By Steve Saltzgiver, Fleet Success Ambassador
As we sit on the precipice of another year, 2023 looks to be another exciting year of trends emerging within the fleet management and transportation industry. Fleet and transportation are significant segments of the economy worldwide, especially as it relates to moving people and products. As an example, “according to transportation industry analysis, truck transportation contributed more than $150 billion to the United States’ gross domestic product in 2019”. As with previous years, technology is advancing at a record pace while the economic outlook for 2023 appears grim.
RTA – The Fleet Success Company’s Marc Canton, identified five significant challenges that are (or will be) plaguing fleet managers soon — if not already. These include:
In an analysis released on November 26th, the Institute of International Finance predicted a global economic growth rate of just 1.2% in 2023, a level on par with 2009, when the world was only beginning its emergence from the financial crisis. The talk for 2023 appears to be “recession” and to add to these fears, the United States is experiencing its highest levels of inflation in 40 years.
So, what does all this mean?
Like in 2022, in the coming year the key issue remains supply chain issues and ability to gain access to necessary supplies and goods to service fleets. Since the latter is the pressing concern, we’ll focus on the challenges related to the supply chain issues first.
Since the COVID-19 worldwide supply chain interruption, many manufactures are still struggling to source materials to keep up with consumer demand. This has a caused huge delay in new vehicle acquisition which continues to plague fleet managers as many select models are out 12-24 months before delivery. Microchip issues will continue, along with timing challenges with vehicle upfitting. Coupled with a significant issue in sourcing replacement parts, fleet shops are now resorting to cannibalization to keep their fleet assets road worthy. Further, supply chain challenges include acquisition of fuels, parts, supplies, and labor. For example, last month the U.S. faced a diesel fuel shortage causing prices at the pump to skyrocket past $5.50 per gallon on average, impacting both consumers and the trucking community. In November 2022, experts announced only a 25-day supply existed for diesel fuel, which caused panic across the industry.
Unfortunately, the outlook for 2023 continues to be bleak as many of these supply chain challenges are still present throughout the industry with no reprieve soon. In the coming year, 2023 will continue to be a huge challenge for the fleet and transportation industry professionals as manufacturers look to get on top of the supply chain issues.
Lastly, record inflation continues to pillage fleet management replacement vehicle acquisition and repair budgets, making it difficult to manage and predict future costs until the Federal Reserve and Biden Administration get inflation under control. On the bright side, we’re starting to see an easing on used vehicle prices, which could indicate the supply chain issues are beginning to subside. Whatever the case, fleet managers will still need to brace themselves for another rocky year in 2023.
Like previous years, can the adoption of technology assuage the supply chain issues? Let’s discuss a few of the emerging trends in fleet and transportation.
As technology continues to advance, organizations can ill afford to continue with outdated “on-premise” software applications limiting potential integrations and budding functionality. The Software-as-a-Service (SaaS) systems have been growing exponentially over the last several years. This SaaS model allows unlimited opportunities for companies to scale and take advantage of newer digital resources emerging in the transportation market. SaaS systems allow access to greater cost-savings and efficiencies across all segments of today’s operations, including sales, logistics, legal, operations, finance, and safety. Adoption of SaaS systems and their fully- integrated web counterparts allow organizations to better leverage human capital and capture necessary data to make better informed decisions. For example, RTA’s innovative SaaS software is accurate, reliable, and user-friendly, with powerful reporting integrations that help more fleets operate safely on the road, more of the time.
The continuing rise of MaaS throughout the transportation and fleet industry has made for smoother and more hassle-free choices to fulfill vehicle needs. MaaS subscriptions are picking up steam as an alternative to traditional asset ownership models – especially in large urban cities where 68% of people live in developed cities as fleets look for more innovative ways to meet their diverse transportation needs.
According to the MaaS alliance, this service integrates various forms of transport and transport-related services into a single, comprehensive, and on-demand mobility service. MaaS offers end-users the added value of accessing mobility through a single application and a single payment channel (instead of multiple ticketing and payment operations). To meet a customer’s request, a MaaS operator hosts a diverse menu of transport options, including (but not limited to) public transport, active modes such as walking and cycling, ride/car/bike-sharing, taxi, and car rental or lease, or a combination thereof. MaaS aims to be the best value proposition for users, societies, and the environment.
