State of Readiness

A few months back Louise Yako, the British Columbia Trucking Association’s government affairs specialist and de facto convention organizer, called me up to ask what I knew about e-commerce and the trucking industry. I didn’t have to reach far for reference material-the press releases from dot-com startups spilled from pile at a corner of my desk usually reserved for an oversized road atlas and a thick three-ring binder with course materials from an old TFS Group owner-operator business skills workshop.

Dozens of Web startups are vying for chunks of the North American trucking and transportation market. It’s a market worth roughly $550 billion US in annual revenues, so it’s easy to see why some are backed by the biggest names in the game, like FedEx, Yellow Freight, and J.B. Hunt. If you’re hedging you bets on who will succeed in what will be a game of attrition, these folks have the financial and intellectual mettle to succeed.

The bigger issue is whether truckers are savvy enough to take advantage. The trucking industry suffers from a sort of technological bi-polar disorder. Electronic data exchange? Sure.

Sophisticated mobile communications systems? Sign us up. Electronic engine controls? No sweat. Management information systems? The buck stops there. Small and mid-sized companies still invest too much effort managing paperwork for tracking, shipping, billing, and international customs. The result is inefficiency, evidenced by an estimate I heard in April during a National Private Truck Council convention: that one mile in five is an empty mile.

The irony is that poor information management and a lack of connectivity create conditions that make start-up Web-based freight exchanges seem both so necessary and pointless at the same time.

I’m not talking about load-matching services or bulletin boards, which have been around for a long time and still require a carrier and shipper to strike their deal over the phone. I’m talking about shipment aggregators, tapped into IT systems and doing what 3PLs have been trying to do for years without the advent of the Internet. These are companies without any assets but promise to manage freight movement more quickly and better than any one carrier ever could.

I don’t think the market is ready for Internet-based consolidation and freight optimization across multiple modes-and then across multiple customers. First, the large shippers still have the leverage, and they still have contact with the big carriers. In peak season, they know they’ll have the volume they need without having to ask for help from an aggregator. Second, the smaller companies, which comprise the bulk of the trucking market, haven’t made the IT investment to take advantage of an online aggregator.

A sign of change comes from software developers who are working to simplify and lower the cost of fleet-management package. A good example comes from Louise Yako’s own backyard: Maddocks Systems in Langley, B.C., and Mississauga, Ont.-based Cancom Tracking Solutions have integrated Maddocks’s TruckMate for Windows software with Cancom’s satellite communications services. The result is a package that lets information currently entered by drivers and dispatchers to be captured, transferred via OmniTRACS, then updated automatically into Maddocks’ TruckMate for Windows dispatch system. Drivers can record 90% of dispatch events-from arrival at the shipper, to hours worked, and delivery of the load, cutting hours of entry and giving dispatchers more time to find backhauls and reduce empty miles. A novel thought.