A recent Gartner report1 predicts that by 2023, 50% of global product-centric enterprises will have invested in real-time transportation visibility platforms. We have already seen a significant shift in the demand for advanced GPS and telemetry solutions with our existing clients in the fleet industry. Add to that digitalisation, and rapidly evolving customer expectations and it’s quite clear why operators need to shift their thinking about managing their fleet operations.
We’ve asked our CEO, Justin Coetzee, and Head of Fleet, Prian Reddy, to share their insights about fleet technology solutions that will shape the logistics industry in 2022:
1. Supply chain visibility and transparency from end-to-end using IoT
Businesses globally are losing billions in revenue due to inefficient monitoring, tracking and end-to-end traceability along the supply chain.
The Internet of Things (IOT) is enabling the re-engineering of the entire supply chain process. IOT intelligently connects the physical (people, devices and sensors) and digital world (processes, data, devices and sensors), creating a layer called “infostructure”. The continuous measurement, collection and exchange of real-time data provides visibility into every process and transaction within the chain, allowing improvements to be identified and actioned directly and rapidly.
These technologies will revolutionise the way different actors in a supply chain capture, communicate, and access information on a secure, shared, and transparent platform. Digitalization leads to more digitalization in freight and logistics.
2. Digitised workflows and operational management of sub-contractors
In an industry where time is money, you want to streamline and reduce admin internally while keeping your workforce running smoothly. Gone are the days when sub-contractors are called via phone, and administration managed in an excel spreadsheet. That simply no longer scales.
With the proliferation of multi-modal logistics operations, collaboration and transparency is the key to success. Using technology solutions that enable working with sub-contractors in real time, streamlining processes and workflows to keep vehicles and goods moving, accessing accurate performance data and analytics, and providing better tools to connect the fleet manager and driver, will lead to operational efficiencies, increases in productivity and decreases in cost.
3. Urban-based distribution centres for on-demand ecommerce
As consumers become ever more accustomed to purchasing online, expectations about delivery service and speed have increased. Globally retail giants are buying or leasing warehouses in, or close to cities, to serve the growing demand. Rapid technology advances, such as telematics mapping, have enabled the urban logistics model.
Moving distribution centres closer to cities, leads to great efficiencies: shorter delivery times, removing the need for backroom storage, creating better customer experiences and building brand loyalty.
4. Logistics chains accurately reporting on reducing emissions
With the transport sector responsible for 25% of direct CO2 emissions, logistics companies can play their part in reaching the Sustainable Development Goals of 2030 by using better driving practices and technology. This includes driver behavior tracking, calculating least cost routing and waypoint clustering and optimisation. Ultimately this will lead to fuel savings, solving a huge operational pain point for logistics companies.
Cities around the world are also increasingly concerned about the amount of air pollution that people are exposed to. A move towards cleaner fuels and zero emission zones will become an urban characteristic of major cities in future. This will influence the fleet planning and execution of urban logistics by providing a new layer of optimisation to meet carbon footprint and air pollution legislation in cities.
5. Hydrogen mainstreaming for long-distance haulage and electric propulsion for short-distance and urban haulage
Many countries are investing heavily in hydrogen energy research as the world races to meet the legally binding carbon emissions reduction targets of the Paris Climate Change Agreement. The scientific consensus is that hydrogen fuel cells will be more efficient with regards to energy conversion than hydrogen combustion engines for vehicle propulsion. Both of these hydrogen alternatives have yet to reach efficiency parity, with renewable energy and battery electric storage alternatives. However, due to the unstable nature of the South African electricity grid and frequent load shedding due to demand stresses, battery electric alternatives are not a suitable option for road freight electrification at this time.
Green hydrogen (produced from the electrolysis of water using renewable energy) produces zero carbon dioxide emissions when used in fuel cells for vehicle propulsion. This technology has the potential to decarbonise the operations of long distance freight without the range anxiety that is associated with battery electric alternatives. This is due to the greater range associated with hydrogen fuel cell vehicles. Additionally, existing petroleum pipelines and refuelling stations can be repurposed to service the hydrogen fuel cell propulsion of road freight transport.
