Transportation

Global industry agenda


Transportation companies with the insights to understand the future will be the ones that shape it.

Rapidly changing customer expectations, ecosystem collaboration and new technologies are defining the transportation industry’s future, and straining legacy systems and models. Success in the industry of tomorrow demands market innovation, a sound transformation strategy and differentiated implementation.

Disruptive forces

Digital technology is accelerating new solutions and business models for transportation players.


Digital technologies

Redefining possibilities in the transportation industry, digital technologies will compound disruption and have hyper-exponential impact.


AI icon

Artificial intelligence

AI icon

Artificial intelligence

Serves as the engine for operational improvements

Enables a new level of customer interaction


Mobile icon

Mobile

Mobile icon

Mobile

Becomes the primary channel for customers and employee interactions

Provides data control


augVR icon

Augmented and virtual reality

augmented and virtual reality

Augmented and virtual reality

Aids in the organization of goods within a warehouse, port or transshipment facility

Improves efficiency by merging physical and digital realities


Robots and drones icon

Robots and drones

Robots and drones icon

Robots and drones

Facilitates the physical movement, inspection and verification of freight

Produces a highly reliable account of shipment status


Blockchain icon

Blockchain

Blockchain icon

Blockchain

Promises to improve security and secure data exchange

Enables transformational business model innovation


IoT icon

Internet of Things

IoT icon

Internet of Things

Equips physical assets with digital data

Optimizes existing operational processes


Emerging consequences

Each manifestation of disruptive forces has the ability to shape a new future and affect the customer, the enterprise and the market.


Number 1 graphic

Buyer impacts

Transportation substitutes become a higher priority, especially for the last mile

Transportation substitutes become a higher priority, especially for the last mile


  • Manufacturing companies are using 3D printing to circumvent supply chains and reduce costs
    Boeing started using 3D-printed titanium parts in its 787 Dreamliner jet airliner and indicates it will eventually save up to USD 3 million in construction costs on each jet built 17

  • 3D printing is expected to shift demand from intermediate and finished goods transportation to raw materials movements
    “The vision pursued with 3D print technology looks something like this: Goods no longer need to be shipped halfway around the world, because they can be printed out close to the consumer.” 18

  • In response to changes in consumer preferences, many companies are focusing on buy-local products, which reduce transport demand
    According to experts, “3D printing promotes local and regional production" and "the next 20 years will see 3D print centers spring up close to sales markets." 19

Number 3 graphic

Enterprise impacts

Operational and information silos limit innovation among incumbents

Operational and information silos limit innovation among incumbents


  • AI and cognitive systems thrive on complexity, but many AI projects focus on just one business silo
    Many transportation companies are conducting large- and small-scale trials, tests and pilots of AI systems. While these programs often support a larger vision for AI within the companies they serve, most begin as relatively small investments to prove the technology's viability. For this reason, while many AI projects have been initiated in the transportation sector, none have yet taken a comprehensive, cross-departmental or cross-operational approach. 22

  • Many of the types of improvement needed in the transportation sector depend on multiple silo coordination
    "[Transportation innovation] progress is often stalled because the public and private sectors see themselves in silos and too often find themselves at odds. The reality is that their mutual success is wholly dependent on one another, and both companies and cities will be far better off when the dialogue changes to be more collaborative.” 23

Number 6 graphic

Market impacts

Coordination within the transport ecosystem delivers real value

Coordination within the transport ecosystem delivers real value


  • Many transportation challenges require coordination between a wide range of companies and government entities
    In October 2017, King Abdullah Port successfully completed the first phase of electronic integration with Saudi Customs. “We are proud of this achievement, which is the result of the fruitful cooperation between King Abdullah Port, the Economic Cities Authority (ECA), the Customs, IBM, the leader in information systems development, Tabadul and the National Container Terminal,” said Eng. Abdullah Hameedadin, owner and developer of King Abdullah Port 26

  • A large portion of transportation delays can be attributed to non-transportation providers
    According to Metropolitan Transportation Authority (MTA) data, overcrowding is the top cause of weekday subway delays; out of a total of 55,694 delayed trains in August 2016, 22,407 were due to overcrowding 27

Digital excellence eclipses the importance of rapid delivery

Digital excellence eclipses the importance of rapid delivery


  • Open, data-rich business environments are not only supporting new operating and organization environments, but fundamentally different business modes
    China-based delivery business SF Express is integrating internal and external data to gain business insights that incorporate consumer behavior, local business environments and supply chain patterns to increase both service quality and operating efficiency 20

