FreightTech Trends: Accelerating the Transportation Industry
Transportation markets are becoming increasingly technology-driven due to COVID-Delta border regulations, tighter restrictions on goods’ safety, and growing demand for intermodal freight delivery.
ReportLinker mentions the global freight transportation market will reach $7.8 trillion by 2027. This market research stresses that in the coming years, we’ll face a global shift in the vision of freight technologies as demand for transportation agility increases, as does the creation of integrated logistics services accessible on demand.
- The market has become more and more challenging:
- Web-based retail channels are changing the nature of demand
- Personalization and customization of services is rising
- Growing investments in road infrastructure is pushing the efficient use of transit
These developments encourage logistics providers to innovate, accelerate digital transformation, and stay aligned with the latest freight tech market trends.
Freight Transportation Market Overview
In an overview on the GrandViewResearch website, “urbanization” and “communication innovations” are shown to be the key global factors amplifying the freight market by 2025. Substantial market growth is pushed by:
- Innovations in freight delivery processes
- New networks with secure contacts and speedy transaction times
- Demand for more reliable shipments that comply with international regulations
- Freight transportation revenue covers one-third of logistics costs, yet barely influences the logistical software system’s performance
- Local and small players hoping to compete in the global arena by using efficient high-tech freight transportation management systems (TMS)
- Clients trying to deliver freight on time at a lower price.
DataBridge, an e-science collaboration environment tool for big data analyses, performed research where they forecast freight market growth at a rate of 6.6% in the period of 2021 up to 2028.
Every transportation sector; air, truck, rail, ocean, and other grows – and this proves the growth of the entire freight industry.
For example, Allied Market Research evaluated the global air freight market at $270.2 billion in 2019 and its expected growth up to $376.8 billion in 2027 with a CAGR of 5.6%. This mode of transportation is evolving from the old mainframe systems to more adaptable interfaces utilized for flight operations management, revenue accounting, and networking planning.
Airfreight transportation providers offer charter, standard, deferred, and consolidated delivery options. The technological shift is more apparent in consolidated deliveries serving fast and efficient logistics with a full aircraft load at lower costs. The focus in this freight industry segment is on flexible transportation to meet specific customer’s needs.
The road freight transportation market is driven by the necessity to boost operational efficiency by a factor of freight tonnage expanding as well as by development shifts in the automotive industry (e.g., self-driving cars). The North American market is now projected to grow by $103.29 billion during 2021-2025 at a CAGR of 2.31%.
The global truck transport market seems to be even more dynamic and is expected to reach $215 billion in 2025 at a CAGR of 8%. We can explain this boost by the faсt that the industry has started to recover from the pandemic.
What encourages such high market growth and makes freight companies implement innovative technologies?
The necessity to cover wider markets and ship safely and quickly has pushed the freight industry to undergo some changes. Companies have started to empower their operations with smart technologies to be able to satisfy extraordinary demands and preserve customer loyalty. Let’s see some of the measures the global giants have taken to innovate and become technology-driven.
Lukas Neckermann, an expert, author, and speaker for the mobility revolution outlines that modern “zero” demands drive changes and make freight companies implement innovative technologies.
In his book, The Mobility Revolution, he identifies three zeros shaping the innovations:
- Demand for zero emissions to be sustainable and prevent pollution
- Zero accidents to deal with the transportation risks
- Zero ownership to optimize delivery costs
Companies have huge budgets for sustainable transportation. JBF said many of their customers have a $100+ million annual budget for transportation. Because of such large investments, they tend to buy and own transportation systems that are empowered by innovative technologies.
Mergers and Acquisitions
Over the last few years, we have seen partnerships forming in every facet of the transportations industry, including some mergers and acquisitions aimed at service innovation. TFI International, a North American leader in transportation and logistics, acquired nine companies during 2020 to expand its carrier capabilities and grow its network.
Penske Logistics completed a successful acquisition of Black Horse Carriers in 2020. As the President of Penske Logistics said in a release, they made it to deliver their services on a higher level through the improved use of technologies.
Overall, the freight market is traditionally fragmented, and as the managing director of Logisyn Advisors, Nikhil Sathe, says, this “fragmentation brings opportunities for consolidation.” In turn, this requires data reorganization and process merging. This can’t be smoothly done without the right technologies.
