Carriers look to IT to rein in costs

By James A. Cooke -- Logistics Management, 9/1/2005

NEW YORK—Transportation and warehousing companies spent $30 billion on information technology (IT) and telecom expenditures during 2004, according to new research from Frost & Sullivan. The report, "IT and Telecom Spending Trends within the U.S. Transportation and Warehousing Services Markets," predicts that IT spending in those markets will reach $38 billion by 2010.

Carriers are making IT investments in a bid to rein in rising fuel and security-related expenses. Motor carriers, for example, are turning to Web-based applications to coordinate their drivers, said the report's author, analyst Imran Khan. Some are even equipping their drivers with wireless devices that can store and transmit data, he added. "Commercial freight carriers are employing IT and telecom technologies to improve fleet management activities," the analyst explained.

While big motor carriers are investing in technology, smaller truckers are hard-pressed to come up with the dollars for similar investments. "Smaller trucking companies are spending less than one percent of their gross revenues on IT," Khan said. "Owner-operators are at a big disadvantage here unless they work for a big company as a contractor."

Although for the moment warehouses are investing most of their dollars in basic materials handling equipment such as forklift trucks, Khan said he expected that in the next two years that industry would shift its investments into RFID and software to better manage inventories.