Today’s Fix This podcast by AWS features Aaron Terrazas, Director of Economic Research at Convoy and Jennifer Wong, Director of Sustainability at Convoy to share how Convoy is addressing the inefficiencies in freight and helping their customers make progress in achieving their corporate sustainability goals. Listen here
Ray Rogers: I’m Ray Rogers.
Brad Kepler: And I’m Brad Keppler.
Ray: You’re listening to Fix This. A podcast exploring tech ideas and solutions to some of today’s largest challenges. Buckle up. Today we’re driving straight into the world of trucking and sustainability.
Brad: So, you’re sitting there listening to this and if you’re like me, you don’t think of trucking usually, on a daily basis, right?
Ray: Except probably when you’re passing them on the highway.
Brad: Right, and that’s a good point. You see the truck and you don’t know where it’s going. You don’t know what’s in there and it’s just like, “Okay, there’s a truck on the road.” But when you think about, the goods we rely on, the stuff that we get and the stuff that we use, every single day, like shampoo, soap, electronics, clothing, furniture, medicine, you name it, it’s all transported and delivered via those trucks that we see going by us on the road at some point in its life cycle.
Ray: And in each of those trucks is also a truck driver. Truck driving is one of the most common jobs in America. According to the United States Census Bureau, more than three and a half million people work as truck drivers as of June 2019. For reference, that’s just about the size of Connecticut’s population and it’s an 800-billion-dollar industry. With numbers like that, it puts trucking into perspective. This is an industry that powers the economy and makes our day to day lives possible.
Brad: But what is the cost of all that convenience? With so many trucks out there on the move, surely there’s an environmental impact. We set out to learn how modern technology like machine learning in the cloud can be used to improve the entire trucking process, from efficiency to sustainability. Convoy is one company in the world of freight delivery. They help ship goods from some of the biggest household names in America. Fortune 500 shippers like Procter & Gamble, Unilever, and Anheuser-Busch. Convoy’s mission is transporting the world with endless capacity and zero waste. [2:00] They self-describe as a digital freight network.
Ray: To learn more about the research behind Convoy’s work, I chatted with Aaron Terrazas, Director of Economic Research at Convoy.
Aaron: Just about everything that we consume, and produce is carried on trucks at some point. There are hundreds of thousands of companies that need to ship goods anywhere from the big multinational giants that you’re familiar with to mom and pop businesses and those shippers are trying to connect with millions of mostly small trucking companies. There are over three million individual truck drivers nationwide and, in most states, that is the largest single occupational group.
Ray: Can you explain a little bit more about what the broker does and what role they play in most truck deliveries?
Aaron: Traditionally, the way the industry has historically worked, you know, the shipper will decide they need to move a good from point x to point y and they’ll call the broker and say, “I need to do this delivery, can you find me a truck?” And that broker, they’ll go through their network of truck drivers that they know, call them up and say, “Hey, can you do this load?” And as soon as they find the first driver to do that load at the right price, then they can match. Obviously, that is, you know, timing as a process. Typically, it involves multiple hours of work, at least 10 to 20 phone calls on the part of the broker.
Ray: So, this process seems like it is ripe for change, or potential change to streamline things and Convoy does things a little bit differently. You’re not using brokers, right? How are you changing the trucking industry with technology like machine learning?
Aaron: At a very high level, Convoy relies on a mobile app to connect drivers and shippers. We’re using our data and our algorithms to scan all of the different available truck loads and truck driver combinations that are out there for any particular shipment that needs to be delivered and in doing so we find the optimal match. So, shippers will have, [4:00] you know, either scheduled or at hawk loads that they need delivered, they’ll submit those into our online platform and then we will make those available to our network of carriers who are searching the app, looking for their next load, or looking to schedule their time over the coming days. Historically, part of the inefficiency in the matching process was that you didn’t necessarily find the closest truck to where the delivery pickup was. So, as a result, truck drivers ended up driving many miles, hours, to find their next load. That resulted in an enormous amount of waste. We’ve been able to reduce that pretty substantially through this more efficient matching by finding the closest truck driver to the job that needs to be done.
