How digitalisation can increase profit in logistics
In a recent PWC survey, 54% of the companies surveyed in transport and logistics expected that digitalisation would increase their revenues. What does “digitalisation” mean in terms of road freight transport? Where are the opportunities for using it to increase revenues and profitability? How digital is your trailer fleet? Step into the world of the ‘logistics nerds’.
What is digitalisation?
IoT, machine/predictive learning and AI are the digital technologies that the media refers to in relation to the transport and digitalisation. Digitalmag says that these technologies underpin new ways to:
- track and analyse shipment patterns
- anticipate demand and enhance customer satisfaction
- improve maintenance visibility to reduce repairs and downtime
- enhance operator retention.
Digitalisation – a key trend
In its CEE Transport & Logistics Trend Book 2019, PWC identified “digitalisation” as one of the five forces reshaping transport and logistics in addition to “shifts in international trade”, “software-driven process changes”, “changes in markets’ domestic commerce” and “machine-driven process changes”. PWC expects digitalisation to be the most impactful trend over the next few years, radically transforming the transport industry.
Digitalisation enables fleet managers to receive more data about their fleet operations whether through sensors on their vehicles, RFID tags on cargo, predictive analytics or telematics and use this information to improve their business processes and performance and increase profitability.
The growth of ecommerce has led to corporate customers pressurising transport fleets to deliver packages over the “last mile” with increasing efficiency. The Economist attributed breakthroughs in this area to data digitalisation. “Though today’s talk is all of delivery drones and driverless vans, the key to this transformation has not been new equipment but new ways of handling data: knowing where hundreds of millions of things are and where they are going and being able to act on that data as things change.”
The following examples illustrate how digitalisation can make a big impact on road freight transport.
Predictive maintenance analyses historic and real-time data relayed from sensors about wear and tear on mechanical and physical components of trailers and trucks to help fleet managers bring in vehicles for maintenance and repair before unexpected and costly roadside breakdowns occur. The global predictive maintenance market is expected to grow by 37% per year between 2018 and 2022 reaching over 10.9 billion USD in 2022. (source: PWC)
Digital data storage and sharing
This is an area that the IRU (the World Road Transport Organisation) is championing. Road freight transport fleets and logistics companies process a significant amount of paper documents to enable deliveries to take place. Digitising data storage and sharing are fundamental to improving supply chain efficiency. There are several areas that are prime candidates for digitisation.
CMR consignment notes are essential documents for delivering across borders. There are 150-200 million paper-based CMRs in use annually in Europe for international transactions. The IRU has calculated that the digitisation of these paper-based CMRs could reduce current handling and processing time by up to 44% and costs by around 3 Euros per paper CMR. Similar savings apply to digitising TIR and other transport documents. (source: IRU)
The environmental benefits are also significant. For example, BLG Logistics, a multi-modal logistics company, has developed a digital transport document system Logbird. Based on the 257.7 million journeys undertaken by German road haulage companies in 2016 which would have required 9 pages of paperwork (2.319 billion pages), digitising them with Logbird would have saved 23,500 spruce trees and 604.2 million litres of water needed for paper production.
This European project connects emergency alerts (eCalls) to real-time data sources such as e-CMR services to brief emergency services about the exact location and type of truck and cargo involved in an accident.
Digital freight brokerage platforms
Another area where digitalisation delivers benefits to a range of participants in the supply chain including road freight transport companies is the digital “freight brokerage platform”. These platforms provide information to match owners of goods looking to ship cargo on a specific route with transporters with spare shipping capacity and vice-versa, in real-time. Traditionally, accessing this information, when paper-based, by phone and fax was hard. It is a service with great potential. The Economist informs us, for example, that “America’s lorries travel empty more than a quarter of the time: the wasted capacity is equivalent to 200,000 lorries travelling 1,000km per day”.
Making a compelling case for the digital freight brokerage platform is YMM, an online Chinese freight brokerage platform. It has registered 850,000 cargo owners and 3.9m drivers of heavy trucks on its platform and claims that it has reduced the average time for finding cargo capacity from 2.27 days to 0.38 days. (source: IRU)
PWC believes that another digital technology, blockchain, a digital record of transactions and other “distributed ledger technologies” will have a “moderate influence on all transport and logistics segments, with effects visible in 3 years’ time at minimum”. Companies believe that blockchain solutions enable them “to create “internally robust, transparent and secure systems that allow them to deliver service levels at a lower cost.” (source: PWC)
TIP and digitalisation
With over 50 years’ experience in the trailer rental and maintenance business, TIP Trailer Services can help you install and operate digital solutions to enable you to maximise profitability from your trailer fleet.
TIP leasing and rental
With a transport fleet of over 68,000 units, TIP is one of Europe’s largest transport equipment rental and leasing companies. It offers fleet managers the ability to meet flexible demand for trailers.
TIP can provide maintenance and repair programmes run from its network of 84 trailer workshops across Europe. It also operates a 24/7 pan European roadside assistance service, designed to get your trailers back on the road as soon as possible in the event of a breakdown.
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