Migration to Cloud
Cloud computing has become a game-changer for the transportation industry, bringing opportunities such as on-demand service scalability, solid data protection, and significant cost reduction. Global giants understand the value of cloud technologies and are actively planning to move their operations to the cloud. This is one more tech challenge pushing organizations to innovate.
Ramond Coleman, former Senior Manager at Capgemini, says that the cloud is making transportation services more accessible to shippers and carriers and develops a “sandbox” for technology providers who search for building cloud-based supply networks.
In 2020, Uber Freight partnered with Cloud Logistics to scale the capabilities of their shippers. Uber Freight integrated Cloud Logistics Transportation Management System through APIs to enable the options of instant quote viewing, tendering shipments, and more. The integration with cloud-based TMS allowed Uber Freight to respond to market changes much faster than before. Why can’t others do that?
The quality of transportation services is growing from year to year. This urges providers to reconsider their approaches and find new technology-driven solutions to tackle specific demands and problems more effectively:
- JIT (just-in-time delivery) to increase customer satisfaction and loyalty
- Cold chain logistics applications to comply with the new vaccine regulations
- Self-driving vehicles to exclude the “human factor” in shipping, and more
Geotab, a commercial telematics provider, distinguishes three concepts in the future of freight transportation:
- Smart technology: Smart City Command Center will manage autonomous air taxis debuting in Qatar for the FIFA World Cup in 2022 – the Ehang184 innovative concept for 5G-connected urban air mobility
- Electrification to achieve a minimal impact on the planet
- Autonomy: AAVs (autonomous aerial vehicles), human-carrying drones designed for transporting, cut travel time by essentially being taken off congested roadways
These are only examples of technologies that are going to reshape the freight industry. Let’s see in detail what tech trends are forming the present and future of transportation.
Technology trends to help freight companies gain a competitive advantage and boost profits
The theory part of the “Future of The Transport Industry” report illustrates an overall profile of the innovation efforts performed both by the public and business sector as well correlation between innovation and competitiveness.
To gain bigger GDP, increase productivity, optimize employment, fulfill trade balances, cover new market shares, and boost turnover, companies follow a number of logistics industry trends which we identify below.
Edge Computing to Deal with Massive Volumes of Data
Carriers of all sizes are striving to achieve better control over their fleets, driver locations, and hours they spent driving. Unlike cloud computing, which helps gather data remotely and transmit it in a clear format for tracking your fleet in real-time, edge computing picks, processes, and analyses data at the point nearest to data origin.
New distributed edge computing architecture is focused on dealing with the telematics data within the vehicle cab no matter whether or not it’s located within the network with availability to a data connection. Using edge technology, companies can be sure data is picked and stored precisely and will be synchronized as soon as network and service become available.
Edge computing deals with an immense amount of data produced by autonomous vehicles. It’s calculated that one self-driving car produces about 30 terabytes of data per day, and on US roads alone, there are over 250 million cars. You can imagine what would happen if only 1% were replaced by the self-driven ones. The industry should be ready to cope with the burden of big data generated. Edge data centers play a significant role in serving extra computer power for performance-critical analytics near the end-user. According to Analyses Mason, we can expect that edge computing will reduce costs by 10-30%.
Nokia launched a MEC (multi-access edge computing) platform that promises latency below 20 ms, providing a flexible deployment model. They demonstrated how MEC technology can save lives during a 5GAA Connected and Automated Driving Workshop in Berlin. MEC-equipped cars receive warning about road obstacles in real-time as well as HD geo data is transmitted in milliseconds making driving safer.
Processing data is crucial for lowering risks, optimizing functionality, and making freight and fleet communications available everywhere. Edge computing deals with data while RPA is focused on the freight transportation processes (being another trendy technology in the future of logistics).
RPA for Smooth Freight Transportation Operations
In an analysis by the World Economic Forum and Accenture, researchers calculated $1.5 trillion of RPA market value and $2.4 trillion of RPA societal benefits in the freight industry. Robotic Processes Automation assists in:
- Scheduling and tracking shipments: reporting shipping details inside shipping portals and extract them out from the calls or emails to provide users with the details of the planned freight shipping.
- Processing invoices and credit collections: “getting paid after service delivery” is one of the biggest challenges, especially in 3PL logistics. RPA is able to automate the whole order-to-cash process.
- Capturing, researching, and closing out loads: third-party carriers provide endless opportunities for your business to grow, but at the same time, freight amount increase leads to a boost in the tracking data necessary to process. RPA can serve the needs of LTL (less-than-load) shipments and manage numerous freight deliveries.
- Automating order processing, mail communications, and payment transactions
- Speeding invoicing by integration with the customer portals
- Proving customer responsiveness via automated order tracking systems
According to the Institute for Robotic Process Automation, RPA can result in up to 50% cost savings. ICSM Australia summarizes on their website, “freight transportation supply chain is ripe for applying RPA to increase efficiencies and reduce costs.”
FedEx designed a self-collection service for the convenience and flexibility of their customer in Singapore. They implemented the services with the help of the RPA and FDMI (FedEx Delivery Manager International) platform, where users with a valid phone number or email can be joined to the nearest Park n Parcel collection point or BluPort, or Parcel Santa Locker. FDMI gives customers the possibility to choose or change location options in case they are not available for delivery. The fact that every customer will manage to receive location flexibly will contribute greatly not only to company freight delivery expenditures but to the reduction of carbon footprint and traffic congestion.
AIoT for Enhanced Freight Delivery Network Efficiency
Weather tracking fleet locations via edge computing, or freight delivery scheduling via RPA, interconnection of all the shipment participants in a transaction is crucial. This is where AIoT comes in handy. AIoT is an intersection of AI and the Internet of Things that comprises people and devices working together in a single edge network for enhancing AI real-time decision-making for better performance.
Information gathered from the devices participating in freight delivery and processing due to AI technologies is helpful for:
- Preventive maintenance
- Lower costs of energy (due to analyses of optimal fleet operations)
- Infrastructure optimization
- Driver compliance identification
- Fuel management
- Equipment reliability auditing
McKinsey estimates that the AIoT market by 2030 is worth potentially $5.4 trillion. And the fact that freight delivery giants implement these techniques proves its popularity.
DHL established smart warehousing options using AIoT with temperature-controlled facilities, dedicated and shared operations, and the first robot-picking cell to tackle the problem of “man’s hands” errors. DHL appreciates AIoT technology for its asset utilization opportunities, increase in agility, and automation of repetitive processes.
Blockchain To Simplify Cross-Border Shipping
Freight companies perform numerous transactional, operational, and interactional processes on a daily basis. In 2017, 500 members from 25 countries established BiTA (Blockchain in Transport Alliance) to drive the adoption of blockchain technology in the freight transportation industry. It deals with the challenges of transport payments safety, freight monitoring, and shipping quality control as well as transparency and trust throughout the supply chain.
A decentralized distributed digital-based ledger tracks the transactional flows and data in blocks across the whole network. Records can be displayed for everyone anywhere, and new blocks are created every time a new transaction occurs. Blockchain deals with keys and hashes: a key gives access to a certain part of the contract while a hash algorithm turns any amount of new data into the hash.
The Blockchain Transport Alliance (BiTA) was created as a reflection of blockchain importance for the global freight circulating. The Alliance has 500 members in 25 countries, collectively generating $1 trillion in profit. They appreciate blockchain technology for:
- Operational security
- Smart contracts
- Transaction privacy
- Secure records storing
- Connecting information blocks into a single network available for every user
Big Data As a Background for Any Other Technology Implementation
Xeneta, a leading ocean and air freight rating platform, describes Big Data as a piece of traditional (fuel costs, transit times, insurance issues) and non-traditional (changeable data, e.g., GPS alerts about closed route road or RFID metrics) information. They emphasize big data as being extremely important for decision-making in freight transportation. Key uses of freight big data are analytics for shipowners, data engineering, vessel performance management, and fleet situational management.
Here are some key application areas for big data:
- Bartering: the main charter’s function is to provide the most economical shipping for freight. The more information variables will be available both for the carrier and for the shipowners (ETA, vessel specification, market information, load size), the more easily they can match the best freight transportation deal. AIS (automatic identification system) is utilized to unite and integrate big data.
- Operations: operating a vehicle at an optimum speed and fuel consumption is crucial, but it depends on the particular car and its maintenance level. Big data processing can help choose the optimum operational mode.
- Voyage operations: tracking any voyage performance-sensitive data (ETA, speed, weather, route changes, etc.) is helpful to stay profitable under variable conditions.
- Vetting: getting feedback from the entities (inspectors, terminals, port authorities) to keep track of the vehicle state.
UPS has applied the ORION (On-Road Integrated Optimization and Navigation) algorithm for big data processing, able to deal with 1 billion data points per day. It has already built numerous routes for more than 55,000 drivers in the US, saving 100 million miles per year.
Prescriptive Shipping to Effectively Manage Risks
Effective freight management is always about huge amounts of data. Thus, carriers have access to real-time data and need to analyze it to forecast necessary steps to fulfill the delivery at its best rate.
Prescriptive shipping is one of the ways carriers can eliminate risks or at least anticipate them.
Amazon patented “anticipatory shipping,” which involves moving the products toward the customers even before they have purchased them. They planned to do this via machine learning (ML): analyzing customer big data and send the items they were likely to buy. Amazon has shared some steps to utilize prescriptive shipping successfully:
- Ensure organizational readiness
- Secure executive buy-in
- Test, learn, retest, relearn
- Ensure operational capacities
Amazon’s transportation mantra is “Data is power.” You can pay attention to how often their page with “Related Items” or “Inspired by your browsing history” changes. Where anticipatory shipping is concerned, Amazon is committed to prescriptive big data analytics.
Autonomous Vehicles: Transfer Hub Model
Deloitte notes that eight startups raised $1.4 billion for self-driving vehicles initiatives in 2020. They developed a scenario planning model to describe how autonomous trucking will cover the freight market.
While speaking about autonomous trucks moving from A to B point, many specialists refer to the transfer hub model as increasing technical feasibility. This autonomous vehicle (AV) transportation is focused on the following concept: deploying drivers in congested urban environments (humans located in the hubs are responsible for local street driving to minimize risks). They drive AVs throughout the city area toward the hubs, and then driverless cars reach the next hub, following a special route.
The benefits of AVs are obvious: decreased human factor influence, minimized risks, reduced administrative running costs; the route will follow an optimum speed level, which eases ETA and ATA metrics balance.
All technologies in freight transportation are interconnected: AIoT catches device data, analyses it to turn into qualitative big data for decision making, and prescriptive shipping utilizes big data analyses to predict route metrics variables. They all contribute to the digital transformation of the freight market to make companies stay competitive and profitable.
Summing up: what technologies drive the freight market
All tech trends in the freight transportation industry are focused on mobility, ownership cost reduction, and sustainability. Under the growing freight market, it’s crucial to stay competitive by applying RPA for operations efficiency, edge computing for safer and easily accessible delivery fleets, AIoT for establishing interconnected united delivery networks, prescriptive shipping for better freight management, and autonomous vehicles to speed up freight dispatching as well as human risks reduction.
Market leaders in the freight industry utilize technologies for generating profits alongside staying socially responsible and sustainable:
- DHL announced its plans to build the first all-electric air cargo network. To address the global climate crisis and go sustainable, they bought twelve electric Alice planes to create a zero-emission fleet.
- Precision Software and FedEx partnered to join the Blockchain in Transport Alliance to optimize freight shipping. And if you were to buy a skincare gift for your mother in South Korea, order it to Atlanta with a long way traveling to your doors, blockchain is a perfect solution to record and store every data detail about your order: price, shipping date, expected date of arrival, returns. The parcel travels across the ocean contained with a number of the other goods, and there’s a lot of points sensitive for fraud (payment transaction, shipping procedure), and blockchain can cope with this issue as well. Information is stored in segments, not in a centralized way, allowing access only to the part of it.
- Amazon developed SageMaker, a fully managed service enabling every developer to design, deploy, and train ML models to predict the arrival time of vessels. They were prompted to create SageMaker because one of the biggest freight delivery challenges is balancing ETA (estimated time of arrival) and ATA (actual time of arrival).
- Einride unveiled new driverless vehicles for autonomous freight hauling. Rio Tinto’s 416-ton trucks are hauling raw materials around Australia. Uber bought self-driving fleet company Otto and is perfecting the technology right now. All these giants are aware of mobility and how autonomous vehicles will drive future transportation changes.
FreightTech trends are about anticipating and meeting the industry’s technological challenges head on, such as embracing global visibility, providing real-time data aggregation, and processing freight transportation data. Software development companies contribute to the democratization and innovation of the transportation industry for future growth and sustainability. Innovecs is a prime example of how digital expertise can enhance operational productivity in the logistics sector in the age of digital transformation.