Future Freight Flows: Poten1al Trends – Near and Farctl.mit.edu/sites/ctl.mit.edu/files/attachments/tab 13 Caplice_FutureFreightFlows...Future Freight Flows: Poten1al Trends –

MIT Center for Transportation & Logistics ctl.mit.edu

FutureFreightFlows:Poten1alTrends–NearandFar

Chris Caplice ([email protected]) Director, MIT FreightLab

20 January 2017

MIT Center for Transportation & Logistics

FreightTransporta1onPlanningisHard.•  Hardforshippers,•  Harderforcarriers,•  Hardestforgovernmentplanners!

n Infrastructureplanning1meframeisdecadesn Diverseandvocalcons1tuents(NIMBY,BANANA)n Palletsdon’tvoten Bothmodalandjurisdic1onalsilosn Revenuesourcesaredecreasingdrama1callyn Removedfromthesystemusers

These challenges were recognized by AASHTO and USDOT – resulting in the Future Freight Flows project.


TheFutureFreightFlowsProject


FFFProjectObjec1ves&Deliverables•  TwoObjec1ves:

n “Providedecisionmakers[stateDOTs]withacri1caldrivingforcesbehindhigh-impacteconomicchangesandbusinesssourcingpaTernsthatmayeffecttheUSfreighttransporta1onsystem[intheyear2030&beyond].”

n “BeTerenableinformeddiscussionsofna1onal,mul1-state,state,andregionalfreightpolicyandsysteminvestmentpriori1es.

•  ThreeDeliverables:n AnalysisofDrivingForcesn FutureScenariosn ToolkitforrunningaFutureFreightFlowWorkshops


So many potential futures, so little time . . .

5


FFF Thought Leaders

Candidate Forces& Uncertainties

12 Snapshot Scenarios

Brainstorming Session

Prioritization Workshop

Expert Practitioners

Analyze, Harmonize and Merge

Future Freight Flows Symposium

Stress maps Flow Impacts

Influence Matrices

Analyze and Merge

Freight Stakeholders

20 Candidate Forces

Distribute Survey

264 complete and usable responses

Stakeholders Survey

Scenario Generation

Identify key driving forces

Two structuring axes Develop

storylines Potential storylines

Test and Refine storylines

4 scenario skeletons Finalize scenarios

4 scenarios

MIT CTL Team

Supply chain professionals

Phase 1

Phase 2


Strategyvs.FactorsvsForces

7

•  Strategyn  Thingsyoucontroln  Solu1ons&approaches

•  Factors(“Inside-out”)n  Youcannotcontroln  Youmaybeabletoinfluencen  Directandobviouseffects

•  Forces(“Outside-in”)n  Youcannotcontroln  Youcannotinfluencen  Indirect,ambiguous&unknowneffects

A scenario is a set of driving forces


Key Drivers 1. Global Trade 2. Resource Availability


FourFutureFreightFlowScenarios


•  DigitalFreightMatching•  Transporta1onManagementSystems•  MobileCommunica1on•  AutonomousTrucks

now +20years+5years+1year +10years


DigitalFreightMatching


UberforX


WhynotUberforFreight?


Over $500M invested in these 67 start ups



Thelast1meVCsthoughtfreightwassexy... >200 Transportation Electronic Marketplaces existed in 1999,

but essentially none survived in their original form.


Thelast1meVCsthoughtfreightwassexy...

Source:Boyle,Marc(2000)Business-to-BusinessMarketplacesforFreightTransporta7on


Most Recent Real Disruption?

Source: AAR and ATA

50.0$

60.0$

70.0$

80.0$

90.0$

100.0$

110.0$

1980$1982$1984$1986$1988$1990$1992$1994$1996$1998$2000$2002$2004$2006$2008$2010$

IndexofRevenueperMileforUS.TruckinginReal$

Deregulation


Case of Rapid Change: Deregulation

Bifurcation of US Trucking Market

Source: Parming 2013

Predominant LTL

Predominant TL

Hybrid


DoestheUbermodelfit?

