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Showing posts with label otto. Show all posts
Showing posts with label otto. Show all posts

Wednesday, August 24, 2016

The New Transportation Technology Ecosystem is Shaping

Developing the future is messy.  It always appears it cannot be done and individual technologies, when looked at in isolation, look like they will never work.  However, I submit this is short term and to borrow a Star Trek phrase, is "Two Dimensional thinking".  Let's think about this in "three dimensions - think about the ecosystem and the connection of this ecosystem.

Let's review some key technologies being developed or deployed now:

  1. Electronic logging
  2. In cab cameras that go beyond just filming but rather sends signals to centralized managers who make real time decisions.
  3. "Uber" type applications for booking, managing, and tracking freight
  4. Autonomous vehicles and the "Otto" type technologies. 
  5. On line immediate economy (hour type delivery)
All of these technologies have advocates and enemies when looked at in isolation. However, I submit that you have to think of this in "three dimensions"; you have to connect the dots. All of these technologies need to come together to build the infrastructure of the future for transportation.  They all point to one thing:  A driverless truck.

The core to this is the autonomous vehicle - which probably explains why Uber buys Otto.  But then, once this is solved, there are other things that have to come into place for this new ecosystem to work:  You have to book the freight easily (enter Uber), you will want to see what is happening (especially at delivery and pick up points) (enter cameras), you will need to track where the truck is and what it is doing (enter E-logging).  

The one thing I cannot figure out is how the truck will fuel and perhaps that leads to a futuristic truck stop which caters to the autonomous truck. Perhaps the biggest issue with this entire ecosystem is how will the truck stops like Pilot make money when there is no one to go into the C-Store to buy stuff.  

So, when you look at the entire ecosystem of the future, you can see it taking shape, albeit messy, with all the technologies being developed.  If you look at them in isolation, solving an old problem (i.e., Does E-Logging really solve driver logging or does it prepare us for having no driver?) then you will wonder "why do we need this".  If you look at them together, building the new transportation ecosystem, then you say, "Got it!".

Those who look at these developments individually make me think of Khan and his two dimensional thinking:


Will The On Demand Economy Work in For Hire Freight?

I recently read a very well written article in Trucks.com titled:  Will The Sharing Economy Disrupt Trucking, Transportation and logistics?  It covered the very common topic of the day which  is the "Uberization of trucking".  Will it work?  Can shippers get over the fear of people they do not know actually hauling their freight?  Will it be consistent enough for commercial customers?

All of these questions are great questions and I have always said that all the answer to these questions are simple:  Yes, it will be messy during the transition;  Yes, these issues will all be solved; and Yes, the ultimate solution will not look exactly like we think today but we will move more towards "Uber" than we will stay where we are.

I think this is generally the conclusion of the author however I disagree with him in one major aspect: He still thinks of logistics in isolation of everything else that is involved in getting products to market.  He says:
" But for all the speed and mobility an evolving new model like this brings, there are tried-and-true, iron-clad laws of physics, geography and time that need to be respected by newcomers to the industry."
This hints that the author thinks of the final delivery in isolation but in reality this is just one part of the overall cost.  For example, what if the lack of retail space, the lack of moving product between nodes in a distribution network saves significant dollars. Some of those dollars are reinvested in a higher cost "final mile" solution and some are retained:  The net new cost is less than the old cost.

Think of the significant advantage in cost/sqft on line retailers have relative to those who have to get high cost real estate in commercial locations.  The bottom line is there is a total cost to deliver product from the raw materials, through manufacturing, through distribution and the finally, delivered to the customer.  This cost has to be looked at in its entirety and you cannot just look at one element and say something will not work due to the cost of that one element.  If other costs are reduced or eliminated then perhaps that final mile cost can go up a bit.

Finally, don't think that this is a "law of physics" cost structure as this author thinks.  Once you say "law of physics" it becomes a discussion where one believes the costs cannot be mitigated:

Well, along comes Uber buying Otto.  And, that, as they say, changes everything!