Ray: And when you say waste, you mean more than just gas waste, is that right?
Aaron: Yeah. Historically, about 35 percent, 30 to 35 percent of the miles that truck drivers drove, were empty. That means they were out there searching for the next load or getting to their next load, but it’s also the driver’s time.
Ray: Can you tell me a little bit more about some of the environmental impact reports that you’ve worked on? Do you have any key findings you can share?
Aaron: As I noted, about a third of the miles truck drivers, heavy truck drivers run, are run empty. There really hasn’t been that much progress in improving truck driving efficiency in the past three to four decades. And if you look across the entire industry, you know, that means that something over 200 million metric tons of carbon are needlessly emitted into the environment as a result of these empty miles. If they could take all those miles that a truck driver drove empty, that’s 88 billion miles per year. That’s about the same as driving to Mars and back about 250 times. 3 million gallons of diesel were burned while driving empty. You take about those wasted miles alone and that’s 72 million metric tons of carbon as a result of this industry waste.
Ray: And my mind is spinning now [6:00] just thinking about all of the carbon that has been needlessly immitted and how those empty miles could be better used. The word efficiency keeps popping up. What role does data play in this story? How does gathering this data make the trucking industry more efficient, and how do things like real time analytics and automation relate to fighting climate change?
Aaron: The critical component in helping the industry become more efficient is being able to analyze all of these different combinations of routes and loads, and model, kind of what different combinations are going to look like. That requires an enormous amount of data, complex data, science techniques and models, and for that we rely pretty heavily on AWS services like EC2 and SageMaker. These tools have made us incredibly more efficient allowing us to learn more quickly, iterate more quickly, and move from development to deployment with a lot higher speed and velocity.
Ray: Can you talk a little bit more about how Convoy is changing the lives of truck drivers?
Aaron: Truck drivers are, in most states, the most common occupation. These are workers who are the backbone of our society. They enable us to have the things that we want and need in our stores, in our shelves, when we want them. But it is obviously not an easy job. It’s a job that requires long hours, often away from your family, and this idea that they should just be working about a third of their time and not getting paid for it is not something that most workers would put up with very long. And so, helping them make the most of their time, earning loads for every hour that they’re out there on the road is critically important to help them, you know, make the most of their time.
Brad: So, from that conversation, this one thing stands out, it’s just this stat that jumps out. 35 percent of all heavy trucking miles are driven without cargo, resulting in lots of different forms of waste. Driver’s time, costs, and a lot of carbon waste. 72 million [8:00] metric tons of wasted CO2 to be exact.
Ray: Which is insane to think about.
Ray: Connecting shippers with carriers efficiently, powered by machine learning on AWS is one way the company delivers on its mission of zero waste, but what exactly does zero waste mean and how can Convoy and other companies lead the way for a sustainability focused business model? To hear another side of the Convoy story I talked to Jennifer Wong, Head of Sustainability at Convoy.
Jennifer: According to the US Environmental Protection Agency, the EPA, medium and heavy-duty trucks account for seven percent of all greenhouse gas emissions in the entire country. That’s equivalent to 435 million metric tons of CO2. 76 million tons of those are incurred because the heavy duty trucks are running empty miles. They don’t have any cargo in the back. So, if you’re driving down the road or just walking down the street and you see a truck, a third of the time, that truck doesn’t actually have anything behind it. There’s just so much waste and so much more utilization that can happen with a more efficient trucking model.
Ray: And aside from reducing the number of empty miles through this network, is there anything else that Convoy does to help customers reduce their carbon footprints? Are you allowing them to see some kind of data visualization, or how is this further communicated to the other organizations and companies that you are working with?
Jennifer: The reduction of carbon emissions is the main opportunity for us to partner with customers in achieving their environmental sustainability milestones. Sustainability for us is actually just more than environmental sustainability, we also focus on sustainable communities. We are helping truck drivers earn more. Historically, truck driving has been a very stressful and underappreciated job. We are first to launch a lot of new products and features that dramatically improve the truck driver’s experience. For example, we were [10:00] the first to introduce free quick pay. What that does is ensures truckers get paid in a couple of days instead of an industry standard of about 30 days. And that’s important for every business. Improving your cash flow, getting paid quickly, not 30 days after the services were delivered. We also launched facility ratings, which are particularly important in this industry because, not only do they give driver’s insight about where they’re going, but they can also give feedback to the shipper.