  • Unburdened by legacy organization and infrastructure, digitally-born start-ups possess an advantage in the marketplace
    Jerusalem-based Freightos is enabling importers and exporters to more efficiently browse through freight forwarders online to quickly compare quotes and identify the best available deal; the productivity improvements possible within the USD 15 trillion global logistics industry run into the billions of dollars 21
Number 4 graphic

Intermediaries that can master digital integration engender loyalty

Intermediaries that can master digital integration engender loyalty


  • Freight forwarders are offering a wider range of services
    In addition to freight forwarding, Crowley Maritime Corporation also offers customs brokerage and cargo insurance services: “We continue to listen to [our customers’] needs, then amend or expand our offerings appropriately,” said Steve Collar, senior vice president and general manager of international services at Crowley 24

  • Financial intermediaries are offering services to work around the complex back office process of major transport providers
    While many companies have placed an increased emphasis on improving internal back office processing functions, such as payroll, billing, collections and the like, several companies have arisen to address these needs as trusted business partners. One such company is Transport Back Office Solutions, or TBOS, a company that helps freight services providers and other transportation companies reduce the costs of back office functions by offering a compelling suite of services and solutions 25
Number 7 graphic

Private transport networks displace existing supply

Private transport networks displace existing supply


  • Some manufacturers are exploring more extensive horizontal integration
    In 2013, Tesla CEO Elon Musk created the Gigafactory to produce Tesla's own batteries. Tesla hopes it will provide an ample supply of batteries at a time when its rivals are supply-constrained and that economies of scale will allow it to produce batteries more cheaply than anyone else 28

  • Some companies are exploring the use of private fleets to improve supply chain performance
    In December 2015, Amazon purchased thousands of its own, Amazon-branded trailer trucks to transport products between its various fulfillment and sortation centers in hopes of taking control of its fulfillment process to make it as fast as possible 29

Pressing challenges

Acknowledge and act upon industry challenges
in the near term to stay competitive.


Traditional strategies collide with new models in global transportation
service markets

Traditional strategies collide with new models in global transportation service markets


  • Many incumbents pursue strategies that increase scale and capacity

  • New business models emerge that leverage digital excellence and optimized assets

  • Lower carbon and automation technologies reduce operating costs

Global transportation rates decline despite increasingly complex operational constraints

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Global transportation rates decline despite increasingly complex operational constraints


  • Select governments work to reduce industry frictions, but trade restrictions, regulatory requirements and frequent changes to trade practices drive up global transport complexity

  • Competitive forces in global transport markets make it prohibitive for service providers to raise rates

A deep-pocketed digital giant enters the transportation services market

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A deep-pocketed digital giant enters the transportation services market


  • Overcapacity depresses asset utilization and leads to the demise of high-cost transport providers

  • Dissatisfaction among customers provides a market entry opportunity

  • A digital giant enters the market with good service and low rates

Transformational opportunities

Technology-enabled opportunities empower your organization to address pressing challenges and compete in the marketplace.


Leverage technology to radically reshape your company’s operational cost curve

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Leverage technology to radically reshape your company’s operational cost curve


Lead the digital revolution with instrumentation and automation while applying energy-efficient industry solutions to reduce costs

Leverage data from newly instrumented operations to improve efficiency through the cross-silo use of AI technologies

Redesign interactions to delight customers across the transportation system

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Redesign interactions to delight customers across the transportation system


Invest in, experiment with and deploy AI across the enterprise to strategically reinvent the experience for transportation buyers

Invest in blockchain initiatives that facilitate seamless information sharing while building trust across the entire transport ecosystem

Collaborate well beyond your company’s established comfort zone

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Collaborate well beyond your company’s established comfort zone


Collaborate with members of the transportation ecosystem to deliver and derive value from industry standards

Adapt business models to capitalize on the growth of last-mile specialists, in-house networks and digital commerce giants

Start here to assess your readiness for
the future

Critical question 1

Customer satisfaction

  • Are your customers sticking with you because they feel locked-in or because they are loyal?
  • Is your company exploring new ways to interact with and serve transportation customers?

Critical question 2

Ecosystem strategy

  • What role, if any, is your company playing in the definition of industry blockchain solutions?
  • Are you partnering with companies that help you better understand and serve your customers?

Critical question 3

Technology initiative

  • Are your systems optimized to gather data and share insights across business silos?
  • Is your IT organization prepared to support new technologies like blockchain and AI?

Take action

Explore transportation industry solutions

Discover how IBM's breakthrough technologies are transforming the industry with smarter ways to do business, new growth opportunities and strategies to compete
and win.

Access more IBM Institute for Business Value transportation industry research

Read business insights and recommendations in our library of transportation industry thought leadership reports built on primary research and analysis.

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