CSCMP's Supply Chain Quarterly
December 19, 2018
Forward Thinking

Wanted: The Billy Beane of freight

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The data produced by trucks' electronic logging devices could change the way that people manage transportation and logistics operations.

As the general manager of the Oakland Athletics baseball team, Billy Beane revolutionized the way teams are run and players are selected by applying statistical analysis. Now Michael Lewis, whose book Moneyball made Beane famous, says a similar revolution could be coming for the freight industry.

The freight industry could see sweeping changes in leadership as the sector goes through growing pains to adjust to a new age of big data and analytics, he said in keynote remarks at a transportation industry conference in Dallas today.

"We're living in a moment where we're beginning to understand that data has magical possibilities," said Lewis, who is also known for the nonfiction book Liar's Poker and The Big Short.

Speaking at FreightWaves' MarketWaves18 show, Lewis cited an example from the world of public policy, where data compiled by the U.S. Department of Commerce has recently revealed the depth of the nation's opioid drug addiction crisis. Keeping the federal government running smoothly through transitions between political administrations is the subject of Lewis' most recent book, The Fifth Risk.

In another policy application, he described the burgeoning amount of data collected by the government's National Weather Service, allowing analysts to create five-day forecasts that are as accurate as one-day forecasts were 30 years ago.

Now those types of revelations are also on schedule to rock the world of freight and transportation, as the federal electronic logging device (ELD) mandate creates large troves of raw data that can reveal hidden patterns that allow trucking companies to operate more efficiently, he said.

In the face of that change, many transportation and logistics companies will soon be hiring experts in statistics and analysis, instead of employing leaders drawn from the traditional ranks of family-owned fleets and relationship-based businesses, Lewis predicted.

That pattern would mimic the impact made on baseball by Lewis' 2003 book Moneyball, which described how Oakland A's manager Billy Beane pulled a coupe on his better-funded competitors by using statistics to expose inefficiencies in how teams had always signed baseball players. Beane soon started winning games, and in short order, most professional teams in the league had hired data-driven analytics experts and fired the talent scouts who had operated by gut instinct alone.

Confronted by reams of fresh data suddenly revealed to the logistics industry by the ELD mandate, that pattern could play out again. "Either the trucking industry is going to change or the people in it are going to change," Lewis said. "I would look for massive change at the management level as they adapt."

That transition could be painful. Just as many old baseball scouts lost their jobs in the new age of baseball analytics following the publication of Moneyball, an older generation of transportation professionals may soon find themselves displaced by statisticians, and truck drivers may be replaced by autonomous vehicles, he said.

"Really old businesses don't adapt really quickly. You can't turn back the clock; it's managing the change that's hard to do in a way that you don't break lives," said Lewis.

 

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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