September 14, 2023 Trucking Industry Ripe for SaaS Innovation, Here’s Why

Today’s technology and software innovations are not ones that trucking companies can afford to miss.

By Jules Schwerin – Partner – RTP Global

Delayed deliveries, increased costs, and reduced efficiencies, resulting from supply chain disruption and ongoing labor shortages, create a bleak outlook for the trucking industry right now. But my outlook is actually not all doom and gloom. Why? Because with greater challenge comes greater opportunity and I believe the trucking industry is ripe for innovation. Today’s technology and software innovations can help businesses improve logistics, scale, and navigate these difficult times in order to prosper in the future.

A challenging environment     

Before we get into that, let’s first understand the problems plaguing today’s trucking industry. Labor shortages are leading directly to delays yet truckers are still under pressure to deliver on time. The lack of qualified drivers means that some trucking companies have to limit their operations, or risk significantly longer wait times for delivery. It’s clear that help is needed, as too many trucking companies are relying on legacy software and manual processes to manage their logistics, handcuffing their agility and ability to maneuver external disruption.

Internet-native consumers, particularly in younger age groups, customers and service providers also increasingly expect and demand the cloud-based and automated solutions that they’ve grown up with, versus the previous generation of management who had been relying on spreadsheets, pen and paper and dated software. Yet, for some trucking companies, simply being able to provide location tracking on a truck is a struggle. This lack of organizational visibility hinders operations and amplifies consequences of negative market forces.                                

Lastly, competitive digital offerings are fast becoming a vital component of talent attraction and retention – especially as digital natives populate the workforce. So, the companies that fail to highlight and amplify their technology assets run the risk of losing their best talent to competitors or failing to attract good people in the first place.   

Adopting innovative software in the trucking industry can help companies solve these issues and provide better transparency and efficiency to customers. So, the question is why aren’t more trucking companies embracing software solutions to address the problems?     

There are a number of reasons why, for example:

• Lack of IT Support – These trucking organizations have traditionally operated with a ‘pen and paper’ approach and, until the pandemic, they didn’t feel a need to change this process. Understandably, these business owners want to run a garage or a trucking company – not an IT department – but as a result these businesses fail. Why? Because they purchase a software solution, but then never start using the tool, or do not use it correctly. Even after the purchase was made, implementation remains a difficult challenge. When vertical tools lack onboarding and customer IT support, they fail to reach their potential and help companies.
• Poor data input and management – Bad inputs will almost always lead to bad outputs. Data integration or data cleanliness, and therefore useability, is a major problem for these companies. To make matters even more complicated, the challenges of integrating with electronic data interchanges (EDI) prevent innovation. Oftentimes, new data innovation is blocked by the barrier of EDI integration whose difficulty is defined in part by the complexity and evolution of its standards. Digital transformation is more than a buzzword, it is still a huge trend that is increasing with large language models (LLMs), or natural language processing computer programs that use artificial neural networks to generate text, like Chat-GPT. For a trucking company, having better data quality leads to a better industry score cards (how truckers are graded) and more business and better rates for companies. EDI can be vital here as it provides automated and standardized data exchange, thus ensuring secure and correct communication. By making sure that data is correct, organizations can introduce workflows and automation. In today’s supply-chain environment, decision times are speeding up while the stakes are getting higher.
• Skilled workers needed to onboard the software – Trying to centralize fragmented and siloed data stacks and build on top of legacy technologies – or better, rip and replace – can be very expensive and requires further investment in human capital. Skilled workers need to be available for sometimes a couple months to onboard these systems. But, once the data is organized and the software fully integrated, these businesses can introduce efficient workflows and automation.

Whatever the hurdle may be, the reality is that a significant wave of innovative solutions continue to enter the space and lower the threshold to begin adoption. Given the robust benefits to both trucking organizations’ customers and employees, this wave of digital transformation is not one that trucking companies can afford to miss.

Keeping things moving     

Companies like Tealbook and Alvys are on a mission to address these challenges. Tealbook, for example, leverages state-of-the-art machine learning concepts to deliver high-quality supplier data light-years ahead of traditional, manual methods. It uses analytics in supply chains to help businesses meet diverse sourcing claims; raw-materials data can help with ethical sourcing goals; and carbon-emissions figures can help with climate goals.

Alvys, on the other hand, is all about improving efficiencies for trucking organizations. By streamlining major steps in the workflow like load management and driver management, all the way down to reporting and compliance, they’re able to help trucking companies move their loads more efficiently. Having built their own EDI, they are able to seamlessly integrate with any data source required. When technology and innovation are the new names of the game, SaaS companies like these are helping trucking companies surge. It’s an important area for investors to keep their eyes on.

The fragility of global supply chains has shown us all the value in transparency – and now that offering must be unlocked with solutions that digitally transform business processes. Due to the number of problems in need of solving, and the degree to which technology has already been adopted, the trucking industry – an important industry to the fabric of our country – offers incredible growth potential.

Jules is a Partner on RTP Global’s US investment team. He focuses on investments in enterprise software technologies, with a particular interest in companies building for vertical markets, software-defined automation), SaaS for SMBs, and privacy preserving technologies.

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