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6 Trucking
Pages 123-154

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From page 123...
... Intense competition, low margins, and relative ease of entry in the trucking industry motivate firms to develop or adopt many innovations. Unstructured and semistructured interviews with trucking industry stakeholders indicate the following: Technological factors have enabled many process innovations.
From page 124...
... The significant conclusion of the paper is that innovations in the trucking industry have addressed two basic issues: the enhancement of value to customers at an affordable price and the utilization of information to improve business practices through the application of technology. In general, trucking firms have invested in technology that is particularly relevant to the key success factors in their segment in an attempt to enhance productivity and increase competitive advantage.2 Freight activity is increasing worldwide with road transportation and air freight becoming the dominant modes.
From page 125...
... For the purposes of this chapter, we embrace this broad definition and apply it to the study of innovation in the trucking industry. Figure 1 illustrates the innovation process in the trucking industry showing how technological and non-technological factors motivate and enable service and process innovations.
From page 126...
... The emphasis on customers and their important role in the innovation process is consistent with the current industry dynamic. Loyal customers become critical in a competitive environment where there are a large number of trucking firms for the customer to choose from and changes in customer preference entail no significant switching costs.
From page 127...
... Section 4 presents some of the important technological factors that have influenced innovations in the industry, including telecommunications, computer hardware and software, navigation and positioning systems, surveillance, sensing and tagging technologies, and data exchange and fusion capabilities (BTS, 1997a)
From page 128...
... While logistics once belonged in the realm of the manufacturing firm, today trucking firms are seizing the initiative and absorbing the logistics function into their value chains.6 As customers focus on cutting costs and developing core competencies, trucking firms are restructuring to offer the total transportation solution by including logistics and a variety of other transportation options in their corporate portfolio. The logistics business, almost nonexistent ten years ago, is now approximately a $20-30 billion industry segment and is projected to grow at about 20 percent a year (Industry Week, 1997~.
From page 129...
... J.B. Hunt Transport is but one of the transport companies that are a part of the portfolio of trucking firms used by Hunt Logistics.
From page 130...
... Firms such as CNF Transportation and Caliber Systems, through mergers and acquisitions, have developed a portfolio of transportation services. CNF transportation has, among its operating units, a package express firm (Emery Worldwide)
From page 131...
... Table 2 provides the area of focus for the non-technological factors. Globalization The fundamental nature of the overall business environment is changing.
From page 132...
... . To adapt to this new opportunity and to adjust to evolving cabotage9 rules, trucking firms are now engaged in a new process innovation called "sweeping." Analogous to a milkrun,~° the trucking firm sweeps a region for exports and moves 9Cabotage rules are laws prohibiting motor carriers from hauling freight between two points outside of the carrier's home region.
From page 133...
... are falling, while trucking firms are providing an increased level of service to their customers. Trucking firms are becoming more
From page 134...
... For example, one major shipper, an automobile assembler, has reduced the number of trucking firms with which it contracts by over a factor of ten in order to encourage the remaining carriers to coordinate their operations with the assembler and its trading partners. That assembler has reduced in-plant parts inventories to four hours or less.
From page 135...
... Consequently, the operating costs for the trucking firms have often exceeded operating revenues. The squeeze on revenue has led trucking firms to focus on costs as their means to greater profits.
From page 136...
... These teams foster teamwork and cooperation while keeping focused on achieving best business practices. Trucking firms are also calling for greater productivity through the use of longer, heavier trucks traveling longer routes.
From page 137...
... industry in general is short about 190,000 knowledgeable workers (Traffic World, 1997d)
From page 138...
... TECHNOLOGICAL FACTORS INFLUENCING THE TRUCKING INDUSTRY At the foundation of much of the technological innovation in the trucking industry lie five basic building blocks: telecommunications; computer hardware and software; navigation and positioning systems; surveillance, sensing, and tagging technologies; and data exchange and fusion capabilities. The rapid pace of technological change in these building blocks presents a quandary to firms.
From page 139...
... An especially powerful tool is the ability to make real-time operational information available to a dispersed transportation network. Trucking firms are improving traditional wireline communications with advances in satellite, cellular, and fiber optic technologies.
From page 140...
... Network linkages such as the Internet are being combined with electronic data interchange to offer innovative new service enhancements. For example, CFMF exchanges EDI shipping information through the Internet with one of its customers, Westinghouse Hanford.
From page 141...
... Such systems help trucking firms determine which customers and what locations are profitable and align their freight rates with their costs. The availability of low cost, high-powered computer hardware and software is providing the trucking industry with an information-rich environment.
From page 142...
... Surveillance, sensing, and tagging technologies are providing intelligence about the trucks' environment while also enabling process improvements. Data Exchange and Fusion Capabilities The broad impact of information technology (IT)
From page 143...
... The ability to locate a package or load in real time appears to be as important to the shippers as it is to the trucking firm. The availability of computing power and data exchange and fusion capabilities is also spurring innovation among truck manufacturers.
From page 144...
... Trucking firms have also begun to use wider 112-inch trailers. These enhancements in length and width increase the volume of freight that can be carried within the same weight and height limits, increasing productivity without increasing direct cost significantly.
From page 145...
... By investing in transaction specific assets and providing valueadded services through pallet management, the company describes itself as not just a trucking company but an asset to their customer. In summary, advancements in a variety of technologies have made a plethora of data available to managers in trucking firms.
From page 146...
... In the successful cases, the innovation push created by emerging technologies is matched by the innovation pull created by non-technological factors in the business environment and technological advancements in truck and trailer production. RELATIVE CONTRIBUTIONS OF TECHNOLOGICAL AND NON TECHNOLOGICAL FACTORS TO FIRM PERFORMANCE The trucking industry appears to be on the rebound, and the future appears to be bright.
From page 147...
... Non-technological factors, such as the changing customer and competitive environment, organizational restructunng, and globalization, are playing an important role in motivating new service innovations, thereby allowing firms to be G localization Changing Business Practices Non-Technological Factors T e~ecommun~cat~ons Computer Hardware and Softweare Technological Factors _ _ _ Supply Chain ~ Management / ~(Service Innovation)
From page 148...
... Trucking firms look to technology to differentiate themselves. Already many advanced technologies, such as AVL, satellite and cellular communication, on-board computers, and EDI are becoming commonplace in the industry.
From page 149...
... In contrast, the LTL segment of the industry emphasizes precise information relating to the contents of the truck and to network optimization. Accordingly, package tracking and route optimization have been more frequently adopted within that segment.
From page 150...
... For many firms, the competitive circumstances of the trucking industry has created an environment in which profit margins are small. The decision to invest in innovation rather than, for example, trucks is often difficult for trucking firms to make.
From page 151...
... Our initial conclusion based on the limited information ava~lable is that innovations enabled by technological factors often appear to enhance profitability by reducing costs through process reengineenng, strategic information, and cost management. Innovations attributable to non-technological factors appear to be the competitive weapons motivating new ways of doing business that provide strategic advantage.
From page 152...
... :21. Traffic World.
From page 153...
... Using the discussions as the basis, we developed semi-structured questionnaires for trucking firms and for technology vendors. The questionnaire for the trucking firms consists of three sections.


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