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In the wake of 9/11, 11,000 U.S trucking companies folded. Outside of hurricanes and earthquakes, the attacks on the Twin Towers and the Pentagon were the largest insured losses in history. In an effort to regain control, insurance companies raised premiums across industries with trucking taking a direct hit. The notoriously slim margins of the trucking industry meant that anyone who couldn’t get costs under control went under.
Today, the trucking industry is facing a similar vulnerability as a result of COVID-19. This time, it’s unlikely cost cutting alone will steady the industry. The current pandemic is exacerbating driver shortages and putting a strain on the aging drivers holding up the world’s supply chains. When the trucking industry rebounds, technology stands to play a critical role in its recovery.
The next few weeks are going to be hard — really hard. Most big enterprises are in crisis evaluation mode, working overtime to assure shareholders that everything is under control while taking steps to increase employee safety.
Few CEOs had a pandemic preparedness guide sitting in their top desk drawer. Companies are doing the best they can to respond with the resources on-hand. Optional pilots and POCs are on hold in the most affected industries. Innovation teams in some cases have been repurposed entirely to serve as COVID response teams — searching for thermal scanners instead of RPA tools. Their most immediate need is for solutions that can keep drivers safe and help manage cash flow risks.
In the longer term, COVID-19 is forcing conversations around autonomous trucking and remote work to the forefront of the industry. While glitzy tech companies have been preparing for years with Zoom, Tandem and Dropbox, trucking companies are for the first time grappling with what ‘remote’ means for drivers that already operate in the field.
“When a truck driver makes a delivery, he often gets out of his cab and goes into a room to talk to the individual responsible for that unloading facility,” explains Jeff McCaig, owner of Trimac Transportation, the third largest tanker and dry bulk trucking company in North America. “We’re saying don’t do that, do it through the window, do it through your phone but avoid the contact.”
Remote technologies for industries like trucking need to be able to effectively bridge the physical and digital worlds. This means better communications technologies so trucking companies can do more with fewer field resources. It also means better connecting stakeholders so more planning and coordination can happen back at the office and less has to be done ad-hoc by drivers.
“Truck stops that have formerly been available to a driver as he goes on longer haul, some of them are closing down,” McCaig adds. “How do we make sure our drivers have places to rest, to eat and to use hygienic facilities?”
Autonomous technologies are also moving from nice to have to need to have. Trucking companies need options in the event that sick drivers are unable to work. A successful response to COVID-19 hinges on keeping supply chains functioning. We’re already allowing drivers to exceed federally mandated driving time limits in cases where they’re carrying medical supplies. It’s not infeasible to imagine autonomous trucks running some routes in areas where normal traffic has been prohibited.
“The most tactical and strategic issue for trucking is the availability of truck drivers,” explains Trevor Adey, vice president of Trimac Digital. “Truck driver is the largest employer in Canada and one of the largest in the U.S., but the role is not as appealing as it has been in the past.”
As trucking tech continues to grow hotter with recent rounds for companies like Convoy, Flock, Emerge, CloudTrucks and Ike (among many others), hundreds of new startups working on everything from autonomous trucks to digital carriers need to be thoughtful about how their operations and value propositions will evolve as COVID-19 reshapes the industry.
The next few weeks may appear bleak, with churn and sales cycles moving in the wrong direction. Fortunately, demand for trucking is nearly constant. There’s more than enough demand for food and pharmaceuticals to keep the industry humming. Many of the costs in trucking are variable, so while companies are seizing this opportunity to tighten their belts, it’s likely that trucking will emerge as one of the industries best equipped to ramp-up with technology coming out of this pandemic.
If you’re interested in learning more, check out the first episode of Future Proof which features both Jeff and Trevor from Trimac speaking at length about the themes presented above.
John Mannes is an investor at Basis Set Ventures, an early-stage venture capital fund in San Francisco focused on artificial intelligence and automation.
Dave
Luckily we had completely transformed ourselves in terms of tech over the last 2 years – with COVID-19 being the final kick in the pants for us where we were finally forced to change our phone system.
Now everything we use is totally cloud based (AscendTMS, Trucker Tools, Keep Truckin, QuickBooks online, Truckstop) and we ditched our old phone system for a new VOIP Internet phone system that is WAY better than the old system.
Now about 90% of our staff are working from home and all of them are HAPPIER working from home where they can look after their kids and not waste time commuting.
The next step for us is now getting rid of at least half the office space we will never need again. Everyone I know is doing the same thing. I sure wouldn’t want to be a landlord during these times. A lot of property owners will go under as they sit on office space nobody wants or needs after this.