AI and Trucking Trends Take Center Stage on Day Two of SMC3’s Jump Start 2024
Authored by SMC³ on January 30, 2024
The LTL industry is on the edge of its seat when it comes to how artificial intelligence (AI) will impact business and operations going forward. Will it replace human workers? Will AI and humans work together to improve many of the tasks that humans exclusively do today?
MIT professor Dr. Yossi Sheffi explored the current state of AI in trucking and introduced several next-generation AI innovations to rapt attendees at the SMC3 Jump Start 2024 conference. From the inevitable mass introduction of autonomous trucks on U.S. highways to fleet and maintenance optimization, AI is the fastest-evolving technology with the greatest potential to completely transform U.S. trucking.
“The main challenge is how do we get machines and people to work together,” said Sheffi. “Because there are things that people are best at, there are things that machines are best at, and the trick is to get the best of both.”
Sheffi noted that machines are very good at doing the same, repetitive tasks. Machines don’t get sick, they don’t take time off—but they also don’t deal very well with variable environments and changes. This is the thing that people looking at generative AI—deep models that can learn and create—are most worried about. “The truth is that [generative AI] is very far from this. It says certain things based on the training data, but it cannot think outside the box,” he said.
According to Sheffi, the industry is long way from the point when you can tell a generative AI model to build a global supply chain. That’s a complex system with millions of variables—far beyond the capabilities of AI.
When it comes to autonomous trucking, Sheffi pointed to the current high salaries of truckers for companies like Walmart and UPS that aren’t sustainable and will drive automation. The same holds true for main carriers driving on open freeways and going hub to hub. But it would be more difficult for trucks that navigate older city streets to learn models and mitigate risk, he said.
Sheffi maintained that autonomous trucking won’t be the job killer that many expect. “Other jobs will be created. When intermodal started to be big, drivers were petrified that jobs would go away. They didn’t. Lots of other jobs were created and it’s the same thing here,” he said.
He pointed to new infrastructure that will need to be built, such as more truck stops to maintain and fuel autonomous trucks. The industry will also need human drivers with trailers to come from the city to go the last mile of delivery. Additionally, he described the need for new, large and spread-out warehouses and distribution centers that can serve customers within a day.
Offense vs. Defense with AI
A panel discussion moderated by Jay Tomasello, CIO at Forward Air Corporation, dove into whether the trucking industry is playing offense or defense when it comes to AI. Expert panelists Jim Badovinac, VP of LTL commercial development at Green Mountain, and Pradeep Vachani, CEO at LYNXUS, weighed in.
Prior to Green Mountain, Badovinac spent 29 years at FedEx in various pricing, operations, and sales roles. When FedEx analysts became overwhelmed with pricing requests, the company took an offensive approach. He led the charge to explore AI and machine learning to automate the requests that didn’t require human intervention. He said at first the analysts were fearful that AI would steal their jobs, but the opposite happened.
“It allowed them to feel like they had a greater impact on the corporation,” Badovinac said. “They had deeper conversations with sales and their leaders. They quickly realized that we needed them more than ever.”
Badovinac added that organizational leaders need to be purposeful in how they communicate about AI initiatives from the top down and have everybody in the company working toward the same outcome with AI.
“The artificial intelligence that we have seen over the last year is dramatically different than what has been researched and/or brought to market in the last 25 years,” said Tomasello. “Our industry is kind of on the tail end of any sort of tech wave or trend. But AI will impact every part of your business and every part of your life.”
Vachani noted there are fantastic opportunities and great use cases for leveraging AI in practical business applications. Applications around intelligent document processing, conversational AI, improved customer service, and enhanced analytics are improving due to AI technology, he said.
“There are many intelligent document processing platforms in the market and they all use some component of machine learning and AI to really improve throughput,” said Vachani. “We’re certainly doing that with our clients.”
Badovinac pointed to the resource-based model for freight audit and pay at Green Mountain that serves 70 customers and has close to 175 employees in the department. “AI has led to automating repetitive tasks, eliminating human bias, and creating organizational efficiencies. But we still want people touching the output,” he said. “It doesn’t necessarily mean less people, just fewer manual tasks.”
Tomasello asked the panel what taking an offensive or defensive posture on AI means to them. “If you’re not already thinking about AI and machine learning, all the different components of it, and how it can better your organization, you’re already falling behind,” said Badovinac.
Trends, Challenges, and Opportunities in Trucking
SMC3’s CTO David Knight moderated a Jump Start Leadership Series: In the Fast Lane session with Sheer Logistics CTO Rob Cook. In an in-depth discussion, they covered ground with conversations on the trends, challenges, and opportunities driving trucking and the next-generation supply chain.
Cook has been in the supply chain industry for three decades working for various large consulting companies. For the past 10 years at Sheer Logistics, a managed transportation services company, Cook led the management of inbound purchase orders, vendors, outbound sales orders, financial reconciliation, and data exchange.
“With 30 years of experience, I’ve been able to make every mistake in the world—and if mistakes are an education, then I’ve got a PhD,” Cook quipped.
In terms of driving technology forward at Sheer Logistics, Cook stressed being able to present recommendations to the board of directors. “We’ve got to speak the language of business,” he said. “We have to make sure we articulate the technology solutions that we’re putting in place to support our management transportation service.”
Cook noted that about 90 percent of small- to mid-size supply chain businesses in North America still run on Excel spreadsheets. That market is Sheer Logistics’ sweet spot because they can’t go in talking about digital supply chain twins with customers using spreadsheets, he said.
The conversation tilted toward cybersecurity and Cook said several of their truckload partners got hit with cyberattacks multiple times in 2023. As a result, Sheer Logistics deployed a multitude of endpoint security solutions to help its truckload partners improve their security postures.
On sustainability initiatives, Cook shared that Scope 3 CO2emissions reporting for outsourced transportation emissions is also on the rise. “We were fortunate that we’ve been calculating Scope 3 emissions in our data warehouse for five years. We had a partner-customer based in Europe that is on the forefront of CO2 emissions and we walked through that piece with them,” he said. Cook believes increased emissions reporting will become a requirement sooner or later, and managed services providers need to position themselves to take advantage of that and provide those services.
Cook also believes applications for AI will benefit sustainability initiatives in the trucking industry. “You can download ISO 1483 and GLAC standards and your head is going to start spinning,” he said. “AI can provide assistance on that piece.”