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Home » Blogs » Think Tank » New Tech May Be Eroding Trust in the Freight Industry

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New Tech May Be Eroding Trust in the Freight Industry

New Tech May Be Eroding Trust in the Freight Industry
October 24, 2019
Ashik Karim, SCB Contributor

Some call it an apocalypse. Others a bloodbath.

Whatever you call it, things aren’t looking good in the freight industry, where companies shutting down is now a daily event rather than something that only happens a few times a year. In fact, while the rest of the country is just now ringing alarm bells, truckers, shippers, and carriers have been using the term “recession” for months.

At first, it was just smaller carriers shuttering. Then names like New England Motor Freight started popping up on the ever-growing list of companies that have closed their doors this year.

Blame it on the trade war, on signals of a wider economic recession, on whatever you want: the bottom line is that things are bad, and might get worse.

At the same time, Silicon Valley clearly thinks logistics is an industry ripe for cost-saving technology to come in and save the day. Why else would Convoy, just one example of many, be valued at $1 billion?

The gap has never been greater between how the industry is viewed by investors with money to spend and the people actually working on the ground. Those who seek out risky endeavors have found an industry that is justifiably risk-averse. Such disparity highlights the fact that no amount of new technology matters if it doesn’t take into account a business’s most valuable asset: its relationships.

Recently, a carrier executive related how his company had to shell out nearly $4 million in detention fees last year alone. That’s something I hear all the time, whether it’s detention, late arrival or unloading fees.

It’s a seemingly simple problem with a seemingly simple solution, one that can be found in new technology. But while the barrier to entry for tech has been lowered, that development has become part of the problem.

Five years ago, it would have been cost-prohibitive for many freight companies to consider investing in new technology, no matter how much it would save them in the long run. Today, that’s no longer the case. The tech is cheaper and easier to get than ever before. And there is no shortage of people trying to sell it as a quick fix.

That has led to an influx of options that are doing more harm than good. With more choice comes the imperative to spend more time analyzing options. And clearly that’s time many carriers don’t have.

Some recent tech has actually eroded trust between partners. Take electronic logging devices (ELDs). Everyone has to have them, but with their arrival, we’ve also seen the potential for data manipulation.

At a recent industry conference, I counted at least 120 new logistics startups. How can any carrier who’s fighting for its life right now spend the time and resources to parse out which of those options is the right one? How can it know which is going to deliver on the promise of cutting costs and providing much-needed relief to the business? And can how can it be assured that this new tech won’t be a headache for the customers who keep it afloat?

We are spoiled for choice, at a time when what everyone needs is fewer, better enterprise-strength options.

The logistics lead for a prominent fast-food chain recently told me that he can find out where his spouse is simply by looking at his smartphone. Yet he has to spend hours tied up on the phone tracking down where his trucks are. Surely among those 120 companies, someone has the technology that can make tracking his trucks a painless, user-friendly experience. But how will he ever find them, and how will he know he can trust them once he does?

The answer is to look beyond the technology.

Companies feeling the pains of the freight recession need to look at the people who are building the products that are being pitched as their salvation. Do they actually understand freight, or are they simply coming out of Silicon Valley eyeing the next industry to disrupt? When they arrive touting huge partnerships, is that actually a good thing for your company, or is it merely good marketing?

If you’re a smaller player with huge clients to attend to, you’re never going to influence their roadmap. But if you find the right fit, you’ll have a better chance of working with them to tailor technology that will solve your specific needs.

Chances are you’re already working with fragmented systems that you’ve pieced together for years or even decades. You end up taking data out of all these systems to be manipulated manually in spreadsheets. They work for now, and it’s scary to change. But most existing tech solving only one piece of the puzzle.

Whomever you choose to work with should demonstrate the capability to solve your problems, a willingness to adjust their product roadmap to meet your needs, or the ability to bring in additional partners to create a seamless experience.

Anyone can build an app, but not everyone can understand the intricacies of an industry that is massively complex by its very nature. To get logistics right, start with the people who are working for you, and work from there.

Ashik Karim is CEO of LiteLink Technologies.

Technology Sourcing/Procurement/SRM Supply Chain Planning & Optimization Quality & Metrics

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