•  Whatdowedowhenweuber?1.  ContactasinglesourcethroughanApp2.  “Real1me”visibilityofnearbyvehicles3.  Matchedtooneofmul1pleunderlyingproviders4.  Paymenthandledoffline,es1matedinadvance5.  Pricingvariesbasedonsurging

IsUberjustFreightBrokerageforPassengers?


HowdotheMarketsCompare?PAX FRGT

CompeDDveMarket LocalMonopolies(taxis)

HighlyCompe11ve

NewCapacity Untapped/Part-Time NoneBusinessType C2C B2BServiceTypes Limited UnlimitedFrequencyofUse Occasional Repe11vePlanningLeadTime 0min 1-3DaysLengthofHaul VeryShort

(~6miles)MuchLonger(500miles+)

LoadingTime ~30seconds >1hourAsset/DriverType PersonalVehicle CommercialVehicle

Par1allyadaptedfromSa1shJindal(2016)


Transporta1onPoroolioCon1nuum•  Differentnetworksegmentsrequiredifferentrela1onships•  Segmenta1onofnetworkandcarriersbyneeds•  Con1nuumfromone-offtransac1onstoownership

n OwnershipofAssetsversusControlofAssetsn Responsibilityforu1liza1onn On-goingcommitment/responsibili1esn SharedRisk/Reward–Flexiblecontracts

Private Fleet

Spot Market

Dedicated Fleet

Core Carriers

Alternate Carriers

Use for most reliable and steady flows

Use for random & distressed traffic


ProposedvaluetobeTermatching

•  Improvedvehicleu1liza1onn Es1matesinUS10%-30%emptymilesn Differsbylengthofhaul&carriersize

•  Reducedtransac1onalinefficiencies(fric1on)n Streamlinematching,payment,no1fica1on,visibility,etc.

n Doesvisibilityofnearbytrucksaddvaluetoashipper?


MyTake-Awayson“UberforFreight”•  Moststartupsinthisspacehatethename!•  Somestartupsdohavehaveimprovedfunc1onality...

n Evolu1onarymorethanrevolu1onary,n Servingtoincreasecustomerexpecta1ons,butn Worthwhilefunc1onalityisbeingincorporatedwithinTMSorbrokers.

•  Demiseofbrokershasbeengreatlyexaggerated(again)n Middleman’sroleisgrowing,notbeingdiminishedn Promised“twoparty”transac1onsarereally“threeparty”n Poten1alconsolida1oninbrokeragespace–strongeconomiesofscale

•  Areaforfit:Localreal-1me,on-demanddelivery


Begsabiggerques1on...

ContractRate

SpotRate

Transporta1o

nRa

te($

/mile)

1me

Ifspotmarketwastotallyliquidandreliable,woulditleadtotheendofannualcontracts?


TMSTrends


Gartner’sMagicQuadrantforTMS

Excel, Phone & Fax!


LatestTMSTrends•  ConvergenceofSystems

n  BridgingFunc1onsw  Connec1ngtoWMS,OMS,IMS,etc.w  Fixnginend-to-endsolu1onsw  GrowthofSupplyChainPlaoorms

n  Connec1nggapbetweenplanning&execu1onw  Integra1ngreal-1mestatusintoexecu1onw  Feedingexecu1onresultsbackintoplanningw  Procurementtriggering(marketvs.schedulebased)

•  Evolu1onofDeploymentn  Finallyflippedfromself-hostedtoremotehostedn  Longevolu1on:ASPtoSaaStoCloudn  Differentflavorsofremotehos1ngn  Fasterupgradesandrolloutofimprovements


MyTakeAwaysforTMSs•  Thedecisionfortheshipperhasnotchanged,

n StandardprocessesversusCompe11veadvantagen ERPoff-the-shelfversusBestofBreed

•  Thespeedofimplementa1oniss1llaproblem,n Gexngfaster(forvanillainstall)n Connec1ngcarriersiss1llthe1mesinkn Nostandardiza1onofformatordata

•  MosthaveDigitalFreightMatchinganyway!n Privatemarketplacesn Dynamicandadap1vecarrierselec1on


Example:CarrierSelec1onwith AutomatedEscala1on

Carrier

Accept?

OrderManagement

System

Load

No tLT>tMIN?

SelectAppropriate:(1)CarrierGroup&

(2)ClearingMechanism

No

Yes

CarrierCarrierCarrier

Offer

Response(s) OK?

Yes

Done

SelectCarrierfromRou1ngGuide

Tender

Tender

Yes

No

Transporta1onManagementSystem


Num

ber o

f Car

riers

R

ange of Pricing

Primary

Step 1

Lane Backup

Step 2 Step 4

All Relevant Company Carriers

(Dynamic Prices)

All Relevant Company Carriers (Quoted Rates)

Step 3 Steps Step 5

Public Market

AutomatedEscala1onProcess


MobileCommunica1ons


MobileCommunica1ons

•  Providingreal-1meaccesstodriversn Forshippers,carriers,brokers...n GPSbasedposi1oning-trackingn Visibilityversusexcep1onmanagement

•  Connec1vitytothedriver......doshippersreallywantthisinforma1on?...docarriersreallywanttogivethisinforma1on?


ChallengesforMobileTracking•  Howeasilycanreal-1meassettracking...

n GPSdatabemergedwithmilestoneEDIdata?n Betranslatedandmappedintoac1onableontheunderlyingordersandgoods?

n BeconvertedintobeTerpredic1ons?•  ImpactofwidespreaduseofElectronicLogBooks?•  Whathappenswithcompletetransparencytodrivers?

n Dissolu1onofcarriers?n Growthofalliances?n Growthoffreightbrokerage(UberFreight)?


AutonomousTrucks


Shizfrom“If”to“What,When,&Where”•  TheWhat...likeboilingafrog!

n Notabinarydecision...w  NoAutoma1on(Level0)w  Func1on-SpecificAutoma1on(Level1)w  Combined-Func1onAutoma1on(Level2)w  LimitedSelf-DrivingAutoma1on(Level3)w  FullSelf-DrivingAutoma1on(Level4)

n SystemsinPlacew  CollisionMi1ga1onSystemsw  IntegratedSafetySystemsw  LaneDepartureWarningw  BlindSpotDetec1on


Shizfrom“If”to“What,When,&Where”•  TheWhen...fasterthanoriginallythought!

n FirstpaidautonomousdeliveryoccurredinColoradoinOctober2016.

n UberFreightOn-goingExperiments&Trialsw  Ini1alwindowwas15yearstocommercialnon-pilotusew  Releasingsozwareupdates2-3xweeklyandhardwareweeklyw Windowfornon-pilotcommercialuseshrinkingtosingleyears



From“If”to“What,When,Where,&How”•  TheWhere...threeenvironmentsforfreight

n Longhaulcorridorsn Shorterhaullocalmoves/shuTlerunsn IntraFacility(Yard)moves

LongHaulShorterHaulIntra-Yard


LongerTerm...•  DirectChanges

n Increasedsingledayrange(~1000miles)n UbiquitousnessofTLcombinedwithlowcostofIMn Lowerfuelcosts

•  IndirectImpactsn Reduc1oninNa1onalDCs,increaseinlocalsn Concentratedcorridortrafficn Dissolu1onofTLcarrierstoindependentdrivingen11es


•  DigitalFreightMatching•  Transporta1onManagementSystems•  MobileCommunica1on•  AutonomousTrucks

now +20years+5years+1year +10years


Questions, Comments, Suggestions?

[email protected]

“Wilson&Dexter–disrup1ngthedominantdesigndaily”YankeeGoldenRetrieverRescuedDogs(www.ygrr.org)

Documents

Future Freight Flows: Poten1al Trends – Near and Farctl.mit.edu/sites/ctl.mit.edu/files/attachments/tab 13 Caplice_FutureFreightFlows...Future Freight Flows: Poten1al Trends –