Truck OEMs are excited about Trucking-as-a-Service

Truck OEMs are excited about Trucking-as-a-Service

Technology is transforming the logistics companies we’re so used to working with.

Autonomous trucking, artificial intelligence (AI), and the internet of things (IoT) are really making a big dent in the way the industry works, but they’re also fuelling other changes in the industry, all aligned with the ultimate goal of moving to a Trucking-as-a-Service (TaaS) or Transportation-as-a-Service (TaaS) model.

In its simplest form, TaaS is about supply chain operators gaining access to trucks on-demand, be it an autonomous truck or one that is driven by a human. In either case, however, the truck will need significant telematics and support to ensure tracking, mapping, management, and optimization of routes.

In fact, according to Frost & Sullivan, the surge in service and solution based revenue streams following the rise in digital transformation, autonomous trucking, urban trucking, platformization, and dealership evolution is expected to propel the US$11.2 billion TaaS market toward US$79.42 billion in 2025.

Further, according to the team, digital freight brokerage is expected to be the biggest market segment with revenue potential of US$54.2 billion, while the telematics devices segment is anticipated to grow from 25.7 million units in 2018 to more than 73.1 million in 2025.

What’s most interesting to note, however, is that the rise of TaaS will make life much easier for small businesses looking for new, innovative, and cost-effective ways to transport their goods, within the city and outside the country.

With the e-commerce boom in the APAC coming quickly, TaaS will be a game changer for small and mid-sized businesses looking to reduce costs and provide more timely and better delivery experiences to customers.

 

Truck OEMs keen on helping TaaS take-off

Truth be told, truck original equipment manufacturers (OEMs) such as the Traton Group (formerly Volkswagen Truck & BUs), Daimler Trucks, and Volvo Trucks are driving the industry’s move to TaaS as a result of their investments in connected, autonomous, digital, and smart services,

Volvo, for example, recently introduced Volvo Connect, a new customer portal that offers a single interface for digital services and functions, Volvo Trucks makes it even easier for customers to access the full benefits of digitalization and connectivity.

“Volvo Connect will also contain a marketplace where additional services can be subscribed to and activated. Users can adapt the interface so that the information and services most important to them are quickly and easily accessible,” explained Volvo Connect Product Manager Carina Holm.

 

Traton and Daimler are making similar efforts and also trialing subscription services in certain localities and regions.

 

In the future, Frost & Sullivan believes Truck OEMs will generate new sources of income as a result of the digital services they offer.

 

“OEMs will be looking to deliver new services, such as automated freight aggregation, as a value-addition to their fleet customers,” said Frost & Sullivan Mobility Analyst Silpa Paul.

 

 

Here are five new revenue opportunities that TaaS will create for OEMs (and dealers):

# 1 | Collaborate with startups

Investing in start-ups involved in digital technologies. This will help OEMs cope with a highly integrated ecosystem of real-time diagnostics, online booking of services and repairs, remote repairs, assisted repairs, remote diagnostics, and prognostics.

 

# 2 | Build a better omnichannel CX

Leveraging omnichannel customer touchpoints to develop a seamless, personalized customer experience across digital and brick-and-mortar channels.

 

# 3 | Score bigger deals online

Developing a robust CRM program that can convert digital sales leads, build customer loyalty, and sell after-sales services and maintenance.

 

# 4 | Collect customer data post-sale

Differentiating through a connected after-sales offering. This will enable OEMs and dealerships to gain additional insights into customer behavior.

 

# 5 | Offer new technologies as upgrades

Servitizing new technologies such as advanced driver assistance systems (ADAS), safety, health, wellness and wellbeing (HWW), and driver training.

 

Investors and occupiers to (re) imagine India industrial real estate

Investors and occupiers to (re) imagine India industrial real estate

Investors and occupiers are reimagining India logistics real estate strategies to take advantage of ongoing structural shifts and evolving market maturity across the country, according to JLL’s  ‘The Road Ahead – The Logistics Sector in Asia Pacific’ report.

“India logistics sector remain firmly on the radar of investors globally. Recent signs show the market becoming increasingly sophisticated. The inflow of capital into logistics has resulted in more complex transactions and greater participation by both established and new investors into the sector, which we expect to continue in the future as well,” said Ramesh Nair, CEO & Country Head (India), JLL.

As investors continue to reimagine their logistics strategies throughout the COVID-19 environment, JLL forecasts several key themes to gather momentum in India and reinforce the structural shift occurring in the sector.

Pursuit of platform deals: There is an increasing trend towards acquiring logistics platforms rather than individual assets in India including the recent Blackstone–AllCargo and Blackstone-Hiranandani transactions. Investors will increasingly pursue this route to gain captive tenant networks and achieve scale quickly in India.

