The following Supply Chain Matters side panel blog provides added perspective to our previously published 2020 Prediction related to transportation contracting, logistics processes and services industry segments, and how advanced technology enabled players or start-ups will add to disruptive forces within this industry segment.

In our prediction, we stated that additional mergers and acquisitions should be anticipated in the coming year either involving traditional industry players, start-ups or existing technology providers. In many cases, technology could well be a positive influence in bringing together physical and digital processes, providing higher levels of end-to-end transportation visibility and decision-making context. We however, cautioned industry supply chain management teams to be watchful as to whether either carrier or shipper market dynamics are altered by such acquisitions. In other words, will the balance of influence be altered by the technology.  U.S. Trucking Industry

One potential example of what we implied from our statement occurred this week.

Trimble, a technology and services provider whose stated goal is to connect the physical and digital aspects of the transportation and logistics industry, announced this week that the company has signed a definitive agreement to acquire privately held Kuebix.

Financial terms were not disclosed, and the transaction is expected to close in the first quarter of 2020, subject to customary closing conditions. Noted was that at closing, Kuebix’s business will be part of Trimble’s Transportation sector.

Kuebix is described as being a leading transportation management system (TMS) provider and creator of North America’s largest connected shipping community, consisting of more than 21,000 shipping companies.  Trimble’s technology platform oversees what is described as more than 1.3 million North America based private fleet and commercial carrier trucks.

The Trimble Transportation announcement includes the specific statement:

Today, shippers, carriers and intermediaries operate with fragmented TMS software. The Kuebix acquisition will allow Trimble to break down technology barriers, enable actionable visibility and improve collaboration by delivering a single logistics platform for all participants in the supply chain. This Software-as-a-Service (SaaS), multi-tenant, cloud platform will optimize the entire logistics process from order management to financial settlement, improving efficiency and asset utilization for carriers and giving shippers access to expanded capacity and reduced costs.

A further statement comes from Dan Clark, Founder and President of Kuebix:

The combination of Trimble and Kuebix will accelerate the realization of our vision; a world where shippers, carriers and intermediaries leverage the same powerful TMS platform to provide the market with unprecedented levels of visibility and efficiency,” said Dan Clark, founder and president, Kuebix. “A single-platform TMS across all transportation modes will make it easier for shippers and carriers to plan their strategy, design an optimized transportation network, improve execution, and more accurately manage settlements. When all players in the market work together, everyone wins.“”

While Supply Chain Matters applauds the overall vision and goal, it is important to remind readers of the reality that carriers and shippers do not necessarily share the same financial and business objectives.

Carriers seek growth by increasing industry participation and shipper accounts, while increasing profitability through increased asset utilization and far higher efficiencies than other competitors. Market or industry influence, especially when transport demand and available trucking capacity are not in balance equates to rate pricing influence as was demonstrated throughout 2018. Trucking rates literally exploded as shippers could not meet their committed service needs because of a shortage of trucks.

Shippers require the highest and most flexible level of trucking and logistics services at the lowest available cost. They further require the flexibility to either contract carriers for extended services or routes, with the ability to tap the spot market when unplanned movements or process disruption occurs. The win-win is when the technology balances both constituency needs, but the challenge is that both needs can sometimes be in conflict. Government regulators often frown when market balance dynamics are tilted beyond what may be perceived as normal supply and demand market dynamics.

This commentary is not to bash this specific acquisition or its stated intent. We applaud Trimble Transportation for its vision.

Rather it serves to educate our readers that the history of technology platforms and associated is one of understanding the dynamics of the industry and its associated processes.

When the first notions of termed industry exchanges were introduced in the early 2000 period, announcements pointed to increased collaboration and better decision-making among industry players and associated suppliers. The technology evolved into areas of online auctioning of indirect and direct material procurement, sometimes at the disadvantage of certain suppliers. There were added costs associated with being an exchange member, and the market dynamics turned toward who pays, and who actually benefits. This is not to state that history will repeat, but rather that history provides learning for technology and services providers in the understanding and in balancing natural market dynamics.

Bob Ferrari

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