Pioneering Uses of Information Technology in Trucking

The trucking industry, usually perceived as low-tech, has made effective use of wireless applications to enhance productivity.

By Thomas N. Hubbard

October 08, 2004 — CSO —

Wireless networking applications in trucking have yielded significant increases in productivity.

The economic value of many applications of information technology (IT) rest on the same principles: information improves decision making, and better systems of communication enable people to implement those decisions more efficiently.

For every industry, productivity reflects not only how well inputs are transformed into outputs, but also how well information is applied to resource allocation decisions. Information technology can improve productivity by improving such decisions.

The trucking industry, usually perceived as low-tech, was one of the first industries to effectively use wireless networking applications to enhance productivity. While businesses today are developing wireless networking applications around laptop computers, cell phones, and PDAs, the trucking industry was using wireless technology as early as the late 1980s.

In trucking, IT has offered solutions to the long-standing challenge of matching trucks to hauls. Since the late 1980s, operators of trucking fleets have used on-board computers (OBCs), which allow dispatchers to more accurately match supply to demand via enhanced information processing and communication capabilities. Trucks' on-board computers were among the first commercially important applications of wireless networking technology. The on-board computers with the biggest impact have been electronic vehicle management systems (EVMS), which transmit geographic position to dispatchers and allow dispatchers and drivers to send short text messages to each other.

"I see the work of truck dispatchers as a metaphor for the types of resource allocation decisions made by white-collar managers," says Thomas N. Hubbard, an associate professor at the University of Chicago Graduate School of Business. "Information empowers dispatchers to make better decisions."

In the new study, "Information, Decisions, and Productivity: On-Board Computers and Capacity Utilization in Trucking," Hubbard offers strong evidence of productivity gains from adopting IT.

Estimates from 1997 suggest that on-board computers enabled adopters to increase trucks' utilization rate by 13 percent on average. In the aggregate, this led to 3.3 percent higher capacity utilization in the trucking industry. This increase in productivity contributed on the order of $16 billion in benefits to the economy.

"What wireless networking applications provide is the ability to communicate important information at the right place, at the right time-which can yield huge benefits in many industries," says Hubbard.

High Quality Matches

Industries involving intermediate goods, such as trucking, tend to fly under the radar of public consciousness. However, while the trucking industry is relatively invisible to consumers, it is highly visible to any company involved in manufacturing or shipping goods.

The American Trucking Association estimates that trucking (including private fleets) was a $486 billion industry in 1998, which equals approximately 6.1 percent of Gross Domestic Product.

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