April 21, 2018

Just When We Thought the Shipping Industry Couldn't Get More Efficient... IoT Happened

In many industries, companies are transforming into more intelligent and data-driven enterprises. A good example is the shipping industry, notoriously known for having small margins and being focused on constantly reducing costs.

For example, the average truck driven in the US is filled with 30% air on average due to humans loading cargo inefficiently. Having sensors inside the trucks, which would help to better allocate freight, could reduce that number to zero. Furthermore, the number of total trucks needed, while holding total cargo constant, would decrease by 10%. This is not only an extraordinary cost saving but also has the effect of lowering carbon emission.

Case Study: Telefónica

One firm that is active in the market of fleet management is Spain’s Telefónica. They provide a global, subscription-based turnkey solution of IoT devices that aggregate data, which once analysed and turned into insights, allows for efficient fleet management.

Optimizing fleets is done by installing IoT sensors that visualize a vehicles geographic position and ensure compliance with routes and schedules while simultaneously being able to optimize routes based on current conditions (weather, traffic, etc.). The system is adaptive and can be used by couriers, long haul trucking firms, leasing companies, car rental agencies, as well as in the management of a company’s sales force fleet.

IoT helps increase safety of employees, vehicles and goods by analysing driving schedules, ensuring legal compliance, increasing productivity by optimizing maintenance schedules - ultimately improving business operations.

This example shows how a company can innovate both its product and process. Telefónica introduced a rather radical product innovation because it entered into a new business field not directly related to its core business of communication technology. In addition, Telefónica uses its fleet management software as a way to innovate its process which enables the company to apply a lean management approach.

Moreover, Telefónica is now able to position itself in a market, where it was not present before. In addition, based on Telefónica innovation in product and processes shipping companies are able to improve their positioning. The reason is that the new approach makes it possible to ship materials to rural areas that were not economically feasible in the past, thanks to decreasing logistics costs.