HOW CAN new technology in the North American trucking industry contribute to growth potential?
In his presentation, “Growth Opportunities Presented By Advanced and Innovative Technologies,” Sandeep Kar, principal analyst of advanced heavy truck technologies at Frost & Sullivan, identified, analyzed, and discussed four key emerging technology areas — aftertreatment technologies, driver-information and warning systems, active-chassis control systems, and truck telematics.
To establish the industry's strength, Kar took a “holistic” look, saying trucks move 80% of the freight in the NAFTA region and account for more than $600 billion a year in revenues — 5.1% of the nation's GDP.
“The trucking industry has been growing faster than the economy over the last several years,” he said. “Trucking is well-suited to current business practices such as just-in-time supply. Moreover, international trade is growing with globalization, and other transportation modes are facing operating constraints. In addition to these, the increasing prominence of the trend towards larger and more centralized manufacturing and warehousing and the rising popularity of new business practices such as online shopping are helping the trucking industry grow faster.”
He said long-haul Class 8 trucks will remain the most active installation base for advanced technologies.
Sharply increasing truck prices and operating expenses accompanied with driver shortage will keep fleets from making capital expenditures in new trucks over the 2007-2012 period. Therefore, he said, incrementing the return-on-investment on heavy trucks through the introduction of advanced and innovative technologies will emerge as the key growth strategy for truckmakers and their suppliers.
Kar said the aftertreatment technologies and systems include diesel oxidation catylysts, diesel particulate filters, and NOx filters such as LNTs and SCRs.
He said the North American Class 6-8 truck original equipment market for these systems generated $204.2 million in revenues in 2006, and by 2012, the OE market revenues are expected to reach $1.6 billion.
The safety-enhancement technologies are divided into two groups: driver-information and warning systems, and chassis-control systems. The key driver-information and warning systems that have already started penetrating the heavy-truck OE and aftermarket include systems that support applications such as tire-pressure monitoring, lane-departure warning, blind-spot detection, forward-collision warning, and night-vision and driver-drowsiness warning.
He said chassis-control technologies that are furthering heavy-truck safety and will increasingly feature in heavy trucks over the 2008- 2012 period include systems supporting applications such as ABS, electronic stability control, adaptive cruise control, rollover prevention, and electronic braking.
Kar said a key trend will be the integration of disparate safety systems based upon higher levels of sensor fusion, control algorithm, and electronic control-unit performance optimization. Frost & Sullivan research indicates that the North American Class 6-8 truck safety systems original equipment market generated revenues worth $356 million in 2006; and by 2012 the market will generate revenues worth $632 million.
A multitude of technologies and applications related to operations automation, communications, security, monitoring, and mobile internet access are expected to enhance the value proposition of commercial vehicle telematics in the coming years. The revenues generated by the commercial telematics in 2006 were $1.1 billion, and by 2012 the revenues will amount to $2.1 billion.
“Different industry groups have varying requirements from the emerging technologies,” he said. “The fleets require them to offer superior return on investment, feature high degree of reliability, established effectiveness, and high levels of driver acceptance. These technologies should not lead to expensive downtime, but should enhance the overall operating efficiencies of the fleets. The truckmakers on the other hand, require the value proposition of these systems to be appealing enough to invest in R&D efforts aimed at developing them further.
Reliability and effectiveness are important considerations for truckmakers who seek standardized solutions to ensure risk-free and cost-effective technology integration. Overall, the truckmakers require new technologies to be able to add value to their trucks and differentiate them from the trucks manufactured by their competitors.
“The regulators, insurers, and infrastructure providers seek demonstrated effectiveness of these technologies to achieve their desired goals and applications. Statistical evidence or strong theoretical and practical evidence of effectiveness of these technologies are important considerations for this group. The emerging and advanced technologies must offer the potential to improve air quality, highway safety, and transportation efficiency without causing any disruptive effects on the infrastructure, society, or related businesses.
