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Consolidation In Transportation Technology Is On The Horizon: Vancouver Panel

FreightWaves
From l to r: Dean Croke, FreightWaves; Devlin Fenton, Go99; Scott Shannon, C.H. Robinson; Spencer Askew, Teknowlogi ; John Kingston, FreightWaves

From l to r: Dean Croke, FreightWaves; Devlin Fenton, Go99; Scott Shannon, C.H. Robinson; Spencer Askew, Teknowlogi ; John Kingston, FreightWaves

On a stage full of market participants who are offering various technology solutions to the transportation sector, there was basic agreement on one thing – big change through consolidation is coming in the structure of the companies now serving the industry.

In particular, Devlin Fenton, the CEO of freight matching app Go99, said you need to look no further than other industries to see where things might be headed.

There are markets where the key online platforms have been reduced to three players, "and I would imagine this would happen in the transport space," Fenton told a panel during lunch at the Canadian Cargo conference in Vancouver. (Full disclosure: I was the moderator of the panel.)

Scott Shannon, the vice president of North America Surface Transportation for C.H. Robinson Worldwide Inc (NASDAQ: CHRW), noted that the consolidation wave already hit the load board industry years ago. "There were hundreds of them and that has been whittled down to a few core high- performing companies," he said. C.H. Robinson now regularly exchanges information with them, though at one time, he reminded the audience, load boards were going to put companies like C.H. Robinson out of business.

Fenton's company in particular is in a fiercely competitive sector of the trucking and transport world  – apps that are used to match carriers and shippers, a market that has a big carrier at its center (J.B. Hunt Transport Services Inc (NASDAQ: JBHT) with its Hunt 360 platform) and numerous other participants, including those at third-party logistics (3PL) companies. Fenton said there has been plenty of investment interest in the field, with millions of dollars flowing into some of the larger companies.

"It is a massive space for us to compete in." Fenton said of the number of other companies seeking market share. But at the same time, the size of the customer base  – shippers, carriers and 3PLs who need the applications  – "is inordinately large, in the hundreds of billions of dollars."

But there's differentiation, he said, pushing back against the moderator's question regarding whether all the tools did the same basic thing. Fenton wryly noted that in Africa, not all lions think they're competing with all the other lions. Fenton said Go99 has attempted to differentiate itself by different workflows, specializing in certain types of cargoes as well as certain types of lanes. "What anybody in the space will tell you is if you're active in a certain type of commodity or certain lanes, you will find those who move in those circles," he said of the benefits of differentiation. When you're in a field like that, "you benefit from the entire aggregation rather than just the network you had access to," according to Fenton.

Without going into specifics, Fenton also said the Go99 app is heavily oriented toward "the way we move money. It makes us more of a financial transaction company rather than a freight company," he said.

Another growing area for technology applications in the sector is artificial intelligence (AI), the basis for the platform offered by Teknowlogi. The company's founder and CEO, Spencer Askew, a member of the panel, described his AI offering as "super neutral and very agnostic" that can work with existing platforms rather than trying to displace them.

The lunch panel's focus was on e-commerce, and Askew described some of the types of things that the AI offering of Teknowlogi can do. He described it as producing a newspaper dated one month in the future. "You need intelligence to predict buyer and seller behavior," Askew said, so taking AI and laying it on existing transportation management systems (TMS) upgrades that TMS to what he called a "terminal logistics expert system." And when that happens, Askew said, it allows the entire organization "to start predicting."

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Shannon of C.H. Robinson reminded the audience several times that at the end of the process, people remain. And when digitization and automation have displaced more manual labor processes, "it leaves the strategizing to us."

Robinson has numerous freight-matching apps offered through its Navisphere brand, having been in the freight matching business for more than 15 years. "They're specific for carriers, we have another for drivers and what it does it puts information into the hands of people like you who will be making the decisions," Shannon said, returning to the theme of people being ultimately at the root of the business.

Shannon agreed with the need to connect that information seamlessly into telematics, but made an argument for a bigger company like Robinson being in the best position to do so. "Having the scale to do that is critically important," he said.

With all the apps and new platforms flying around, Dean Croke, chief insight officer at FreightWaves, reminded the audience that technology developments seem to be ignoring one of the most important apps of all: the electronic logging device (ELD). Most drivers are using that as their only technology platform, and if they've got an app that asks them to rate the performance of, for example, conditions at the distribution center of a shipper, they're not likely to engage a second app beyond their ELD.  

"Everyone is trying to invent the killer app and they won't be used," Croke said. "If I was inventing something today, I'd be working with the ELD manufacturers to provide that level of transparency."

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Croke also regularly represents' FreightWaves' Blockchain in Transport Alliance (BiTA) on panels, and this one was no different. BiTA's primary goal is to help create standards in the industry, and they can be very granular, even down to the level of how dates are entered into spreadsheets that might later be distributed along a blockchain platform.

Fenton said that Go99 is working to get "blockchain ready." That can include things similar to what Croke described. He cited as one example the simple act of how does one save a presentation in PowerPoint or other applications.

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