Verizon Connect: How AI will accelerate the commercial vehicle industry
For decades, businesses have used new technologies to forge connections in new markets and help scale their supply chain networks globally. As a result of this exponential growth, demand has risen for new solutions that can combat the growing complexity of supply chain networks, whilst simultaneously driving innovation to remain competitive in the face of rising end-user expectations. The deployment of technologies like Artificial Intelligence (AI) and machine learning are two examples of the innovations that can offer fleet operators a competitive edge, and the introduction of these technologies is fueling a wave of disruption across multiple industries involved in supply chain networks.
Take the haulage industry, for example. Ridesharing is one area where some major global firms have begun leveraging AI and machine learning logistics. This move has caused great concern in many quarters, with many haulage businesses beginning to wonder if their livelihoods were at risk. Much to their relief, these initial attempts did not pan out, but the potential consequences raised deeper questions about how AI in transportation would move the industry forwards in years to come.
In an industry facing major digital disruption, the introduction of such transformative technologies is leaving fleet owners and operators with many unanswered questions about the sustainability of their businesses and how they can remain viable.
Small changes with big impact
One source of concern for suppliers of commercial vehicles is the prospect of large technology companies entering the industry and crippling their chances at being competitive. However, despite the huge investments being made in R&D, there is little indication that autonomous commercial vehicles will reach either technological or legal maturity in the near future.
That being said, major changes in the transportation industry due to AI are already happening and in regular practice, although they might be more subtle than self-driving vehicles. The reality is that driverless vehicles aren’t the only use for AI in transportation. For instance, it wasn’t long ago that owners only had a vague insight into how they could interpret critical events reported from telematics monitoring systems. Today, video solutions provide the context necessary to understand the actual circumstances around a harsh driving event, which was previously limited to the interpretation of numerical data. In fact, progressive analysis skills made possible by machine learning are continuously improving the accuracy of the automated classification of event severity, and managers are now notified only when an event requires review.
This means that business leaders have the ability to broaden visibility and deepen their knowledge of what goes on within their fleets, without adding to their burden by requiring a person sift through data (or hours of footage, in this case).
Data drives better decisions
Statistical analysis of driver behaviour and operational efficiency data is as much an art as it is a science. With so many variables to consider, including human and machine elements, refining the way owners and operators manage their people, as well as their equipment, in almost real time, is imperative. Understanding the context of unsafe driving behaviours and having the opportunity to engage the problem directly with a driver to correct it before infractions mount up, or accidents happen, is a major benefit of AI and machine learning-enabled video in transportation.
In addition to reducing the likelihood of accidents, businesses can further mitigate risk by reducing false liability claims. Often, businesses avoid major lawsuits and damage to their reputations by paying out when accused of fault in an accident. Without the ability to back up a driver's account, owners are left with few options. Video solutions offer the ability to provide evidence as businesses back up their drivers, enhancing the trust relationship between owners and employees, as well as between the business and customers (not to mention prospective customers).
AI isn’t the future, it’s now
With consumers expecting faster delivery and further updates on the way, the new normal in transportation is over-communication, transparency, and complete visibility. All signs point to advances in AI and its impact on all industries continuing to grow, with IDC projecting global spend on cognitive and artificial intelligence systems to grow 38% by 2022.
Customers’ expectations of what constitutes “above and beyond” service are evolving as quickly as the technology that plays an integral part in day-to-day workflows. To offer excellent customer service, businesses must evolve as quickly as the definition of that term.
AI and machine learning are already making businesses smarter and trucking more efficient, helping businesses cushion their bottom line and proactively avoid liability and risk challenges rather than simply reacting to incidents that could otherwise have been avoided.
Companies just now considering how to begin their digital transformation are already behind the curve. As technology like AI continues to become more a part of the industry, even before major changes like autonomous vehicles become a reality, businesses that adopt innovations now will have a much easier time keeping up with the best-in-class competitors.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector