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April 6, 2015 3:15 AM, EDT

Consolidation in Truck Technology Sector Opens Door for Innovation, Companies Say

John Sommers II for TT
By Seth Clevenger, Staff Reporter

This story appears in the April 6 print edition of Transport Topics.

Consolidation in the trucking technology sector is opening up new possibilities for product development, including more comprehensive offerings and deeper integrations, technology executives and analysts said.

While carriers likely haven’t yet seen dramatic changes in the products and services they are using today, the recent realignment of many major suppliers undoubtedly will mold the direction of transportation technology in the years to come.

In fact, all of this consolidation ultimately has the potential to drive greater innovation and competition, said Clem Driscoll, founder and principal at research and consulting firm C.J. Driscoll & Associates.

“I think it’s healthy for the industry and for the end user,” he said.

The recent spate of acquisitions has brought providers of mobile communications platforms, transportation management systems, routing software and data analytics together under common ownership.

In many cases, tech firms that previously collaborated across company lines now can work more closely and combine their research and development efforts, often with the financial backing of a larger organization.

Among the biggest moves on the chess board have been made by Trimble Navigation and Omnitracs.

Trimble made a dramatic push into the trucking space by purchasing PeopleNet, TMW Systems and ALK Technologies, all within the past four years.

Omnitracs, formerly part of Qualcomm Inc., acquired Roadnet Technologies, XRS Corp., Sylectus and FleetRisk Advisors, now known as Omnitracs Analytics.

The size and scope of their acquisitions indicate that Trimble and Omnitracs are focused on growing their businesses and have the funding to do it, Driscoll said.

“I look at the two biggest players, and they’re always looking for an edge,” he said. “I think they will try to be at the forefront and try to do things that their archrival and other players in the space can’t match.”

Perhaps, but they are not the only players in the segment bulking up. Teletrac Inc. and Navman Wireless, both owned by Danaher Corp., merged earlier this year to form a larger telematics company and announced plans to combine the technologies of the two firms. Tele-matics firm Telogis, document scanning and management firm Pegasus TransTech and Lytx Inc., provider of the DriveCam video-based safety program, also have expanded their offerings in recent years through acquisitions.

Among providers of handheld mobile computers, Zebra Technologies Corp. acquired Motorola Solutions’ enterprise business in 2014, and Honeywell International purchased Intermec Inc. in 2013.

Amid all of this deal activity, Driscoll said, there is room for other suppliers to target smaller fleets with lower-cost products.

“I think the market is pretty well-served, with the upper-end guys who are focused on providing very rich, full-featured solutions and the smaller guys with a lower-cost solution, and there will be more of them coming along,” he said.

Trimble is forging ahead with product development across the companies it has acquired in recent years, said Jim Veneziano, a member of Trimble’s executive committee and the vice president responsible for the company’s mobile solutions segment, which includes its transportation and logistics division.

Although PeopleNet, TMW and ALK worked together prior to their acquisitions by Trimble, those companies will be able to take those relationships to a much deeper level now that they’re under one roof, he said.

“They were always open to integrating with each other, but to really put significant R&D dollars together to develop something new — I just don’t think that could have happened outside of this,” Veneziano said.

Indeed, the companies will be able to leverage the substantial financial strength of their parent company, which reported $2.4 billion in revenue in 2014.

“I think that’s going to give an unfair advantage to them in the industry,” Veneziano said. “In North America, a lot of the energy is going into developing new products and bringing stuff to the market. I think the integration of the properties we have is going to be superpowerful for the industry, and I think the industry’s ready.”

Omnitracs executives also are touting the collaborative product development that is now possible among its various trucking technology businesses.

Earlier this year, at Omnitracs’ first user conference since its spinoff from Qualcomm in 2013, CEO John Graham said the company’s different businesses are “better together,” reflecting Omnitracs’ plans to pull together the capabilities of its companies and provide a broader menu of options to its customers.

“We’re trying to create a combination of solutions that customers can pick from and that can interoperate together to bring more value to them,” Graham said.

The additions of Roadnet and XRS give Omnitracs greater flexibility to meet the needs of different fleets, whether they prefer an industrial-strength telematics platform, a more basic tracking product or route planning software.

