By Jonah McIntire, Chief Product and Technology Officer, Trimble Transportation
Tariffs. Pandemics. Geopolitical conflicts. Natural disasters. Labor unrest. When we think about disruption and disorder of global supply chains and the transportation and logistics (T&L) that underpin them, it’s often acute crises that grab the headlines as the culprit behind order delays, price increases or inventory shortages.
Major events can have sudden and significant power to unsettle, even if temporarily. However, for shippers, carriers, brokers and a vast network of other logistics service providers, the grind to optimize operations and protect margins comes less from navigating port strikes, hurricanes or other acute threats and more from searching for a steady drumbeat of incremental improvements that reduce costs to a minimum.
In a global market that moves billions of tons of freight annually (the U.S. transportation system alone moved more than 20 billion tons valued at nearly $19 trillion in 2023), for most companies T&L is a cost-to-serve commodity—if customers or consumers can get a comparable service for cheaper elsewhere, they will. This pressure is compounded by Groundhog Day-like investment cycles that must anticipate inevitable macro issues (i.e., fleet maintenance/turnover, technology/IT upgrades, workforce hiring/training) where ROI can be months, if not years down the road.
The reality is:, if the cost-to-serve ratio becomes non-competitive, so does the company. While some may try to migrate to more isolated or rural areas with fewer players, on the T&L Serengeti, those that fall behind are often left behind others that have a higher metabolism to digest superior practices and emerging technologies that steadily lower this ratio.
Bridging the physical world and the back office
T&L is built on two disparate but deeply connected worlds: the physical and the back office. The physical is the world of vehicles, drivers and warehouses, the material supply chain that moves, tracks and stores products and raw materials and a domain where technology like robotics and IoT are evolving how things get from A to B. The back office is the world of invoices, driver logs and transport orders, the pure information management that informs the physical world and a domain where technology like AI/automation is revolutionizing both workforces and workflows.
Through terabytes of highly contextual, commensurate data, nearly 50 years of industry trust and authority and a global network of customers and partners, Trimble helps connect these worlds to manage disruptions and lower cost-to-serve through services and solutions that simply didn’t previously exist.
Take a vehicle breakdown on the side of some interstate, a common nuisance every trucking company has to manage. Our TMT Fleet Maintenance software streamlines repair order generation, automatically populating maintenance records and warranty details to support future warranty claims—an exhaustive process that historically had to be done manually.
This trinity of data, reputation and network also allows us to embrace a Switzerland-like role of neutrality across the industry to provide critical benchmarking that helps T&L companies understand how they compare to market standards. Where it would be nearly impossible for even the largest carriers to gather enough comparable information on peers and competitors, we collect and anonymize troves of information on operational efficiency—driver retention, average fuel costs, vehicle fill rates, pay scales for services—to help companies identify pain points and strategize better operational hygiene.
AI’s back office revolution
Let's revisit the scenario of a vehicle broken down on the side of the interstate. The industry is heading toward a not-so-distant future where, instead of a driver contacting the back office for a tow or service station recommendation, they'll engage with a conversational AI agent. This agent would collect and generate details to create the road call case and make service recommendations, driving efficiencies for breakdown teams. Taking this a step further, future integrations will allow this interaction to happen without much, if any, driver action. Telematic data streams and agentic communication will enable seamless breakdown management.
Queue the alarmists, but the uncomfortable reality is many T&L companies face staggering turnover rates, upward of 90% annually for some. This isn’t about displacing talent or replacing jobs, rather plugging skills gaps, and promoting workers from number crunchers to AI supervisors as they move beyond mundane tasks to more meaningful responsibilities. History is full of examples of technology causing consternation in the job market—after all, video did kill the radio star—but in an industry plagued by persistent workforce challenges, AI’s focus isn’t on butts already in seats, but the countless open seats these companies lack interested candidates to fill.
One of the most controllable expenses in T&L is the back office. If a company runs at a lean 5% profitability, investments in AI agents can create more agile operations and healthier margins that free up dollars for marketing, sponsorship or employee compensation. I see this frequently in my interactions with customers, what I call the AI-native advantage—startups born with efficiency in their source code tend to have sounder revenue-to-headcount than legacy peers that are often mired in a stickiness to maintain (let alone scale down) this ratio.
Like most other industries, we’re witnessing a step change with AI, particularly to back office functions. Traditionally, employees use ERPs and a myriad of other software systems as institutional sources of truth (i.e., transaction history, approval chains) with some light automation sprinkled in. The next generation of these systems won’t merely be enhanced tools with stylus-like upgrades, but transformational shifts in how companies operate.
T&L as a utility
Let’s face it, we’re a generation that has come to expect that anything from toilet paper to that vintage Battlestar Galactica thermos can arrive on the doorstep in 24 hours. We’re only a few rings in the family tree removed from when the cost and time to ship anything cross country (let alone internationally) was prohibitive.
Today, T&L is quickly resembling basic services like water and sewage or internet access where decades of investment and incremental improvements have built trusted systems that for most users are largely out of sight and out of mind. I’m confident T&L is on this same path, and the companies that can rapidly adopt best practices and innovative technology that build efficiency and erode cost-to-serve will be the ones that lead us into this new era.
Learn more about Trimble transportation solutions.
