September 2, 2016

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Tracking Internet of Transportation Things (Part 2)

IoTT: Old wine in new sensors

In Transportation & Logistics industry, the last major phenomenon vis-à-vis technology was massive adoption of GPS. However, the mobility aspect of Transportation hindered implementation of conventional IT solutions on a mass scale. Nevertheless, there were IoT adopters and innovators across sub-industry functions which transformed and led the way of leveraging data for efficient operations and new business insights.

A case in point could be Boeing which built 10,000+ sensors into each aircraft and collecting TBs of data leading to increased maintenance efficiency and aircraft usage for the airline operators.  Use of sensors by industry giant GE on their aircraft engines has saved $ 30-50 Mn in operational costs for AirAsia,. This has also led to an industry wise push to create and use more data in the aviation sector

Similarly, truckers have been using ‘Onboard Diagnostics’ (OBD) to track driver hours and real-time location for years now, while Railroads have been leveraging sensor data for predictive maintenance of assets.

However, the current, and second, wave of IoT transformation is being powered by 2 major change drivers. These are:

  1. Ubiquity of smaller inter-connected IoT devices
  2. Creation of meaningful ecosystems of IoT leverage

While, the first change is due to technological advancement over the years, enabled by faster internet, better computing and cost-effective hardware. The second change has primarily been an organic evolution of business needs and its fulfillment from within and outside Transportation industry. Fluidity of data across a web of information channels acts like arteries oxygenating vital organs of these ecosystems. Let’s take a look at some of them:

  1. Track and Trace

It is an ecosystem of Shippers, Recipients, LSPs & Carriers, where stakeholders have real time tracking of a shipment for efficient inventory management, customer communication, course correction (if necessary) etc. While almost all LSPs claim to offer Track & Trace services, many of them are still tracking islands of transit for shipments, and don’t offer real time visibility.

  1. Asset Performance

Taking example of aviation industry, we talked above the value Boeing has been accruing to its customer airlines. This example also implies that lack of monitoring leads to millions of dollars of foregone money due to inefficient aftermarket services - a major source of recurring revenues for manufacturers. In a fiercely competitive industry factors like aviation total uptime, asset utilization, network performance, and, most importantly, knowing exactly when to service/replace/repair parts can be the ultimate success determinant. Similarly, the case for better asset performance could be applied to Ocean shipping, Cargo/Passenger rail, Cargo aviation etc.

  1. Asset Insurance & Safety

While Track & Trace and Asset performance appears to be natural beneficiaries of a connected Transportation ecosystem, there are supporting industries like Insurance which are witnessing a transformational shift in their business practices, and again for good. Progressive, an insurance company, launched Snapshot in 2008 which offers up to 30% discounts based on driver behavior of usage. Users pay premium based on the quantum of risk incurred by their way of driving, and metrics like speed are monitored to make the decisions. While collecting troves of data from OBD devices, important information regarding accident prone regions and weather conditions is also collected for safer travel in future.

  1. Drones and driverless cars

This phenomenon witnesses exponential interest and advancement. Players like Tesla, Google, GM, Uber, Lyft, Ford, Toyota and Amazon have already made big bets on the future of automated transportation, and we keep hearing about successful Proof of Concepts taking us further closer to this goal. No one can predict a cut-off date by which automated transportation would commercially, sustainably and fundamentally usurp the transportation business, and the quantum of it, but we can be sure about a future where bot-trucks plying on roads will communicate with the warehouses and other bot-trucks to pick-up and deliver cargoes through an ultimately efficient supply web. Driverless cars will also collect some parcels on their way to pick-up a ride and deliver it after the drop-off. Uber is already experimenting with the traditional version of adding logistics delivery to urban mobility.

We can keep exploring and scrutinizing IoT transformations changing the face of transportation industry and its associated ecosystems, but to get on top of that churn, the industry and its CIOs need a comprehensive IoT strategy and see what applies best to their case for maximum technological leverage they can get from IoTT.

Here it comes

IoT will keep evolving and changing the businesses it touches in coming years, and as businesses and enablers we would need to choose the foundational tenets that will drive our approach to it, rather than the nuances of the technology itself. As long as we will get the basics right, we will continue to make progress and better the lives.

Say Hello to a connected future!

In Part 1 the author discusses the impact of IOT on the Industry