Ai and Contracted Model of the Trucking Industry

Post on August 29, 2019

Ai and Contracted Model of the Trucking Industry

• The trucking industry is a major contributor to the GDP, generating revenue worth billions and creating millions of jobs. In 2018, the logistics industry in India was valued at USD 160 billion and it is expected to touch USD 215 billion by 2020. However, the trucking sector in India is largely unorganized and continues to be plagued by high operational costs, fragmented warehousing, inept material handling, lack of transparency, multiple clearances and heavy documentation.
• Most of the problems of the trucking industry arise due to reliance on traditional or loosely-designed systems, as described below.
• Contract model: This is currently the most widely used method in the trucking industry. Under this system, shippers hire logistics firms on a contractual basis. Such contracts usually come with the provision that trucks would be made available whenever needed by the shipper. Also, the shipper will be able to hire more trucks, in case of high demand. While the contract model ensures the availability of trucks, it is based on accurate demand forecasting, which is rarely achieved. As additional trucks are provided at market spot rates, shippers usually end up paying more than they had expected.
• Broker system: Under this system, the shipper connects with a broker to arrange for the needed trucks. This system works in most parts, but brokerage is quite high, which increases shipping costs. Moreover, shippers have no clarity if they are being charged the correct shipping rates.
• Load-boards: This is an online system where trucking fleet operators post their logistics capabilities and shippers post their freight requirements. Both truckers and shippers can contact each other to finalize a deal. This system is better than the contract model, but it lacks transparency and does not help much in improving capacity utilization and operational efficiency. Things still need to be done manually, which is another bottleneck.

Expedited digitization – On-demand trucking is a game-changer

• Powered by AI-based digitization, on-demand trucking model is transforming the logistics industry like never before. It is a lot better than a load-board system, as it automates the process of finding the right trucker, reduces paperwork, saves time, and improves transparency. With on-demand trucking, shippers can easily find the best match for their freight. They can instantly see the various truckers available for a specific type of shipment and choose the one that they feel is most appropriate and is offering the best rates. It is also useful for trucking fleet operators, as it helps them boost capacity utilization and improve efficiency by finding the most easily serviceable route and the next available vehicle to connect the dots on a map. With AI-based on-demand trucking, shipments can be tracked in real-time and support services can be provided in the shortest possible time.
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  On-demand trucking model has huge potential in a fast-growing economy and it can benefit all stakeholders including shippers, trucking fleet operators, manufacturers, consumers and government agencies. It’s quite like an Uber for the trucking industry, which works as a bridge between shippers and logistics service providers. The trucking industry still relies heavily on contract-based models, but with the irrefutable advantages of AI-based on-demand trucking, it’s only a matter of time when it acquires dominance in the logistics industry. Businesses that embrace AI-based digitization can acquire significant advantages to stay ahead in the game.

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