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‘Corporatisation’ of the industry: Trucking is taking on operational aspects beloved of big business

20 January 20 - In the News

#Transport, Shipping & Logistics

Author: Holding Redlich partner, Nathan Cecil

Publication: Australasian Transport News

Publication date: 20/01/2020

In my 15 years observing the transport industry, perhaps the biggest shift that I have noticed has been what I refer to as the increasing ‘corporatisation’ of the industry. That is, the increasing adoption of structures, practices and focuses seen more in ‘big business’ than on the big shipping lanes, rail tracks and highways.

The shipping and logistics sectors were the first to move, which is probably a function of the fact that most of their businesses are either very large and/or operating or focussed internationally. Their sheer size and the added operational and regulatory complexity associated with operating across international borders meant that it was inevitable that they adopted a more corporate mindset and practices.

The road transport sector has, by and large, been the last hold-out. This isn’t a criticism, but a function of the fact that the majority of road transport businesses are family-owned enterprises, albeit some of them very large enterprises, and their operations and focus are generally purely domestic. As a result, they have generally been relieved of much complexity in their operations and regulation.

But, the corporate shift in the road transport sector has been gathering momentum for many years now and looks like it is really surging.

So, is that blue collar starting to fade to white?

There’s hardly a risk of that (how could you look at yourself in the mirror…). But there is certainly a greater and increasing focus on the development and introduction of a systemic approach to productivity, recruitment and people management, technology, safety and regulatory compliance.

Yes, these issues have always been present in the sector, but not previously with the same concerted focus. In the past, these issues were addressed more within the framework of basic survival – ‘what do I need to do to keep the wheels turning on the road?’ These days, they are being considered independently.

Another difference is that these issues are increasingly not being addressed at the scale of ‘my’ or ‘your’ issues, but as ‘our’ issue – that is, industry-wide structural issues which are required to be addressed on an industry-wide basis.

So what are some examples?

On the productivity front, perhaps the biggest example is the increasing adoption of fleet management technology. Fleet management technology is intended to ensure that vehicles are monitored and maintained better, to ensure that they are on the road for longer. While they are on the road, fleet management technology is intended to make sure that they are full more often.

As fleet size or the number of customers grow, it becomes increasingly harder to handle asset and workflow management, which is why more and more operators of all sizes are turning towards this solution.

One recent example is the roll out of electronic fleet management technology and (once approved) electronic work diaries across the ALDI Australia fleet. Although the primary driver is safety, ALDI noted that it has been shown that businesses that have in place risk and performance management systems are generally more efficient and productive and suffer less incidents than those without. So, addressing risk and safety can also boost the bottom line.

On the recruitment and productivity front, the biggest example is the increasing national call for the development of dedicated training and recruitment pathways into this ageing sector.

There is growing recognition that drivers are not just zoo animals put in front of a steering wheel – they are highly skilled professionals who rely on expertise and training beyond simply the physical operation of vehicles. Despite this, there is no true dedicated training pathway into the sector.

As the number of trucking sector workers is expected to rise from 209,000 to 223,000 over the next five years and given that over half of drivers are over 45 years old, a training and recruitment plan for the sector is essential.

The mindset has shifted from ‘we need drivers’ to ‘our sector needs a viable training and recruitment approach to enhance the profile of the sector and provide a pipeline of skilled drivers’ – much like many other professions. Although this issue hasn’t yet found its way into, for example, the national Heavy Vehicle Safety and Productivity Program, the groundswell of calls for policy and government assistance in this area suggests that the question is ‘when’, not ‘if’ working in the sector will become a ‘profession’ in the true sense.

On the technology front, this has by far been the area of greatest development. Performance of the business, its trucks and people is increasingly being monitored and managed using technology. Navigation devices, fuel monitoring, fleet management, workflow allocation, fleet tracking, speed monitoring, autonomous vehicles, electronic work diaries and fatigue and distraction detection technologies are merely a handful of the developments in this area.

Each represents an area where ‘the system’ is increasingly relied on to manage performance and issues, similar to the electronic and online systems that proliferate in the corporate sectors.

On the safety and regulatory compliance front, the biggest development has been the introduction, amendment and current review of the Chain of Responsibility laws. They have resulted in the development of structured risk and safety management systems and processes in businesses of all sizes, rather than safety being treated ad hoc or as an ‘operational’ issue.

Whilst the effectiveness of the laws is currently being reconsidered, you can’t doubt the fact that they have driven a sharper focus on safety management at an organisational level. The laws have also driven or acted as a catalyst for many of the other areas of ‘corporate’ developments that we’ve discussed, in particular the training of workers and adoption of technology solutions. This fundamental safety focus is one of the greatest hallmarks of a ‘corporate’ approach to business – where the safety and wellbeing of workers is just as important as the functioning of the business, because you can’t have one without the other.

So, it looks like the future of the trucking sector is likely to look a little more ‘corporate’. Some will lament the loss of the defining character of the sector. Others will see it for what it is – better business.

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