Today, the transportation and logistics industry is grossly inefficient, overpriced, carriers make low returns and freight is the only industry whose carbon footprint is still rising. In our interview, Brian Bolam, an entrepreneur, founder and a supply chain visionary explains how machine-to-machine (M2M) technology is the key to enable the industry to manage its fleet, efficiency, and to provide visibility and connectivity in a way that can dramatically improve the performance, so shippers can get lower prices, carriers can get better margins and the economy can benefit overall from lower emissions and congestion.
How can logistic companies benefit using M2M technology in their day-to-day business operations?
They can be used enormously, for example shippers can get lower costs (they are paying too much as a result of the industries’ inefficiencies) and they can get much better visibility through freight matching and track and trace – which means they can run lower inventory levels because they can take into account goods in transit as long as they know when they are going to arrive.
From a carrier perspective, they can get much higher asset utilization, the asset utilization is currently appallingly low and that is the reason for such small profits. Hence, carriers can get around 200 to 300 percent improvement in their margins by using M2M technology in order to match supply and demand and track and trace assets.
There is also a big problem worldwide or at least in UK, Europe and the US – driver shortages. Trucks are driving empty around 30 percent of the time. So, there is a huge opportunity by increasing visibility and in matching supply and demand to much better use the existing fleet and drivers, thereby mitigating heavily against the driver shortage.
How will M2M technology support the fleet management?
This is probably the most advanced area in the industry as many companies are using GPS in particular to monitor engine performance, tire performance and real-time feedback of vehicle performance which facilitates planned preventative maintenance, so that vehicles do not fail often and are running more efficiently, thus improving the return on assets.
The greater the use of telematics across the industry, the greater will become the reliability of fleet management and the better return on assets companies will make. Doing so, there are no barriers, however it costs money, but the general perception is that the return on investment is about 6 months. So, there should be absolutely no reason for companies not to adopt the use of technology to manage their fleets.
What kind of impact do M2M technologies have on the environment and the infrastructure?
One of the biggest problems faced by the industry is that vehicles are running empty around 30 percent of the time causing enormous amount of emissions and congestion. The target is to reduce empty running by 40 percent and that is eminently achievable. Additionally, it provides the benefit of utilizing the built infrastructure much more efficiently.
Freight traffic is expected to increase by 40 percent between now and 2040 and is absolutely no way that it is affordable or viable to build enough infrastructure to handle that sort of growth.
The solution is make most out of the existing infrastructure and this can be achieved by making sure that as many vehicles as possible run full in both directions. This is a huge opportunity for M2M technology to provide visibility, connectivity and matching capability in order to make sure that all existing vehicles are used in the most efficient way possible, thereby reducing empty running and enabling intermodal interchanges, so, that rail can become much more viable alternative both in UK and across continental Europe.
One of the biggest reasons why companies do not use rail is either they do not have the capacity to buy a block train or full train which is what most of the rail companies sell. There are insufficient intermodal interchanges that move from rail to road, which means that companies opt for road solutions which is five times more polluting and about the same price.
The big opportunity is to make much better use of the existing fleet in the marketplace and the existing built infrastructure to maximize modal shift from road to rail and coastal shipping with dramatic reduction in emissions and the only really required infrastructure is to build more intermodal interchanges and secure compounds across Europe.
To sum things up, all the issues mentioned above are being addressed and it is only a matter of time for companies to adapt to the new technology which is much more objective as oppose to the current market which is highly subjective. So, there is massive opportunity and it is machine-to-machine technology that will facilitate it, thereby dramatically improving the reputation of the logistics industry.
Do you think M2M technologies will address the challenges faced by the transportation and logistics industry? If yes or no, tell us your reasons for the choice in the comment section
Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward.