Convoy, the darling digital broker that promised to disrupt the supply chain, has closed its doors. It looks like eliminating the middle man isn’t as easy in trucking as it has been in other sectors.
Travel agents, hotels, taxis — there are many examples of technology upending how we do business and even wiping out entire industries. It only made sense that trucking would be on Silicon Valley’s hit list sooner or later.
The freight recession and the drying up of capital markets had a lot to do with Convoy’s demise. But there’s more to it than that.
The business model is flawed.
If you know anything about trucking, you know that completely digitizing the process of finding a truck, booking a load and managing that shipment end to end is ludicrous. It might work in a petri dish, but the idea is impossible to implement on any scale.
You know why?
You can have all the tech and engineering talent in the world, but you still have to broker freight. You need the expertise, commitment and good judgment to solve trucking problems at a human level.
Time to catch up with some of the other technological advances that people are talking about. Their development (or lack thereof) indicates that our conventional trucking model is here to stay for the foreseeable future.
No freight brokers
Two years ago, when Musk, Bezos and the U2 boys were betting on Convoy, I was doing the opposite. I invested in a traditional freight broker.
Why buck the trend? Because freight brokers aren’t going anywhere. In fact, I think the sector has huge upside.
Shippers rely more on third parties than ever as a percentage of their transportation spend to manage their growing supply chain complexities.
The face of trucking is also changing. Newcomer carriers have fueled the growth of the spot market. More communication is required to dispatch loads in the transactional freight world. Static pricing is going the way of the dodo bird.
Last I checked, computers can’t solve customers’ problems.
At every conference, I get asked the same question: “When will technology replace truck drivers?” No doubt, they’re working on it.
First-level autonomy or platooning is nearly a reality. That’s where two trucks with drivers, linked electronically, can in essence draft down the highway, saving fuel.
Level 2 gets really fun. That’s where one driver drafts multiple trailers with no drivers. But hold on a minute. How are these trucks going to get on and off the highway? Where is the driver going to park the “convoy” when it’s time to take a dump?
The platooning concept has been around since the 1990s and here we are, 30 years later. Technology is not very good if it cannot be implemented.
Electric trucks are a reality. There are plenty of feel-good stories of private fleets deploying them to reduce their carbon footprint. But what kind of dent will plug-in trucks make in the diesel market?
Diesel trucks cost $200K. You can fuel them up in 15 minutes to travel 1,900 km. On the other hand, electric trucks cost $450K and take 10 hours to fuel to travel 400 km.
Two 8,000-pound batteries add weight at the expense of payload. It means more trucks on the road to move the same amount of freight. That’s almost counterintuitive!
The reality of charging electric vehicles came right from the horse’s mouth when Ford CEO Jim Farley called his cross-country trip in an electric F-150 Lighting a “reality” check.
He tweeted (what else do you call it?) on X, “Charging has been pretty challenging.”
I moderated a panel discussion on blockchain in 2018. At the time, our industry had “shiny toy syndrome” over it.
Technology consulting firm Capgemini predicted that, by 2025, blockchain will “supercharge” and underpin global supply chains. That’s a mere 13 months from now!
When I reflect on the hundreds of trucking companies whose hoods we have looked under since then at Left Lane, blockchain has not come up in one conversation. Your guess is as good as mine if and when it will have any impact on the trucking industry.
Right now, the money is on artificial intelligence. Elon Musk believes AI has the “potential to become the most disruptive force in history. It will be able to do everything.”
I am not betting against Elon this time.
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