The urgency of digital solutions integration is increasing - and with that, the market is consolidating fast. In whose hands?
COVID and Brexit: the perfect storm
It wasn't just talk pre-COVID. Data-driven transport solutions were being developed all over the place - often by technology start-ups.
But the calamitous upheaval of the pandemic - fracturing supply chains, forcing long-established cabotage and bridging patterns to change, threatening empty return-loads and putting pressure on driver availability has forced not only operators but service providers to act - and quickly.
In Europe, Brexit is intensifying all of those pressures to create "the perfect storm" for the industry. To manage their way through all this disruption, commercial transport operators' need for digitised planning and management solutions has never been greater. And that creates investment opportunity.
Pressures on road freight management
With supply chains unpredictable and haulage margins thin, operators can only lock in margins by pinpoint scheduling, routing, load-booking, fuel payment, driver and road tolls management. A heady mix, especially if you add in spiralling insurance costs.
In such an environment, HGV fleet managers need to streamline the tools they use to optimise efficiency. Using different platforms and service providers to manage such a witch's cauldron of challenge is no longer an option.
That is going to drive rapid integration of digital services, consolidate the market quickly - and leave some players behind.
Disruption in the road tolls ecosystem
Whatever progress has been made in Europe with EETS and the ongoing Eurovignette project, on board units (OBU's) will be a thing of the past very, very soon (as will aftermarket telematics boxes). As we wrote in this Insight Feature recently , road charging expansion will play a huge part in governmental responses to diesel excise duty losses - and that will see tolls businesses needing to reposition themselves as payments collectors for public finance ministries.
The instrument may be the connected vehicle, it may be ANPR - but it won't be an OBU. What's more - governments in different nations will approach and structure road charging strategies differently, and collect payments differently. That's about platform agility; transaction processing capability; great API's. And at the customer end - about the integration of services.
Volatility in diesel pricing
As excise duty (and potentially VAT) regimes undergo upheaval, and as liquefied and compressed gases replace diesel as the sustainable road transport fuels of the future, expect diesel prices to become volatile. Already, the delta between on- and off-motorway prices is widening spectacularly in certain European regions. There is no certainty at all that the classic "low excise duty" refuelling hubs of Europe will stay that way.
So what has that got to do with digitisation? Everything.
The oil majors may not like this (and they don't), but fleet managers are no longer satisfied with drivers having unrestricted access to vast networks. They need to direct drivers - in real time - into locations where fuel prices are lowest (they can change significantly in the course of a day at many locations). No longer will they tolerate a driver deciding to stop at a shiny motorway service station to refuel, buy a hotdog and a coffee, and chat to Greta behind the till - just because his fuel card is accepted there. Flexible, real-time restriction - at the hands of the fleet manager, connected to a vehicle and driver - will become a "sine qua non".
Guaranteeing full loads
Report after report illustrates the challenges faced by commercial transport firms in securing return loads, or in managing the load, routing and scheduling patterns of drivers away from base for weeks at a time.
This may not be a new topic, but it was never as critical as now. Scheduling software and online freight exchanges have been around for years - but were they ever really targets for integration into a broad, digitised offer to road hauliers? Not really.
They are now - and truck connectivity will bring agile scheduling and load-broking straight into the driver's cabin, from the fleet manager’s fingertips.
So - expect this to be a very, very lively investment marketplace indeed....
There is no doubt - none at all - that service providers will spot the opportunity to integrate a broad palette of road transport services into a digitised, "connected" offer.
That isn't the question. The questions are who, and how?
Organic, incremental development of new digital services by existing players in one camp or the other should be off the table: it's slow, resource-intensive, and expensive - and shareholders won't be wearing it.
So who has the vision and the capital to grow by intelligent, targeted acquisition? Who has the core platform and IT infrastructure/capability to integrate these services and connect them to critical third parties?
Well, we'll see, won't we?