Major change imminent for trucking

Coming decades to revolutionise the transport industry, hear Trucking Australia delegates

Stay agile and embrace the opportunities technology brings: that was the key message delivered to delegates at the ATA's Trucking Australia 2017 conference in Darwin, when addressed by Brendan Richards during the 'Preparing for the Future' seminar.

Mr Richards, of business management group Ferrier Hodgson, presented delegates with a snapshot of what Australia's transport industry might look like by 2050, detailing the global megatrends and major influences that will reshape the sector over the next three decades.

"In 2050 we should all be expecting that transport is quite a different industry to what it is today," he said.

"The real issue is, I think, not whether the changes will occur, but whether they will occur by 2030 rather than 2050."

Australia's road transport industry as it currently stands, with around 42,000 commercial entities, has remained relatively static over the past few years. Of that number, approximately 41,000 comprise businesses with fewer than five trucks, with a large percentage of that number comprising single-truck entities.

That's because the barriers to entering the industry are relatively low and the industry has historically been built on the ferocity of competition. However, as Mr Richards pointed out, this has led to a 'race to the bottom' – in terms of rates and of what companies are prepared to give up to their customers – that simply isn't sustainable.

Global megatrends

Meanwhile, the industry is being shaped by a number of 'global megatrends' – namely globalisation, digitisation, urbanisation and resource scarcity – which are being played out amid a requirement to up the ante in terms of both safety and environmental protection.

On top of all that, China is set to become the dominant world economy by 2050, taking over from the US and leading a global shift that will see the Asia-Pacific region account for 50 per cent of global economic activity.

"The Australian economy is actually extremely well positioned for growth, more so than many other economies," said Richards.

However, individual income in real terms will continue to stagnate in Australia, said Richards, and while the population will continue to grow it will also continue to age. These trends spell a major headache for the Australian government in coming years.

"There are actually no more people working in 2050 than there are today, and these are ultimately the people who have to support a bigger economy," Richards said.

Urbanisation is also set to continue, with 86 per cent of population growth occurring in urban areas in 2015.

"So we've got this increasing number of people hovering around the same areas, with fewer as a percentage of the total actually working and of those typically working less hours and earning less money, contributing less tax for the government to deal with," said Richards.

"Ultimately this will force the government to turn to the private sector to look for a basis to support that increasing infrastructure need."

Technology leads the way

What does this mean for transport in Australia? An awful lot, said Richards.

"The growth of the freight task will increasingly be skewed towards technological solutions, as opposed to a continuation of our historical current experience of moving freight by one of four particular modes [road, rail, sea and air]," he said.

Instead, the industry will be transformed by new digital technologies such as blockchain, which will seek to remove middle men from transactions and provide digital proof of identity, and increasing connectivity, which could see trucks in constant communication with other trucks and infrastructure to allow for automatic rerouting to maximise efficiency.

Replication technologies, such as 3D and 4D printing, could allow customers to produce a wide variety of items themselves and on site, negating any need for those items to be transported from a producer, wholesaler or retailer, while drones will play a key role in 'last mile' delivery.

Transport hubs will also change, said Richards, citing the example of Stockholm, Sweden – where a central hub coordinates all goods moving into and out of the city.

"You will see by 2050 a completely different landscape for this sector, and that doesn't mean to say it's all doom and gloom," said Richards.

"More than anything this is about opportunity. And the great advantage that anyone in this sector has today in incumbency – nobody knows it better, nobody's better positioned to think through how to actually tackle the change and invest in their business to morph it into a future-ready business."

How to go about that? Richards said if today's operators are still up-scaling in terms of assets and property, it might pay to think again and see whether that investment could be better directed towards areas like IT, intellectual property, and simply having the right people in your business to meet these future challenges.

"It's not about doing the same thing on a different scale in the future," he said.

"If you're scaling up a current business model, you're not thinking about it the right way."

Click here to view Ferrier Hodgson's recent report,

Look Out, Here comes the Future: Transport 2050

Major change imminent for trucking

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