Rapid institutionalisation: The world’s largest investors are investing more into logistics real estate. Blackstone’s acquisition of the GLP portfolio in the US during the third quarter of 2019 for USD 18.7 billion is the largest real estate deal in history.

Value upside: While growth in values is likely to slow in coming few years, investors’ confidence in the structural drivers for the logistics sector is expected to remain intact. Capital values are forecasted to stay relatively firm, with modest yield compression expected in some markets across the region.

The pandemic and lockdown, as expected, has affected the India logistics sector with overall leasing or absorption in top eight cities in India standing at 11 mn sq. ft. in H1, 2020 (Jan-Jun) as against a 12-quarter average or 7.3 mn sq. ft. However, there has been additional spike in short-term demand / temporary warehouses, (lease tenure of 6 – 11 months) demonstrating the underlying strength of the sector looking for substitute locations or business continuity planning locations for occupiers to mitigate for delays in delivery of under construction projects.

E-commerce continues to drive a reimagination of the Indian logistics sector. According to e-Marketer, online retail sales as a proportion of total retail sales stands at 14% globally in 2019. India has a huge growth opportunity with the e-commerce penetration rate standing at close to 5%. To fulfill potential, e-commerce and other sectors will increasingly push the sector in a three-dimensional growth path:

•           Length - Across the length of a city (suburban and in-city warehouses)

•           Breadth - Across the breadth of the county (tier 1 & tier 2)

•           Height – Early shoots of multi-storied warehousing

“The pandemic will accelerate trends already in play across the sector, such as increased internet penetration rates, expansion of online grocery, omni-channel retailing, rise of temperature-controlled storage and the integration of technology into logistics and warehousing. Led by occupier and investor commitments, the sector is well placed to respond to the post-COVID-19 recovery,” said Yogesh Shevade, Head - Industrial Services, JLL India.

Key shifts influencing occupier decision-making, expected by JLL to accelerate, include:

The evolution of last mile logistics: Faster last mile delivery focus of e-commerce boosts the in-city / urban logistics sector where conventional retail spaces, sheds, banquets, marriage halls are being considered for alternative usage for in-city warehousing across top cities.

Rise of third-party logistics: Outsourcing of logistics will be evaluated by many companies to achieve efficiency.

Frozen is the New Fresh: Temperature Controlled storage requirements will be gaining with consumers looking for ‘hygienic and safer’ frozen commodities.

On the manufacturing front, India is also experiencing the dual thrust of two major reform initiatives – Atmanirbhar Bharat (Self Reliant India) and Make in India. While, Atmanirbhar Bharat boosts domestic manufacturing and reduces imports, Make in India is expected to capitalize on regionalization of international supply chains and reimagine India as a global manufacturing hub.

“Manufacturing firms, especially in the ancillary and assembly space, will find solace in built manufacturing spaces on lease. Additionally, manufacturers will be positioned to realize the benefits of conversion of CAPEX (land & building) to OPEX (rent), ready-to-occupy and built-to-suit industrial spaces, higher specifications, faster entry, and pre-approved usage associated with built spaces,” said Chandranath Dey, Head - Industrial Operations & Business Development, JLL India.

Engineering goods exporters flag shortage of shipping containers, high freight rates

Engineering goods exporters have written to the Commerce Ministry complaining about an acute shortage of shipping containers and arbitrary increase in freight rates and have suggested that a regulator be set up to deal with the “monopolistic’’ practices of shipping companies.

Declining imports, especially from China, resulting in lower inward traffic, is one of the reasons cited by shipping lines for the shortage in containers for outward traffic and increase in freight, explained EEPC India in a letter.

''We understand that one of the reasons cited for such acute shortage (of containers), perhaps, is that as imports into India, especially from China are declining, shipping lines have told some exporters that for only outward traffic, freight rates will have to increase as there is less inward traffic. Further, such a large increase in freight charges is also impacting the competitiveness of exporters, apart from the non-availability of containers," the letter said.

EEPC further said the government should seriously consider its proposal, made at a recent high level meeting in the Ministry, for setting up a regulator which can combat arbitrary increases in shipping freights.

The engineering goods exporters body appreciated the government’s decision to extend five per cent exemption of GST on freight charges at a time when exporters are facing high cost of containers.

Engineering exports witnessed a sharp fall this fiscal so far although things have somewhat steadied recently, the EEPC said. In August, engineering exports dropped by 8.03 per cent. ''The outlook remains choppy, though global trade is opening up sequentially despite the Covid-19 pandemic,' the release stated.