Technology Companies Move into Transportation | Global Trade Magazine
Commentary
  December 29th, 2016 | Written by

Technology Companies Move into Transportation

It’s Better To Have Two Industries Working Together Rather Than Separately

Sharelines

  • Insurance carriers brace for a new reality.
  • Tech giants like Google and Intel turn their attention to the auto and trucking industries.
  • Reshaped economic landscape with tech companies entering transportation.

Tech companies are moving to the automotive market, because that’s where the money is. In mid-November, Brian Krzanich, CEO of Intel Corporation, took the stage at the Los Angeles Auto Show to deliver his company’s first keynote address at an automotive event. The headline news in the widely anticipated speech was that Intel Capital will be investing $250 million in autonomous (i.e., computer-controlled) driving over the next two years. Technologies that will benefit from the investment, according to Intel, include connectivity (of the car to the internet), context awareness (the car knows what’s going on around it), deep learning, and security. Intel’s own processing power comes into play with the amount of data required for autonomous driving. Krzanich pointed out that cars are already equipped with a variety of sensors, cameras and controllers that create, gather and transmit data. He said that the automotive industry needs to be prepared to handle as much as four terabytes of data generated daily by every car.

“The fact that Intel chose to make this announcement at the L.A. Auto Show highlights the massive crossover that’s currently taking place between technology and transportation,” commented Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers.

Referencing announcements made earlier this year regarding joint ventures between Google and Fiat Chrysler and between Uber and Volvo, Macauley said, “As cars become devices that we drive (or don’t drive), and devices become more integrated with our transportation experience across modes, cross-pollination between tech companies and auto manufacturers is becoming a necessity.”

However, what looks like cross-pollination to one observer can look like poaching to another. This is an understandable reaction on the part of the auto industry, Macauley pointed out. He noted that what’s happening here is, to some extent, the movement of a profitable but limited industry into fields that offer—for the victors—a lot more room in which to operate.

This is particularly important to a company such as Uber, which set out—effectively, according to most observers—to disrupt the taxi and limousine service industry. According to the Department of Commerce, the entire U.S. taxi and limousine industry last year generated revenues of about $20 billion. Uber does not have a significant share of that market, and they lost $1 billion last year. Uber is now moving into autonomous trucking. As a $9 trillion industry, trucking is 450 times larger than taxis and limo services. It’s something with a more promising reward-to-punishment ratio.

Meanwhile, Tesla Motors CEO and visionary Elon Musk is sponsoring a design competition for something called the Hyperloop, a system of metal pods running through buried pipeways that would allow people to travel from Los Angeles to San Francisco—a distance of 382 miles—in 35 minutes, at an average speed of 658 mph. This would involve the solution of several as-yet-unsolved problems in physics, but Musk and the young scientists working on this believe it can be done. A team at Carnegie Mellon has come up with a concept it hopes will take home the grand prize in January.6

This may be a great example of why it’s better to have these two industries—tech and auto—working together rather than working separately, Macauley noted. “We do know that there’s a tight, natural fit between these two industries, and that a shape-shifting will occur. At Quadrant, we’re factoring information into our calculations as fast as it comes in. Insurers have a big wave of change to negotiate, and we’ll be there to help.”

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