A successful MaaS service also brings new business models and ways to organize and operate the various transport options, with advantages for transport operators including access to improved user and demand information and new opportunities to serve an unmet need. MaaS aims to provide an alternative to using the private car that may be as convenient, more sustainable, help reduce congestion and constraints in transport capacity and be even cheaper. The Gig economy is only expanding these opportunities that will only advance mobility alternatives like Uber, Lyft, and others. Futurist Tony Bosma predicts “the outerweb, edge computing, Internet of Things (IoT) and 5G wireless networks will connect the disconnected linear world of logistics, empowering visibility, and efficiency. Intelligent logistics networks are on the horizon, which increases the traceability and reliability of operations. Every item within the smart logistics network will be enabled to exchange information about the whereabouts, condition, and treatment of goods. Because of this, we will see the rise of a demand-driven, market-responsive supply chain model. Mobility as-a-service and transportation as a-service will become de rigueur in today’s on-demand society.
A web article from Deloitte Insights by Kevin Kelly recently stated that, “The move to electric transportation is a massive technological and cultural transformation.”
It’s not as simple as replacing every internal combustion (IC) engine-based vehicle with an EV; it includes wide-ranging implications for the broader transportation ecosystem, and its corresponding transportation and power infrastructure. Millions of Americans—and billions worldwide—are used to relying on IC-based vehicles. There’s a well-established network for their sales and leasing, fueling, and maintenance. The patchwork nature of the corresponding infrastructure for EVs may create a psychological barrier in consumers’ minds; recent surveys indicate that Americans’ biggest concerns about adoption include inadequate public charging infrastructure, a lack of charging options at home, the time required to charge vehicles, and—given some highly publicized mishaps—safety issues concerning batteries. As with any major technological transition, there are bound to be false starts and teething issues along the way.
However, the Biden administration is bullish on electric transportation, and has set an ambitious target of EVs representing 50% of all new vehicles sold in the United States by 2030. In line with the administration’s broader climate agenda, it also wants to move the federal vehicle fleet to 100% acquisition of zero-emission vehicles (ZEVs) by 2035, including 100% light-duty ZEV acquisition by 2027.
Manufacturers, too, are betting on the EV future.
In 2021, GM announced it would become carbon neutral by 2040 and would introduce 30 new EVs by 2025. Other manufacturers are beginning to follow suit and have started to offer more EV models for consumers and fleets. The US EV sales doubled between 2020 and 2021 from 308,000 to 608,000 while overall light-duty sales only rose 3%. In 2022, the car market reached a critical tipping point as EV sales topped 5% of car sales.
However, the expansion of the electrification market is not without its challenges as consumer confidence is still low, infrastructure inadequacy (25% not working), and battery supply issues where manufacturers continue to experience supply chain issues to obtain necessary rare-earth metals to manufacture enough EV batteries.
Further, an even bigger challenge for ecosystem players, including governments, will be the availability of a workforce trained to maintain and repair EVs and the charging infrastructure. Today, batteries make up almost 30% of the total value of an EV and the cost of replacing one can be daunting. Skilled battery technicians are required for repairs, software issues, calibration of internal systems, and diagnostics. Similar challenges are expected in repairing and maintaining charging stations.
While EV manufacturers are building a maintenance workforce, a significant need for workers remains. In June 2022, the federal government launched the Talent Pipeline Challenge to develop the next generation of infrastructure workers. The program focuses on broadband, construction, and electrification; the electrification focus is to develop a skilled workforce for charging infrastructure and battery manufacturing. The challenge calls upon state and local governments to use funding from the American Rescue Plan, IIJA, and the State Workforce Innovation and Opportunity Act to retrain and reskill workers and create workforce development programs and apprentice opportunities in the three priority areas.
For several years now, telematics has continued to be spread throughout the fleet and transportation industry. What was once considered a luxury is now a must to track vehicle travel and driver productivity in the transportation industry. Even many government fleets – which are traditionally slow technology adopters – have begun outfitting their assets with telematics technology.
The many advantages of telematics are now well-known and include Anti-theft GPS capabilities, real-time asset location answerability for both assets and operators, green-driving habits, and myriad on-board vehicle diagnostics capability. Telematics have been expanding rapidly to integrate captured data functionality to facilitate real-time operator behavior scorecards to identify critical safe-driving issues and to increasingly reward exceptional-performing drivers.
The coaching opportunity using scorecards have been nothing short of a miracle in reducing organizational liability, carbon footprint, operational costs, and returning driving safely to their loved ones.
As many shop managers will attest, telematics has revolutionized and markedly improved vehicle maintenance and service capabilities for fleet technicians. This tech has moved shop operations from a proactive versus reactive maintenance model. Fleet managers can identify maintenance and service issues prior to failure, reducing downtime. Additional transformative tech use is expanding such as interior and exterior cameras, ELDs, electronic tolling apps, collision avoidance, lane-departure, adaptive-cruise-control, blind spot-detection and a vast array of emerging IoT devices.