“And finally, what the manufacturers and suppliers are seeking is potentially sustainable market demand, affordable R&D costs and capabilities, and the potential to support aggressive pricing strategies in a competitive environment. The return on investment on these emerging technologies is also a primary concern for the suppliers as it is for the fleets, although from a different perspective. The suppliers also seek technologies that can be easily standardized to act as platforms for spawning several innovative applications and features, and present no liability risks.”
Return on investment
Kar said that as these technologies become more important in the trucking industry, the challenge incumbent on the industry is to substantiate the return on investment and payback potential of advanced technologies.
“The challenge for the marketing teams is to implement aggressive price-reduction strategies to facilitate large-scale market demand and adoption,” he said. “The R&D teams on the other hand are challenged to identify and adopt the most effective human machine interfaces and ensure forward compatibilities, while incorporating standardized technologies.
“The truckmaker and supplier operations are challenged to sustain technology innovations and cost optimization while facing severe downturns in the demand for new trucks. The manufacturers and suppliers are challenged to develop and introduce innovative technologies and solutions at attractive price points.
The truckmakers, on the other hand, face the challenge of developing strategic partnerships with technology leaders to obtain customizable solutions that can help them differentiate their products.
“The challenge for the fleets and owner-operators is to establish greater control over variable costs and reduce downtimes by selecting technologies that can facilitate lowering the cost of operation. The challenge related to the end users is to increase consumer awareness and develop strategies to curb psychological inertia associated with the adoption and utilization of advanced technologies. As the competitive pressures mount, price competition will necessitate outsourcing of labor-intensive components through development of strategic partnerships with suppliers in Asia/ Europe and Latin America. An associated and pertinent challenge incumbent on the developers and manufacturers is to improve the efficiency and productivity of the manufacturing facilities to easily adapt to volume swings in this cyclical market.”
Kar went through the roadmaps for various emerging technologies across the four major domains: aftertreatment, driver information and warning, chassis control, and telematics.
He said in the area of particulate matter aftertreatment, “we will experience the increasing market penetration of active regenerative diesel particulate filters, while in the hydrocarbon aftertreatment area, we will see the emergence of diesel oxidation catalysts featuring substrate consisting of lower precious metal content.”
“As we move forward, the installation of integrated diesel particulate filters and diesel oxidation catalysts is only natural and will help suppliers to offer integrated aftertreatment solutions to the truckmakers,” he said. “The NOx aftertreatment roadmap will feature both selective catalytic reduction and lean-NOx trap technologies. The cost effectiveness of the SCR technology and its success in Europe will continue substantiating its competitiveness to LNTs, especially in the 2007-2010 period.
“What should be observed with interest are the developments in in-cylinder engine technologies such as homogenous-charge compression and hybrid engines that might just push aftertreatment technologies towards redundancy. But the state-of-the-art in diesel engine technologies at the moment seems to suggest otherwise and aftertreatment systems seem to be here to stay for quite some time to come.”
Kar said that on a macro level, chassis-control technologies will evolve from driver-in-the-loop-type semi- active chassis-control systems to fully active closed-loop chassis-control systems featuring active intervention strategies.
“In the lateral and vertical safety improvement technologies landscape, rollover prevention systems and active suspension-control systems will gain prominence, while in the longitudinal safety enhancement area anti-lock braking systems will continue to remain the most widely penetrated safety-enhancement technology,” he said. “This technology will evolve to increasingly feature additional functionalities such as traction control and emergency braking assist. Another important chassis control technology, which is rapidly gaining ground in Europe, and promises to take longitudinal safety enhancement technologies in North America to the next level, is electronic braking systems. However, their introduction in North American trucks does not seem likely in the short term, definitely not until 2010.”
Kar said electronic stability control technology is one of the most promising developments.
“Electronic stability control is a keystone technology and is widely perceived as an enabler for the next generation of advanced safety solutions. It is also being developed to act as a foundation for integrated chassis-control technologies.”
This translates to the emergence of electronic stability-control systems market as one of the growth engines for the manufacturers and suppliers of safety-enhancement technologies in the coming years.