DC Velocity - November 2017

64 DC VELOCITY NOVEMBER 2017 www.dcvelocity.com AT AN EVENT IN 2012, ROBERT NATHAN, FOUNDER OF logistics services provider LoadDelivered Logistics LLC, approached Jeff Silver, the head of broker Coyote Logistics LLC, to explain Nathan’s idea for building one of the first mobile applications for North American brokerage. After listening to Nathan’s proposal, Silver asked if LoadDelivered shipped 3,000 loads a day.

No, Nathan replied. Silver demurred, saying that only operations of that scale would be able to justify the investment in the type of application Nathan proposed.

Nathan killed the application and spent the next five years building procurement and digital matching software that large-moved. Speaking last month at a conference sponsored by IT provider project44, Nathan said a broker would actually have needed to flow 10,000 loads a day through its network to create sufficient ROI (return on investment) to justify the expenditure.

The anecdote ties into an issue starting to occupy more brain space in the trade: Is the pace of technology deployment racing ahead of the industry’s need for it? Has technology taken the form of solutions in search of problems? Is it becoming a substitute for developing and nurturing customer relationships?

When industries overcompensate, they tend to overshoot. That may be what’s going on here. For decades, the industry—with several notable exceptions—was woefully behind the IT curve. Then, almost like real estate developers who suddenly discover a run-down pocket of a city with great potential, money began pouring in to pull the business’s IT capabilities into the 21st century. In many cases, the investments were long overdue and have undoubtedly been beneficial. Yet as the deluge continues, we’re starting to see pushback from those who move the goods and must compete with IT for budget dollars.

“If you are building platforms for the sake of technology, you are missing the point,” said Mike Rude, director of international marketing for FedEx Corp.’s FedEx Services unit. “If we can’t articulate the business benefits of IT to our customers, we will all lose,” he said.

Derek J. Leathers, president and CEO of truckload and logistics
company Werner Enterprises Inc., said some IT investment has
become tantamount to killing a mouse with an ele-
phant gun. For example, Werner spent millions of
dollars on sophisticated track and trace systems, but
the technology has been applied to such a small part
of the company’s operations as to make Leathers
wonder if the payback justified the investment.

“We have to say no to more data,” Leathers told the crowd, adding that emphasis instead must be placed on the core of the industry’s value proposition. “Spreadsheets don’t move freight. Trucks do,” he said.

Logistics technology is not disappearing. In fact, companies will likely pick up the IT investment pace if, for instance, it can be demonstrated that the technology can deliver superior business analytics. But perhaps we’ve reached a crossroads in IT attitude. Companies will not blindly follow the technology drumbeat just because a)

the industry needs to play catchup, b) they haven’t yet utilized it, or c) their competitors have it and they don’t. Unlike, say, a venture capitalist, it’s the rare practitioner who can afford to toss money at the next big thing because he or she has cash to burn.