Transportation 2030: The race for digital services is on

Is a standard coming from the OEMs or rather the UBER for the transport industry?

New delivery schedule from the customer, every buyer knows this: he needs the seats earlier and also a third more than ordered. My traditional logistics company can't deliver the seats to the assembly line just in sequence and my own trucks are all on the road. So I pull out my mobile phone and call up "UBER for Trucks" to book a slot to take my goods to the assembly line. On the platform, numerous small logistics providers have posted their capacities, including the empty corners on the return journey. The other day, one provider showed up late, but generally the app works and the cost savings justify using it. I only take the basic option for insurance, not the premium version, but make a point of using the CO2-neutral provider - costs a bit more, but customers like to see it.

This is just an example of a fictitious future scenario, but the everyday life of a buyer could very well look like this or similar in 2030. UBER will probably not be the name of the app in the B2B sector - even though the company has successfully revolutionised the private transport market. But it is one of the most exciting questions of the IAA Transportation: Who will take over the services of the middle? Will there be a platform for central services in transport? And what additional services will new players like FinTechs knit around this offering and last but not least: Who will take the lead in this process and who will ultimately prevail?  

Transforming the trucks to full throttle - who can pay for it?

Numerous manufacturers are also already looking at digital services. However, an industry standard that would optimise manufacturer-independent use is not yet in sight. Yet the transformation of commercial vehicles is already in full swing: by 2030, every sixth truck journey will be without combustion engines. Rising costs for fossil energy sources additionally support the societal efforts to reduce CO2 emissions and the associated conversion to electric drives. Many of these vehicles will then already be able to drive largely or completely autonomously - a key technology for logistics companies to counteract the ever-increasing driver shortage in the industry. Connected services and networking between vehicles are becoming increasingly important and will be used everywhere by the end of the decade.

New, data-based business models will play an ever greater role in this. In the future, it will no longer be possible to earn money only with the transport of goods, but also with the many data collected in the process or services based on them: Financing offers, diagnosis and maintenance, comfort services and the enrichment of data are just a few examples.

Whether through market pressure or government incentives: without modern vehicles, a fleet will no longer be competitive in the future, in my opinion. But this complex transformation requires high investments - for the manufacturers, for society in building the infrastructure and, in the end, of course, for the customers in the transport industry.

In order to continue to play a leading role in the market after this transformation, truck OEMs must optimise themselves as much as possible in all areas: in the development of new powertrains and vehicles, production and new data-based business models as well as in attracting wooed talent. But what should they focus on? What role will they play in the ecosystem of the future? What competitors will they have to compete against? While almost all OEMs are focusing on the development of alternative drive systems, there is much less agreement on the other topics. The only thing that is certain is that no manufacturer will win the race for the future of the industry alone.

Services as a business model of the new century - also for OEMs

For over a century, the market for commercial vehicles was clearly structured: There were the manufacturers of the "hardware", who also took care of maintenance and repair if required, and there were their customers, who transported people or goods with these capital goods. With the use of connected vehicles, a large market for data-based services is emerging between these sectors. These can be financing or usage models for the vehicles, comfort, security or payment services, insurance, route optimisation, predictive maintenance, communication services and much more.

These services form an essential part of the functional scope of a vehicle and, similar to apps, can theoretically be offered on a smartphone by anyone who is in possession of the required data: by OEMs for their own vehicles, by logistics companies for their fleets or by external service providers.

Many OEMs already offer individual such services and have even created their own brands for them. At the same time, the acceptance of brand-specific solutions is rather low among larger customers, who usually operate fleets with vehicles from several manufacturers. For cross-manufacturer solutions, however, standardised interface formats would be necessary for the provision of data from the vehicles.

The market for these vehicle-related services is growing massively. The question of whether in future one will be able to offer such services oneself or together with partners and make them available via special platforms will be a key success factor for an OEM in the logistics ecosystem of the future.

Developing a networked solution to address global challenges

Long-term transformation - using data and connected technologies to help customers manage routes, costs and emissions more efficiently - cannot be divorced from immediate challenges such as electrification and cost optimisation. The simultaneity of the different aspects of change, their interdependencies, and the interconnectedness of different industries from manufacturers and logistics to energy and infrastructure make digital transformation one of the most complex challenges in history for commercial vehicle manufacturers and their customers.

For this transformation to succeed, OEMs need to forge new partnerships that will help them make these big goals a reality. No manufacturer can manage these changes alone. Even the industry leaders lack the investment capital to do so. Whether they want to compete with the logistics giants or offer them transformative services: OEMs need to leverage the expertise and experience of trusted, global partners to meet the challenge. They have also recognised this: Already, the industry is seeing an unprecedented number of collaborations and joint ventures between OEMs, suppliers, technology companies and start-ups.

Of course, these relationships alone will not be enough. OEMs must also make the necessary investments themselves and develop the right transformation strategies to achieve their goals. The talent and infrastructure must be in place to connect vehicles with customer, logistics and environmental data and to build on decades of operational and process optimisation.

Where is the journey going: Transport-as-a-Service (TaaS) as a solution approach?

Over the past decades, the truck OEMs have put themselves in an excellent position that needs to be defended, because they are very aware of the new challenges. Nevertheless, a change of perspective - especially with regard to their corporate strategy - could help them to turn the challenges into advantages and accelerate their transformation.

The future of the commercial vehicle industry, in my view, must be about reducing costs and emissions, building common standards, platforms and networks to achieve collective economies of scale and leveraging insights. TaaS in particular can lead the way.

TaaS, in my opinion, could be a solution approach to the current challenges: Innovation and embedded technologies can provide the insights and connections the supply chain needs to respond quickly to external forces, market dynamics and customer needs. They create a solid revenue stream for OEMs as they transition from sales to services, secure revenue streams and provide a solid foundation for further innovation and development in the future.

It remains to be seen whether the truck OEMs will be able to use the new technologies to change their business model and create new revenue opportunities such as data-based services or TaaS, or whether the new areas in the market will be taken over by other players.

Author: Markus Scherbaum, Capgemini

Further information: Markus Scherbaum on LinkedIn