Although AVs have not quite accelerated at the anticipated speed the industry and manufacturers would have liked, the recent innovations in artificial intelligence quickly making these applications more of a reality very soon.
Coupled with 5G technology and the expansion of Internet-of-Things (IoT) devices available the AI-enabled AV is becoming more probable very soon. In fact, this future is even closer than it may seem. Tesla’s electric semi-trucks have autopilot features which can greatly facilitate the driving process. Walmart, along with many other corporations, such as Pepsi, Asko, and Loblaw confirmed having ordered Tesla Semi trucks for their commercial needs. The future will be defined by data, analyzed by AI and driven by machines, Gartner has predicted that by 2023, AI technologies will be embedded across 50% of the supply chain technology solutions.
Technology offerings continue to assist fleet and transportation managers with improved compliance with regulatory requirements that must be maintained in a heavily regulated industry. Everything from hours-of-service electronic logging devices (ELD) to better compliance with international fuel tax agreement (IFTA) reporting accuracy, international registration program (IRP), to following the myriad of commercial vehicle regulations issued by the Federal Motor Carrier Safety Administration (FMCSA).
The expansion of Application Program Integrations (API) will become king as organizations scramble to better enhance vehicle regulatory compliance. We’ve already seen where companies are interfacing with many supplier partners and beginning to outsource various fleet functions to external partners using APIs to capture data. These data from external partners include such things as, transaction invoicing, repair and maintenance history, fuel transactions, repair network use, capture of standard repair times, VIN decoding,
Blockchain is a transformative technology trend in distribution and transportation shaping mobility and beyond. One perspective use case for blockchain technology in transportation is ensuring the accuracy of asset (i.e., Trucking) performance history records. When a truck gets sold for the second time, potential customers may have questions about how this vehicle was deployed. Blockchain transactions are unchangeable and transparent, all parties involved in a transaction can be sure that the information about the truck is trustworthy. Another perspective use of blockchain in transportation is capacity monitoring. The cost of transportation depends on cargo volume.
The use of Internet-of-things (IoT) sensors can help determine the amount of space a particular cargo occupies. This data can be used to calculate the shipment cost. Storing this information into a blockchain-based system signed with a smart contract will allow self-executing payments on a base of the amount of space taken by the freight.
In a recent blog by Cognizant, they stated better logistics will happen through interconnected supply chains with cross-border data exchange, orchestrated by smart self-learning algorithms and supervised by humans. Throughout the logistics process, everything will be connected and continuously monitored, resulting in a transparent supply chain with accessible real-time data for owners. Every shipping process in the supply chain will contribute to a more healthy environment, without negatively impacting the planet. Logistics will add value to society instead of extracting resources and polluting environments. The industry will shift from a dumb and fragile system to one that is resilient to the fast-changing demands of society, from natural resources to last-mile delivery. In the end, it will become fast, durable, customer-centric, efficient and, most of all, reliable.
As today’s teenager can attest, drone technology is cool and becoming pervasive across all industries. The uses are seemingly countless. This latest tech will eventually add to the fleet manager’s repair and maintenance delimmna.
Drones and droids can be used for everything from package delivery to land surveying and its impact is sure to impact future fleet budgets as they must track and maintain these assets in their SaaS inventories. This tech is only sure to expand in use as users come up with creative ideas on how various drones can be used in their individual operations.
Drone use will only reduce road congestion, traffic, and carbon footprints as they expand. Package delivery companies like Amazon, UPS, and FedEx are all starting to use drones to enhance and reduce expenses associated with their last-mile delivery services. Regulations will need to increase to regulate drone tech as they become more pervasive. The need to have enforcement tools in place will better ensure drones don’t futher intrude on today’s privacy and safety concerns.
Although not available in near term 2023, how soon will automated repair droids become assessible to repair and service vehicles in the near future? This is something fleet managers must certainly anticipate as the human capital related issues in acquiring qualified technicians begin to worsen in future years.
Although the future is still uncertain in the fleet and transportation industry, many problems with supply chain and the advancement of technology will continue. These factors, along with record inflation and worldwide instability, will likely continue to challenge fleet and transportation professionals.
Fleet managers will need to remain vigilant in 2023 and continue to seek creative and innovative solutions to manage expenses effectively and efficiently during another challenging and unpredictable year of turmoil. Keep your head up fleet professionals, there’s always a light at the end of the tunnel and the train coming at you today is not likely to be there forever!
Let me know your thoughts ssaltzgver@rtafleet.com.
To learn how RTA’s fleet management solution can help your fleet operation navigate upcoming hurdles in 2023, schedule a demo today!