I interviewed Per Olof Arnas who discussed Unsolved Problems in Freight Transport - Climbing the Three Mountaintops of Real-Time Data.
It’s good to speak with you again, Per. It’s been a while since we did our last interview, and today I’m looking forward to hearing your views on unsolved problems in freight transport, climbing the three mountaintops of real-time data. Before we start, can you provide a brief background of yourself?
Yeah, I’m a Ph.D. in freight transport and logistics. I work at a technical university called Chalmers University in Gothenburg, Sweden. I do research on the digitalization of the freight industry, and I’m also doing a lot of teaching in advanced master’s and postgraduate levels of freight transport logistics and ITS, international transport systems.
Thank you. What are the unsolved problems in freight transport?
Well, the unsolved problems are the unhandled problems, more likely. The freight-transport industry, due to a number of reasons, is a very reactive industry. It doesn’t take initiatives unless someone forces them to do it. One of the main reasons behind this is, of course, that this is a high-capital investment, low-margin industry where you need a high turnover in order to make money because—in Europe, at least, when a company has a profit margin of 2 percent, they’re really good. They don’t have this kind of money to freestyle in research and development that other industries may have. This has made the freight industry very cautious in how they treat new ideas and how they adapt to concepts and change in environmental parameters.
One example of this is the transportation system we have today is very much based upon standardization. It’s based on hard-coding decisions, hardcoding rules so that we sort according to zip code; we decide cities into zones; we have fixed timetables, fixed routes, et cetera. All of these actions are to prevent decisions being made in real-time because decisions made in real-time or close to real-time in an operational setting in the freight industry, they are almost always badly informed and probably suboptimal.
The freight industry loves planning and it loves to put things into motion and to see the plan carried out. The problem here is, these are the unsolved problems that things happen in real-time that these systems cannot handle. The way they try to handle them is by allocating more capacity than they actually need at a capable than they would actually need and not utilizing the resources the way that they could theoretically be utilized. These are the unsolved problems.
Are there any other reasons why these problems exist?
Yeah. I think that—I’m not saying this is a bad system, by the way. How the system has been working, the past 50 years, since the freight container was introduced, we’ve seen a tremendous growth of trade across the globe, in many ways thanks to these standardization issues and containerization. What you also can see is that as soon as you standardize something, you force the variance or the long tail if you may; you force the tail very few standardized services, like container transport, and so on, where the industry naturally wants to force large volumes into these standardized services, thereby creating a long tail of specialized services with very low volumes. There is much business to be done in this long tail if you just can mass-customize your services, and the transportation industry is not very good at that.
Can you talk some more about how the problem can be solved?
Fortunately, we’re in the 21st century now, and we have information technology, we have sensor technology, we have computer capacity, and we have what I call an app maturity. We, as humans, we are very much used to having, for instance, subscription services like Netflix or shopping experiences like Amazon, where we constantly get new recommendations and help from these systems, and we are constantly using information technology without realizing that we’re doing it; it’s just an extension of ourselves into the digital realm. In the transport industry, we’re still very much trapped in the old paradigm of spreadsheets and tables and paper-based information. What the freight industry needs is to do what, in many ways, the passenger-transport industry already has done: move into the digital realm. To do this, you need to climb these three mountaintops that I’m referring to.
The first one is: You have to be able to collect data from a lot of different systems, connectors, and domains in real-time or very close to real-time. This requires sensor technologies to be implemented; it requires APIs, application programming interfaces, that enables a computerized system to gather data from a third party, for instance. This first mountaintop is about collecting data in real-time and in a structured manner so that you can utilize this data.
The second mountaintop, that’s even harder. You have to, in real-time, process this data. You need the tools that we find when we look at big data at the moment: advanced visualization. The purpose behind this real-time processing of all this data is, of course, to create decision support, to make real-time decisions feasible and better informed than they are today.
And then the third and most difficult mountaintop is when you have to take these decisions—if you get good decision support for the second step…you need to be able to exploit, often in very short timeframes, large amounts of information to make things happen in the real world. I think that’s the ultimate challenge, and that’s where we will have most problems, I think.
Thank you. Did we cover all the points you wanted to make about the unsolved problems in freight transport?
Yes, I would say that. The unsolved problems are…we need to look beyond the standardization as the only way to increase sufficiency. You have the technology to actually mass-customize transport services in a way that’s not been done before. It’s being done but on very small scales due to very highly efficient individuals, traffic managers and so on, drivers as well, if you look at road transport, but it’s not being done in a systematic way by the big actors; they are still very standardized.
Everyone I know has had a number of these yellow notes from UPS or FedEx stamped to their door, for instance, when they come home. “We’re trying to reach you. You were not here.” They will try this three times, and then you have to pick up your own cargo. It’s the 21st century now; there has to be a better way to solve these problems.
Thanks for sharing today.
About Per Olof Arnas
Per Olof Arnas
Senior Lecturer and Logistics Researcher at Chalmers University of Technology