Transforming the logistics value chain

Executive summary

Just as the arrival of the connected car is already changing how carmakers will operate in the future, the advent of the digital truck will completely transform how freight is transported on the world’s highways. Thanks to a combination of new technologies, trucks will move down the road guided by a wealth of information from transportation infrastructure and other vehicles, improving utilization through remote maintenance, increasing efficiency, and boosting safety. Eventually, these trucks will drive themselves, freeing up drivers to take on administrative tasks, and eventually doing away with them altogether.

These advances will have an equally profound effect on the entire logistics system. Trucks will become even more tightly integrated into the entire logistics chain, with the arrival of shipments to factories, warehouses, and end customers timed precisely, as all the players across the supply chain gain full transparency into the whereabouts of their goods. And ultimately, trucks will be able to communicate their contents and destination with other trucks and with technology platforms that will automatically match shipments with trucks with available space, rerouting them as necessary.

As these digitally enabled, cloud-based solutions come on line, they will rearrange how the logistics business operates, rendering obsolete old business models and enabling new ones. Some players, such as the truck makers, will look to offer increasingly sophisticated shipping solutions, taking over much of the territory now controlled by shipping companies and other logistics providers, as will many large end customers. Technology companies will try to enter the market as well, offering their own trucking and logistics platforms — and even, perhaps, their own trucks.

The promise of connected trucks combined with the digital supply chain is huge. But so are the risks for those players that don’t move now to begin building the capabilities and business models needed to win in this new world.

Further down the road

Imagine a world in which long caravans of large trucks travel in lockstep down major highways while each of the trucks automatically transmits its whereabouts, estimated time of arrival, and load information to its next stop. The warehouse system automatically assigns each truck to a loading dock, where several autonomous forklifts stand ready to unload it. Then they move the load on to another portion of the warehouse, where it is sorted by machine for local delivery routes and loaded onto the proper small autonomous electric trucks for final delivery.

This “digitized trucking,” and the logistics industry of which it is a part, is still at least a decade in the future, but parts of it are already being put in place — thanks largely to two major global trends that are transforming the trucking industry. First, efforts on the part of regulators around the world to manage climate change and to save energy and resources are forcing the industry to develop cleaner, more efficient trucks and optimize the use of heavy vehicles. Second, social and cultural changes are opening up new markets and increasing expectations for the efficiencies to be gained through autonomous vehicles and the digitized supply chain.

The effect of these trends isn’t just a matter of how trucks move down the highway, or how the global supply chain is managed. Rather, digitized trucking will transform how virtually every stakeholder in these linked businesses — original equipment manufacturers (OEMs), logistics companies, warehouses, and local delivery businesses — will operate. Some stakeholders will see a wide range of new business models open up, while others will likely struggle as their roles in the logistics chain are diminished.

And in the longer term, the trucking business will likely divide into two distinct markets. Emissions regulations, increased competition, big strides in connectivity, and coming disruptions in the entire logistics chain will primarily affect developed economies. In emerging markets, the issues will involve the need for more reliable and economical trucks, a growing interest in regulating emissions, and strong overall growth prospects, but not necessarily the development of digitized solutions. These distinctions will likely last into the foreseeable future.

In this report we focus on developed markets: how the forces behind the transformation of trucking will develop, and what that means for OEMs, trucking companies, and other logistics providers in the long run.

“Digitized trucking” is still at least a decade in the future, but parts of it are being put in place.

The era of digitized trucking

The radical transformation coming to the trucking and logistics industries over the next 10 or 15 years presents many risks but also opportunities for all the players in the business. For some, the risks will be so great that they will likely not survive. For others, success will depend on their ability to understand the opportunities available to them, and to build or buy the capabilities needed to aggressively pursue them. The real risk lies in failing to move forward.