Whilst hydrogen fuel cells may be suitable for long-haul road freight transportation, first and last mile urban logistics have an operational nature which can be suitable for battery electric vehicles which often travel shorter distances and have frequent stops at distribution centres and retail branches, which could potentially support solar powered Direct Current (DC) charging facilities. The success of this approach will rely on private DC Charging stations and rooftop solar energy storage which is not dependent on the national grid.
6. Freight consolidation and optimisation
Freight Consolidation involves increasing load volume per shipment, to lower per unit shipping costs. The post pandemic eCommerce boom has resulted in retailers requiring smaller orders, delivered more frequently. This coupled with limited visibility between orders coming in, and routing and fulfilment planning, freight transportation planners face a real operational challenge.
Using computer vision, RFID tags, tracking telemetry and other IoT technology can result in greater supply chain visibility and enable data driven decisions in real time. Developing a real time digital twin of 3PL providers that can be used to match shippers who produce similar goods going to similar destinations and cluster deliveries such that loads can be shared in the most efficient way possible. In this way, trucks going to the same distribution center, retailer, or region, can combine compatible loads and thus pass savings over to all parties.
7. 5th Party Logistics
Most fleet operators have heard of the term 3rd Party logistics or 3PL, however the latest school of thought in logistics digitisation predicts that 5PL logistics is the future. This involves the complete digitisation, outsourcing and optimisation of the end to end logistics process. The road to 5PL logistics will be the battleground of the super aggregators. Online freight marketplaces, such as Linebooker, are already disrupting the way that shippers advertise and move their loads by aggregating the freight transport demand and allowing transporters to bid for loads in real time.
Larger 2PL logistics providers, such as Grain Carriers and MacDonald’s Transport, have quickly moved towards 3PL services by offering warehousing, consolidation and distribution services. These 3PL operators are quickly growing their operational footprint by aggregating transporter subcontractors in order to bid for more jobs and gain market share by leveraging brand value. This trend is increasing the need for accurate telemetry tracking and real time monitoring of subcontractor fleets. This will slowly evolve into the establishment of transporter super aggregators who will have a birds eye view of the entire logistics network. Such operational advantages will allow transporter super aggregators to outbid smaller logistics suppliers and control market pricing.
8. Multimodal freight integrations
An alternative solution to resolving the range anxiety of the freight trucking industry with regards to fleet electrification is the use of rail for long distance freight transport. The introduction of multimodal freight logistics creates an opportunity for efficiency creation at the break of bulk point between shipping, rail and road based trucking which operate at different levels of the logistics chain.
A multimodal freight trip planner which combines live tracking, container occupancy & load booking capabilities across multiple freight transport modes, with estimated time of delivery and real time monitoring functionalities can enable efficient freight load consolidation and smooth planning for the transfer between modes. Real time notifications linked to dynamic geofencing will become an important tool to monitor the safe transfer of loads as they pass from one mode of transport to another.
9. Charging / Refuelling as a Service
The zero emission energy transition within the freight and logistics industry creates the opportunity for a paradigm shift with regards to how fleet operators pay for the refuelling of their vehicles. Whether the industry chooses hydrogen fuel cells or battery electric vehicles to transition away from fossil fuels, there is a need to offer a refuelling or recharging service which can be billed monthly either as a fixed subscription service or pay as you use model.
This Charging or Refuelling as a service would consist of a dedicated Driver App which would inform drivers and or freight transport planners of the nearest hydrogen refuelling or battery charging station in close proximity, with routing and built-in gamification for loyal customers. The payment system would be cashless and frictionless with the possible use of Computer Vision and AI for number plate recognition and automated billing.
In a time of driver and trucking shortages, economic and regulatory uncertainty, reducing expenditure is vital for fleet managers and logistics providers. Increased operational visibility and efficiency can only contribute to cost-savings, and with the innovations in telematics technology, fleet management software, and the solutions we have described above, we are excited about what the future holds for our logistics clients.
Contact us if you need help with increasing visibility and transparency in your fleet management system, and future proofing your business with technology partners you can trust.