Ray: Can you tell me what role data plays in driving transparency around sustainability?
Jennifer: A lot of the interest in what we are seeing today in environmental sustainability, especially around reducing carbon emission, has to do with data and visibility. One example is customers, familiar brands, like Anheuser-Busch or Unilever, have pretty deep corporate environmental sustainability goals and they’ve been making really meaningful progress in their scope one and scope two carbon emissions. An overview of scope one, scope two, and scope three carbon emissions, it’s carbon emission classification. Scope one emissions are the direct emissions that your business activities create like the exhaust from your cars or for your business. The trucks that you have to transport the products across the country, or any generators that you might run. Scope two emissions are the indirect emissions that come from the production of electricity or heat that your business uses. And then scope three emissions are the indirect emissions that come from all of the other business activities that you’re engaged in. This includes emissions such as the business travel of your teams, emissions of your entire supply chain, and even emissions for the full life cycle of your products. Scope one and scope 2 carbon emissions are where businesses have a lot of oversight and ownership over but in terms of scope three carbon emissions, [12:00] which is typically larger than scope one and scope two combined, that’s where there’s actually a lack of data and insights. That’s actually where Convoy is able to provide a lot of value. Because we use technology to move freight across the country, we’re able to give insights and data reports to shippers so that they can actually see what carbon emissions they’re producing as well as what are the opportunities to reduce it over time.
Ray: Sounds like companies are already thinking about their own environmental sustainability. So, is this something that Convoy has to initiate with customers, or has it already typically been top of mind with the companies that you’re working with?
Jennifer: Sustainability has been top of mind with most of our customers. 74 percent of the S&P 500 companies have corporate environmental impact goals specific to sustainability and carbon reductions. Progress against these goals have historically come from places outside the shipping supply chains, such as renewable energy or reducing excess packaging. And I think the industry is slowly waking up to massive scope of waste in trucking and that’s actually gone largely unaddressed for the past few decades. Another reason why our customers are actually really excited to partner with us on achieving their sustainability goals is because they’re seeing it from their customer’s demand. Consumers are now showing that they want to make different buying decisions or brand affinity decisions based on companies that align with their values and those values being today in terms of working with companies or supporting companies that are actively supporting society as well as the environment in addition to growing it’s own business.
Ray: Climate change and sustainability are things that can bring up a lot of different emotions in people and sometimes anxiety is one of those feelings, but on the flipside, what makes you feel hopeful [14:00] about what Convoy is doing and the value it provides to customers?
Jennifer: Any progress is great progress in terms of identifying the material ways that you can be a better corporate citizen, and I think in the future, businesses are going to recognize that sustainability isn’t just a program put on top of your business. It’s going to be core to how you operate in society.
Brad: Sustainability, zero waste, reduced carbon emissions. These aren’t just buzz words and sustainability is not just a trend. Looking to future generations and using modern technology like machine learning on AWS to make processes more efficient is one way to make the world a greener place. Thank you to our guests Aaron and Jennifer. To learn more, visit convoy.com. That’s C-O-N-V-O-Y dot com.
Ray: And to you, our listeners, a big thank you for tuning in. If you liked today’s episode, please help up spread the word by rating the show, sharing with your friends and family, and subscribing for more stories. Oh, and do you have a topic you’d love for us to cover? We want to hear from you. Drop us a note in a review. We’ll catch you on the next one.
About AWS Fix This Podcast
A bi-weekly podcast of bite-sized stories about how tech makes the world a better place. Leaders from around the globe share how they use technology to fix some of the world’s most pressing issues. Listen to the episodes here https://aws.amazon.com/government-education/fix-this
About Sustainability at Convoy
Sustainability at Convoy means driving positive environmental and societal impact to be a great corporate citizen. We are focused on reducing the billions of waste in trucking and supporting the communities where we live and work. Visit www.convoy.com/sustainability to learn about Convoy’s commitment to Sustainability.