“Our ability in the past to address those differences was very, very limited, which then limited our growth,” he said.

Roadnet and XRS expanded Omnitracs’ reach in the private-fleet market, but those acquisitions also will benefit the company’s traditional longhaul, for-hire fleet customers, said David Post, chief operating officer.

For example, Omnitracs is planning to offer greater proof-of-

delivery capabilities, including signature capture and photos, by pairing a mobile phone application with its fixed-mount, in-cab mobile computing platforms, he said.

Roadnet’s Insight business intelligence tool also could be leveraged in by Omnitracs users, Post added.

David Wangler, CEO of TMW Systems, said his company has taken a more holistic approach to product development since becoming part of Trimble.

“Instead of thinking about how do I integrate with vendor X, we’re really starting to think, as a team, about how to solve a broader business problem,” he said. “We’re really focused on how do we bring these things together and make it easier to own, operate and have a more effective, efficient solution.”

Although PeopleNet and TMW have been partnering for years, the companies now have an opportunity to deepen their integration and improve presentation for customers using both products, PeopleNet President Brian McLaughlin said.

“We want to have a deeper, richer and better integration than anyone else has out there,” he said. “We’re not going to lock out any other providers. We’re going to continue to work closely with McLeod and others, and TMW is going to continue to work with Omnitracs and others, but we want to have the best integration that you can get in the marketplace between the two properties, and it just makes sense. We’re part of the same company.”

PeopleNet and TMW also are moving toward a shared support infrastructure so joint customers have one point of contact for both products, McLaughlin said.

Beyond that, he said the two companies are working together to build new, “transformational” products, by taking a closer look at the customer’s entire business process, from dispatch to compliance, and putting all the pieces together to take it to the next level.

That type of closer collaboration is at work among all of Trimble’s transportation and logistics companies, McLaughlin said.

“Deeper integration, better integration and single interfaces for users — those are the things we’re really driving toward with those sister companies,” he said. “Once you can take those walls down, things really start to open up.”

TMW and PeopleNet, for example, have standardized on ALK Maps for all mapping and visualization features within their product offerings.

During Omnitracs’ recent user conference, Andy Morris, KLLM Transport Services’ vice president of management information systems, said the tech company’s focus seems to be on product development.

“I think we’re too early in the game to really see significant changes, but they do seem to be talking more about the future and newer products,” he said.

KLLM, based in Jackson, Mississippi, ranks No. 42 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. The company uses Omnitracs’ in-cab units in its trucks and TMW’s Innovative software in the back office.

Morris added that he believes consolidation ultimately is a positive development for the industry.

“It keeps everyone more competitive and keeps technology moving,” he said. “Companies tend to get stagnant when they sit still, so I think, overall, it’s a good thing.”

Chuck King, chief operating officer for Bolt Holdings, also said he sees the technology acquisitions leading to better offerings for fleets, especially in terms of streamlined integrations among different products.

Bolt Holdings, based in Toledo, Ohio, is the parent company of Bolt Express and Strike Logistics.

King said his company uses Omnitracs systems and fleet-management software from Sylectus Inc. Omnitracs acquired Sylectus in 2011.

“I think it can only be a good thing if, down the road, they integrate everything that they buy,” he said.

But Tom Benusa, chief information officer at Transport America in Eagan, Minnesota, said the consolidation also reduces the number of suppliers serving the market.

His company uses a custom transportation management system, and he expects to see fewer options if and when it decides to make the move to vendor-based software.

“From that perspective, the consolidation probably narrows customer choices a bit,” he said. “There are really only a few to consider, where in the past, there might have been a handful.”

Transport America ranks No. 71 on the for-hire TT100.

Gary Hallgren, senior vice president of corporate strategy for Telogis, said acquisitions can be good for the industry and the end-customer if they allow for greater investments in research and development and broader product offerings.

“The key component is the integration of products as customers want cross-product functionality and scale in technology offerings,” he said.

Bringing together two different teams under the same ownership can spark good ideas, Pegasus TransTech CEO Frank Adelman said.

“These things tend to foster additional innovation because you bring two cultures together, sometimes with two different thought processes,” he said. “Assuming you can execute, you take the best of the best, and you’re running with a better solution overall.”