Disrupt or Be Disrupted – Transportation

                                             the technology-driven global supply chain (or value chain, if you prefer)

                                            over the past generation has been one of the more astounding

                                           fundamentals, if relatively unnoted, achievements in the business world

by Roger Strukhoff

Before Elon Musk decided to smoke dope on a podcast and talk about his hard life, there were thousands of other people throughout the world working on improving the transportation business.

Disruption may be too strong a word in this space because transportation hasn't fundamentally changed since the days of the Silk Road. We still have to move stuff, a lot of it heavy stuff, often across continents and oceans.

But the creation of a technology-driven global supply chain (or value chain, if you prefer) over the past generation has been one of the more astounding fundamentals, if relatively unnoted, achievements in the business world.

It has enabled the hypergrowth of China's economy, strengthened South Korea's economy in equal measure, and kept Japan's economy alive during two decades of deflationary stagnation.

Freight Containers stacked in a port at night

Photo by frank mckenna on Unsplash

More than $2 Trillion in Play

The development of the modern transportation industry undermines the current bleating throughout the United States for the return of manufacturing jobs: if importing things wasn't so efficient, predictable, and relatively inexpensive then the vast importing ecosystem of the US would not exist.

But exist it does, with more than US$2 trillion imported on an annual basis. This represents about 15% of the US economy, not including the infrastructure investment and jobs created at ports and for train and trucking companies.

Big Dogs Eating Here

Transportation companies represent 89 of the Global 2000, and there are some really big dogs in this group: Maersk, Union Pacific, Fedex, and several major airlines. These companies still invest in major tangible items and buy a lot of oil. But their existence today is based on the quality of their information and the ability to manage it.

They also supply other big dogs: oil companies, automobile manufacturers, and Walmart, for example, a first mover in this space in the advent of RFID to track goods through domestic and global supply chains.

Connectivity and Autonomous

The next era is starting now: the twin focus for the transportation business in this era of digital transformation and disruption focuses on connected and autonomous vehicles. Autonomous vehicle programs are underway by most major car manufacturers, as well as the afore-mentioned Elon Musk's Tesla. There is also a famous beer truck that made a nice run, albeit with a human on-board just in case something were to go wrong.

Three trucks in the countryside on a divided highway, nose to tail.

The more immediate impact comes with connected, rather than fully autonomous, developments. The commercial trucking industry, to be sure, is gaining more connectivity. Commercial trucks maintain rigorous logs, which still often have manual processes that are prone to abuse.

A certain lack of trust among truckers and law enforcement also results in innumerable inspections and subsequent violations. Digitization is amending this screaming need through mandating of Electronic Log Devices (ELDs). Trucks needed to be equipped with ELDs by December 2017, and there's now a two-year period for compliance to be fully in place.

And Here Comes 5G

Additional connectivity is starting to come online through the expansion of 5G wireless connectivity. The slew of “Gs” in the wireless industry may have caused some among us to be unaware of how profound 5G might be.

It is not surprising to learn that “5G” is primarily a marketing term that conflates a large number of frequency ranges. At many of those frequencies, it provides incremental improvements in performance. But at the shorter (and thus, shorter-range) frequencies 5G will be able to deliver 20g service that can make close-to-real-time service available.

String a series of 5G transmitters along with a major highway and connected vehicles become more plausible. They can also be accessed to provide super-high-speed connectivity to more-modern manufacturing (ie, Industry 4.0) facilities.

I should note here that I'm personally part of an initiative in the Chicago area to do exactly this. It's a complex project that involves telcos, equipment manufacturers, manufacturing and transportation companies, and government entities from several levels.

Aside from cars and trucks, the potential of better bandwidth can also enable trains and aircraft to communicate real-time telemetry and dynamics to wherever they need to go.

The scale of operations in the transportation and logistics business is such that a fraction of a percentage point increase in efficiency – whether offloading a ship and getting its cargo rolling on rails more quickly, saving some miles on a sea route, saving fuel in the skies, or automating the trucking industry's tedious logging process – means savings in the millions of dollars. So they continue to grind.

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Roger Strukhoff is a co-founder of DXPlanet and Director of Enterprise Research at Altoros, Inc. He also serves as Conference Chair of Cloud Expo and Executive Director of the Tau Institute of Global ICT Research.

Connect with Roger Strukhoff on LinkedIn 

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