Over the past three years, investors have poured $19 billion into technology companies in transportation and supply chain industries. Most often, the investments focus on technology used by single entities such as shippers, carriers or warehouse managers.
Despite the massive influx of technology investments, motor carriers still have plenty of room to improve efficiency, said James Langley, senior vice president of Trimble Transportation.
On average, truck drivers use between 6.5 and 7.5 hours each day from the 11 hours of drive time they have available. Fleets’ trailer assets are empty at least 15% of the time, and when they are loaded, 70% have unused capacity.
Langley made these and other comments during a conference call on Thursday, Jan. 9, when Trimble announced the acquisition of a company that provides a transportation management system for shippers.
Trimble Transportation has a network of private fleet and commercial carrier customers that collectively use its software products to manage 1.3 million commercial assets in North America. Eighty five percent of the top 200 carriers are Trimble customers, he noted.
With the acquisition of Kuebix, Trimble will bring more than 21,000 shipper and third-party logistics customers into its network. The Kuebix platform is already being used by shippers to connect with carriers on a daily basis.
“Fundamentally, we are all moving the same stuff,” Langley said.
With its newly acquired shipper TMS asset, Trimble Transportation plans to develop an integrated Software-as-a-Service platform for shippers, carriers and freight intermediaries to optimally plan, execute and match freight with capacity, on demand. The integrated platform will also cover the full lifecycle of orders through financial settlement.
The acquisition fits with Trimble’s mission to “fundamentally transform the way real people do real work,” he said, noting the market opportunity to optimize the supply chain down to the pallet and SKU-level in order to “plan, project and procure across the supply chain.”
In the short term, Trimble customers on the carrier and freight intermediary side will have opportunities to collaborate with shippers in the Kuebix community by using the current platform. Over time, more features for connecting and collaborating with shippers will be baked into Trimble Transportation’s software systems for carriers and brokers, he said.
As the companies integrate their products, Langley sees an opportunity to make the freight bidding process more efficient for all parties. Today, 80 percent of freight bidding takes place with spreadsheets, and the bids for contract freight typically require two-year commitments.
The vision is for technology to speed the decision making process for capacity procurement. Instead of two-year awards, Langley expects a more seamless process to emerge for connecting and collaborating for contract and spot market freight.
“It’s hard to commit out two years,” he said. “The supply chain now moves too fast.”
The goal for the acquisition is to bring “value to all stakeholders” in the supply chain, added Dave Lemont, CEO of Kuebix. “We see a world where shippers see assets and source assets that they have not had prior, and carriers have the ability to acquire shipments at a lower cost.”
One of the fears that motor carriers and freight intermediaries may have in the digitally connected world is how they will be able to differentiate themselves and protect their proprietary data.
“We want to help carriers and partners along the way take advantage of this connected supply chain. We will be good stewards of their data, and make sure they are getting value and trust in return,” Langley said. “We are not trying to ‘uberize’ the industry.”
Medium and large carriers are “looking for a trusted technology partner that brings value to them. We want to enable, through technology, all members of the supply chain to do business more easily and efficiently,” he added.
The transaction is expected to close in the first quarter of 2020, subject to customary closing conditions. Financial terms were not disclosed.