What’s more, this information is available in real time, so drivers get updated immediately with a change to the route or delivery schedule.
A big driver for investing in technology is efficiency. Fleet managers are looking at how they can efficiently deliver cargo from one place to another. That implies they are cost efficient, fuel efficient, minimally impacting the environment, while monitoring the security of the product, and the safety of their drivers and personnel.
Declan McAndrew, VP of Connectivity, Thermo King
Here are some of the cutting-edge technology-enabled innovations available to the transport and logistics sector. Start planning for them today.
Currently in testing, but a potential game changer for fleet operators, dynamic insurance could transform one of the single biggest business costs into a consumable. At the moment, insurance is a fixed cost whether the vehicle is driven or not. But as technology advances, and companies have greater visibility over the condition of the cab, the cargo, and driver behaviour in real time, the combination of this data will enable insurance companies to provide variable costs per kilometre. Operators can then put this cost against each particular journey rather than having it as a fixed cost in the business. There are models being actively piloted at the moment; watch this space.
The next wave of in-vehicle video for commercial fleets will add an enhanced layer of information about driver behaviour, road conditions and external environment on top of the internal vehicle telemetry data that’s available today. This technology is available as standalone units, or you can buy systems that integrate with the cameras that are now coming as standard in many trucks and vans. Video has a double benefit for transport companies: firstly by reducing insurance premiums by combining accident footage with the telemetry data that vehicles produce today, like brake force, leading to improved risk identification. Secondly, connected dashcams’ video feeds are a powerful driver education tool, with better quality feedback leading to improved road safety.
Camera technology is advancing to include driver safety and wellbeing features, like cameras mounted in the cab that can scan eye movements or facial expressions for signs that the driver is distracted (by taking their eyes off the road to look at their phone) or tired, both of which could be more likely to cause an accident.
With rising fuel costs and national emissions targets coming into play, it’s never too early to start developing an electronic vehicle (EV) strategy. It’s not just a matter of upgrading the fleet from diesel to EV cabs. Hauliers and transport companies will need dynamic, optimised route planning systems that know the location of charging points, so drivers can top up their batteries throughout the working day based on their mileage, without deviating from their journeys. Owners and managers need to watch activity at national level to see where the EV charging points and supporting network infrastructure will be rolled out.
Looking even further ahead, another trend on the horizon for transport operators will be autonomous or driverless trucks. Using a combination of technologies like radar, Lidar, smart cameras and artificial intelligence, these vehicles are able to make decisions like when to turn corners, or when to slow down, without human intervention. Several major companies are racing to make a breakthrough in this field, including Waymo, Chrysler, Jaguar, Apple, Uber and others. Toyota has gone further, announcing “Woven City”, a 175-acre living laboratory where it will test technologies like self-driving cars and IoT. Plenty more testing awaits, and that’s before we get to the regulatory requirements that autonomous vehicles will need to pass. But for the transport sector in particular, it’s a trend no-one can afford to ignore.
The next evolution of smart camera technology for transport vehicles will be around complex scanning of drivers’ movements, with various algorithms built into the software to analyse facial movements, eye movements, or signs of distracted driving and fatigue. It’s the next evolution of the telematics industry. It provides far more detailed operational information, all backed up by video.
Mervyn O’Callaghan, CEO, CameraMatics
In a fast-paced competitive sector like transport and logistics, the difference between profit and loss is often a matter of fine margins. It’s time to turn that to your advantage by taking the next steps on the road to smart transportation and connected logistics, and ensure your business is in peak condition to face whatever the future delivers.
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