Time Is Ticking For Trucking Fleets To Transition To 4G LTE
US network providers are retiring their 3G networks by 2022, but a large portion of the trucking industry continues to run 3G-enabled devices while being oblivious to the sunset
A hearty welcome to the 28th edition of The Logistics Rundown, a weekly digest that aims to put some perspective on what’s brewing within the logistics industry. This is a space where we religiously dissect market trends, chat with industry thought leaders, highlight supply chain innovation, celebrate startups, and share news nuggets.
While there's no dearth of drama within the trucking industry over the last year on account of the pandemic, the market is now witness to a perfect storm brewing up, threatening to choke fleets' telematics operations. The discontinuation of the 3G wireless network—colloquially called the 3G sunset—is in full swing, with all major telecom providers in the process of phasing out their 3G networks on a rolling basis.
In April this year, we did a newsletter on how 3G sunsetting is a dark looming cloud over the trucking industry, considering most telematics run onboard trucks work on 3G networks today. The urgency to act on transitioning telematics to the 4G LTE network is only stronger now, as solutions depending on 3G infrastructure will cease to function after the sunset, which is expected to be total by the end of 2022.
The urgency to act on transitioning telematics to the 4G LTE network is only stronger now, as solutions depending on 3G infrastructure will cease to function after the sunset, which is expected to be total by the end of 2022.
Nonetheless, the trucking industry continues to lie dormant to change, with a majority of the trucking fleets oblivious to the need for transition. "It's almost too late already," said Steven Dwight, SVP of business development at TruckX. "Lack of planning, procrastination, and a late adopter mindset will put carriers in big trouble, something in the likes of the ELD mandate."
The ELD mandate was a quintessential case of the 'boy who cried wolf,' as frequent pushbacks on the transition deadline convinced a part of the trucking community that the 'final deadline' would never occur—leaving hundreds of thousands of trucking fleets without an ELD when the soft mandate came into force in Dec '17.
But unlike the ELD mandate, the 3G sunset is far less noticeable. The sunsetting does not have a definite termination date in place and lacks the media limelight, which could ultimately result in fleets stranded without fleet visibility.
Current supply chain bottlenecks threaten to complicate transition efforts even further. "A lot of these 4G LTE telematics hardware products are imported and held up in all sorts of supply chain issues, leading to a three-month delay. There's a driver shortage as well, which means the transition isn't happening in the field, or as quickly as you can hope for," said Dwight.
Transitioning asks carriers to tear out and replace the 3G systems with the new 4G LTE hardware on their trucks. Hardware transitioning for a large fleet is a complex process, which involves shipping out the required hardware to maintenance centers across the country. The fleet then mandates its truckers to drive the trucks to the nearest designated service center for reinstalling the new hardware.
"The deinstall and reinstall process is complicated as the fleet management needs to decide on who does it and when they are going to do it. What are the installation costs and availability of the trucks? Are they doing it in service centers or remote installations? Do they need to provide specific training, or is it a continuation of the old platform? These are questions that need to be answered."
And even when fleets get their transition plans in place, they face fresh issues with tackling law enforcement. The ELD mandate warrants the need to maintain the hours of service logs on the device during the entirety of a haul, subject to checks by the enforcement officers.
"Here's the kicker—you have to have a week's worth of logs on a new system, and until then, it remains non-compliant. You can't rip off a previous 3G system and replace it with a 4G LTE system as your truck will run non-compliant for a week. So you run both systems at the same time—which, again, is illegal," said Dwight. "Essentially, transitioning is about having a driver run both the systems on the truck and be able to explain to a law enforcement officer that you're not gaming the system by running two platforms at the same time, but rather looking to transition."
Transitioning is about having a driver run both the systems on the truck and be able to explain to a law enforcement officer that you're not gaming the system by running two platforms at the same time, but rather looking to transition.
Compliance issues aside, companies wishing to switch systems also cite problems with long-term contracts they signed inadvertently. For instance, a carrier with a 5-year contract that still has a couple of years left on the agreement will find it hard to transition as they stand to lose money by breaking the contract.
"There's also a need for a mindset shift amongst fleets, which approach the transition from a pricing focus and not a value focus, especially seen amongst late adopters," said Dwight. "And it isn't just with the carriers—tech solution providers are also at fault. Legacy providers are not making the right investment on new platforms that offer higher value like AI, edge computing, and better analytics. Some of these providers are waiting too long to adapt and are quickly becoming a bad example in the market."
Nonetheless, the clock is ticking, and for carriers looking to hold on to the visibility they have, it's important to remember—being proactive is key.
The Weekly Roundup
While there are a lot of trucks available in the US market, many of them are stuck in regions that aren't seeing heavy activity or are specialized to carry a specific type of freight. While the demand for dry van and reefer capacity has been over the roof due to high retail activity, demand for flatbed has been mellow, considering industrial activity has been subdued since the pandemic.
Moody's Analytics experts have confirmed fears of a prolonged supply chain crisis, citing global economic recovery to increasingly cause disruptions across the length of the supply chain. Border controls, mobility restrictions, and pent-up demand will combine to sustain and increase global production levels, which will suffer from issues with delivery on time, feeding the existing logistics bottlenecks.
Cargo backlog at the West Coast ports has prompted them to stay open 24x7 during the weekdays. However, the process is far from easy, as operations downstream of port activities are yet to play catch up. The move has failed to attract enough truckers to haul loads during the extended hours, as some drayage operators feel it is not worth the extra expense to keep operating round the clock.
Continuing global bottlenecks across the transport corridor have pushed Chinese major JD Logistics to build a sizable fleet of planes, with the aim of having no fewer than 100 planes by 2030. JD expects the spectacular e-commerce growth trend to continue long past the pandemic, betting on air cargo capacity as it expects consumers to ask for deliveries faster than ever. The company is now considering buying long-range cargo jets that can fly imports directly from China to North America.
"While peak season is upon us, we believe the bottlenecks on the West Coast are going to compact and even intensify further peak-season capacity needs into November and December."
- Shelly Simpson, J.B. Hunt's chief commercial officer, during an earnings call on J.B. Hunt's expectation of strong freight demand continuing into 2022.
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