Connecting Automation, Final Mile, and Regulations in the Freight Industry

The Walton College began its business insights series in 2018 by bringing together around a dozen business leaders and supply chain academics to discuss the most significant ongoing trends in the domestic freight industry -- trends already taking place that would likely continue for at least another 10 years. 

Looking back on that discussion 18 months later, it’s amazing how spot-on the group was when it came to identifying the trends that would continue to reshape the industry. If you revisit the widely circulated whitepaper that summarized the meeting, as I recently did, you’ll see that their insights are just as relevant today as they were then. The main difference is that there are more and more examples of how these trends are springing to life in businesses. 

When the group members categorized and prioritized the trends, they landed on automation, regulation, and e-commerce/final mile as the top three.

“These trends are driven by consumers (ecommerce) and resulting in innovations (automation) that are impacted by regulations,” one participant said. “Leaders, therefore, are challenged to drive automation that meets consumer demand, while also influencing consumers’ views about the tradeoffs that come with rules.”

Many companies, startups as well as more established providers, are doing just that. Here are a few examples in each category:

Automation

Walmart provides a number of examples of how automation is impacting the way freight is moved. In early January, for instance, an Alphabot began operating in the warehouse area of a supercenter in New Hampshire, where it retrieves “ambient, refrigerated and frozen items ordered for online grocery” and “delivers the products to a workstation, where a Walmart associate checks, bags and delivers the final order.”

This is a great example of how a corporate giant can partner with innovative startups because Alphabot was designed specifically for Walmart by Alert Innovation.

Brian Roth, a senior manager of pickup automation and digital operations for Walmart U.S., said the automated process for assembling and delivering orders to associates could fundamentally change the company’s online grocery operations.

“Ultimately, this will lower dispense times, increase accuracy and improve the entirety of online grocery,” he said. “And it will help free associates to focus on service and selling, while the technology handles the more mundane, repeatable tasks.”

Automation isn’t just happening in warehouses; it’s also happening at loading docks, railyards, shipyards, and on the roads. Several companies, for instance, are working on self-driving trucks, including one, TuSimple, that already has tested deliveries over limited routes. And platforms such as Loadsmart use automation to integrate shipper and carrier transportation management systems to improve port drayage.

Final Mile

J.B. Hunt Transport Services has made a strong push to up its final mile game over the last few years, and that investment continued at the end of 2019 when the company acquired RDI Last-Mile Company. 

RDI, which primarily delivers furniture in the northeastern US, was generating revenues of about $35 million a year, according to thetrucker.com. It was the third final-mile acquisition for J.B Hunt since 2017 (Cory 1st Choice Home Delivery and Special Logistics Dedicated were the others), and it gives JBHT more than 100 locations that can handle home deliveries.

The growth of final mile deliveries -- whether its a box truck delivering furniture or an electric car delivering groceries -- is creating new challenges for supply chain companies, including six that are identified in this article by FreightWaves.

The one that stuck out to me was the creations of specialty apps designed to help drivers avoid mistakes and delays. The article points out that things like addresses that are hard to read can cause drivers to make as many as 150 trips for every 100 deliveries. Apps like Locus on the Road address this issue by creating the most efficient delivery routes, verifying addresses, and automatically sending notifications to customers.

Regulation

The government has long played a key role in shaping freight transportation, and that certainly hasn’t changed with increased digitalization and automation. Last year, for instance, three US senators wrote a letter to Amazon CEO Jeff Bezos asking the company to “vigorously and proactively monitor the companies it does business with and ensure its contractors are adhering to labor laws and safety regulations.”

State and federal laws regulate how companies interact with employees and contractors on everything from safety compliance issues to pay to insurance. And, of course, transportation companies regularly deal with the changing regulations for the drivers in their fleets. They must know, for instance, the difference between the ELDT (Entry-Level Driver Training rule) and the ELD (Electronic Logging Device rule). 

The former, by the way, goes into effect Feb. 7 and establishes new training requirements for obtaining or upgrading a commercial driver’s license. The latter has continued to receive much attention from regulators. The ELD mandate is not only controversial but a study conducted by research affiliates of the Supply Chain Management Research Center found the mandate has produced mixed results.

According to a summary of the findings, “While HOS (hours of service) compliance – the primary target of the ELD mandate – improved considerably, the study found that there was no decrease in the number of accidents for independent owner-operators and carriers with small fleets. It also found that unsafe driving infractions for small companies and owner-operators actually increased relative to large asset-based carriers.”

Applications

One of the reasons the Walton College brings in industry leaders for discussions like the one we had around trends in domestic freight is because part of our mission is to advance thought leadership. We want to add value to industry leaders, policymakers and other decision-makers. But the discussion also adds value to our students, because it helps us continually add forward-thinking updates to our curriculum so that we account for these trends and better prepare students who will shape the future.