Trucking & Logistics: driven by disruption one. The on-demand economy now drives the matching of supply and demand. For example, Uber Freight connects shippers to nearby truckers with capacity, eliminating intermediaries by offering customers real-time pricing based on current supply and demand (giving the potential for surge pricing). The launch of this application serves as the gateway to Uber’s autonomous truck project, Otto, which recently made its first delivery in the US. two. Amazon is reportedly developing mobile technology to become its own global freight broker matching available trucks with shipments, competing directly with current brokers. This in-house service allows Amazon to drive more volume towards its own trucks, and offer excess capacity to outsiders. The app is said to offer real-time pricing, route directions, and tracking and payment options to expedite the shipping process. three. Mobile brokerage firm Convoy, partnered with Unilever North America to offer guaranteed capacity for freight transport in both the scheduled and spot markets. Convoy’s software instantly matches shippers with nearby carriers with capacity, reducing waittimes and miles driven empty. Their technology-enabled trucking services offer modernized procurement, improved on-time delivery, greater pricing visibility, and real-time goods tracking. Projected revenue in 2016 from Canadian trucking industry. (Canadian trucking alliance, 2016) Approximate percentage of trucks travelling empty at any one time (Frost & Sullivan, 2016) Approximate expected growth rate of the mobile freight market by 2025 (Frost & Sullivan, 2016) Three scenarios challenging the current shipping-brokermodels Adapting to change Shippers and carriers are using mobile applications to seamlessly connect, resulting in: • 24/7 connectivity between shippers & carriers • improved on-demand & on-timedeliveries • higher asset utilization & route efficiency • automated back office processes • more pricing certainty & revenue predictability • removal of an outdated brokerage model Peer-to-peer applications: mobile brokerage applications are changing the industry. Removing intermediaries allows for efficiencies, saving money at both ends of the supply-chain. Shifting gears • The emergence of on-demand brokerage apps is disrupting established intermediaries at every level. • Transport companies are embracing digital to increase their flexibility, pricing transparency, and on-demand services to perfectly mirror clientdemand. • Startup technology companies and new players are disrupting and transforming the trucking industry, with the market for connected trucks seen as a must-have by many in the sector. Finding strategic growth routes • The transportation and logistics sector has long used consolidation through M&A as the predominant form of growth. • Trucking companies seeking growth will need to look at a variety of potential targets to acquire and integrate as a means to complement existing capability, enter new markets and manage overall Total Cost of Ownership (TCO), instead of chasing one big deal. Technology companies will continue to enter the market with their own trucking and logistics platforms, and even their own trucks. The promise of connected trucks combined with the digital supply chain is huge – but so are the risks for those players who don’t move now to begin building the capabilities and business models needed to win in this new world. Prepare for disruption. Connect with PwC’s specialists in Transport & Logistics and Deals to discuss what’s happening in your business. © 2017 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. Transforming your business Eric Castonguay Partner National Corporate Finance Leader +1 (416) 815-5094 firstname.lastname@example.org Rodrigue Gilbert Managing Director National Leader Transportation +1 (416) 687-8714 email@example.com $26.4B Expected revenue generated by the mobile freight market by 2025 in North America. (Frost & Sullivan, 2016) Technology Readiness: Plan for disruption. Recognize which tools and applications will drive greater efficiency to complement your growth strategy. Growth (buy) strategy: Due diligence on a target should start before negotiations. Confidence comes from knowing you’ve derisked the transaction as much as possible making integration into your existing business as minimally disruptive as possible. Exit (sell) strategy: A strong exit strategy requires you to know the true value of your business. Understand what you’re worth and prepare early to get the highest value for your enterprise. Succession planning: Ensure a smooth transition to a new leader so that your business will continue in the right hands. This will make it easier to let gowhen you make that difficult choice.