Interview: Dynamon CEO reveals how medal-winning analytics can help logistics firms

The Scotsman formed Dynamon after using analytics tools to help Team GB achieve a record medal haul at the London 2012 Olympics. Having seen how such tools can aid athletes, Webb was inspired by the idea of using the same tools to benefit the road transport industry.

Since then, the company has gone on to provide UK supermarket chains Asda and Sainsbury’s with tools to reduce their fuel costs, and expanded their portfolio to offer analytics on aerodynamics, fleet trials and powertrains.

Given the radical changes that the road transport industry is undergoing at the moment, namely digitalisation and a move to emission-free vehicles, there is arguably no better time to quiz the Dynamon CEO on how analytics could benefit the road transport industry.

Angus: Our two customer segments are logistics companies and vehicle manufacturers. The logistics companies use our tools to optimise their fleets, and manufacturers use our tools to demonstrate their solutions to their fleet customers in an accurate manner.

During the onset of COVID we had many new customers about to sign up, which got delayed. Whilst this was initially concerning, the good news is that all of that [business] has come back – and much more. We are now seeing a significant increase in business development. I’m very happy with how it is now going.

Where we experienced some delays in new business, this enabled us to really focus on improving our products, looking to the future, and bringing forward development where otherwise we would’ve been working on the operation of the business.

We had more resources, so we focused and developed, and that’s worked out great now because the features and benefits we’d been hoping to bring out in 2021, quite a lot of it is available in 2020.

That, coupled with a big increase in demand, means things are going really well now.

When it comes to the industry in general, what this pandemic has done is really focus attention on business efficiency and the use of technology in business. It has completely changed people’s appreciation of the importance of technology, which we’re really seeing from our customers – they are much more enthusiastic about adopting technology to improve their businesses than they were prior to the pandemic. It’s almost become a necessity now. That’s really good for us because we supply the very technology that can improve businesses, and things have really accelerated towards the end of the year.

Angus: Yes that’s absolutely right; there’s two ways of looking at – there’s the industry as it is today and then there’s industry as it’s going to be in the future. Today it’s very important to be efficient as a logistics company – it’s a very competitive, low margin industry and therefore any company that can gain an efficiency advantage has a significant competitive advantage.

Secondly, suppliers of logistics companies – the manufacturers of the vehicles and the equipment – also operate in a competitive environment – so they need to be able to demonstrate that the technology they are bringing out has a real benefit to logistics companies and to fleets, and therefore they need to invest in technology to gain an advantage.

This has been a benefit for us because our tools enable logistics companies to understand how specific vehicle technologies can help them, and it also helps manufacturers demonstrate in the real world how their technology performs. Therefore, a fleet can understand whether or not it is something worthwhile investing in.

The business models of the manufacturers supplying the equipment to logistics companies is also changing. It’s going much more towards a solutions based industry where a manufacturer isn’t just making a product and selling it – it’s offering a solution to logistics companies. This means they are taking a lot more risk in providing a service. For example, it could be a guarantee of product performance, it could be a guarantee of a service level, and that requires a lot more data and an understanding of the operation that they are providing that service in.

Our tools are enabling these companies to provide solutions – not just to provide equipment. Obviously, once you’ve sold a piece of equipment, there’s no longer any risk to the company that’s sold that equipment – it’s gone, it’s in the operation. They’ve given the risk to the fleet. But when you supply a solution, which would be a service level or a service, you need to know that you’re going to be able to fulfill that service for the duration of the contract, and therefore you need to understand what the operation is. To do that, you need a lot of data and understanding on how to analyse data; you need this to be able to make a profit and be sustainable. So the future is very much around solution based models, and that’s going to be driven by data.

Angus: That’s absolutely correct; data is the feedstock of analytics. Data doesn’t have any meaning until you’ve analysed it. It needs to be analysed. Humans can analyse data – they can look at it and derive insights from it, and up until now, most of the data has been analysed by the very people looking at it. But this is highly limited. As you require more data and more insights from that data, it has to be done with analytics (i.e. computers and algorithms doing the data analysis). People can then use the output of the analytics; it’s the only way to extract the full value of the data.

So, because of that, we’re seeing companies acquiring telematics companies. For example, both Michelin and Bridgestone have done this. That’s a real step forward for them, but obviously they’ve just got access to data, they now need to invest in data analytics to really extract the full value of the data they have access to, to understand how to operate in the solutions industry of the future.

Angus: The work with team GB involved developing very sophisticated world-leading data analytics tools to help the athletes and coaches make better decisions around equipment choice. It was an extremely powerful method of identifying performance gains for Olympic athletes, which resulted in an historic performance by Team GB during London 2012. This approach continues to be used by Team GB today and has been copied by many nations.

It was the ground-breaking success of this approach that led me to apply it to a much bigger domain – the logistics industry. Instead of making athletes go as quickly as possible, making millions of vehicles travel as efficiently as possible would be hugely impactful. I saw an opportunity to adapt the analytics tools that Olympic teams were using to enable anyone operating a fleet to make smarter decisions around vehicle and equipment choices to maximise their efficiency. That has been extremely powerful.

There’s a big problem with the manufacturers using general information to describe products, which makes it very difficult for a fleet to know how a solution is going to perform in their operation.
The key element for the work we did with the Olympics was to keep everything relevant to the individual. We are able to say „for you this solution is going to have this impact”. For example, it was possible to work out that a piece of equipment was going to make an athlete x tenths of a second faster at a particular event, and then say to them „Do you want to adopt it or not?”. The tools give you the data you need to decide if it’s the right solution for you.

In the fleet world, some of our customers are spending hundreds of thousands of pounds a day on fuel. So it’s very important for them to be able to optimise their fleets, to minimise that cost. When you think about the costs they have and the C02 they emit, and think about it from the context of improving performance, it’s obvious – you don’t have to be an elite athlete to want to improve your performance – everyone should want to improve their performance. If you want to do that, you ought to have the best tools that enable you to do so. That’s why we have developed our analytics tools.

Back in 2018 you started your tyre analytics business after a successful trial with Asda. According to your research, the choice of tyre fitted to a lorry can impact fuel efficiency by anything between 20 and 40%. Is this something that’s overlooked by many hauliers?

Angus: Yes, when a vehicle is performing its operation it’s overcoming a number of forces, and a significant proportion of force comes from the tyres – 20%-40%, that makes the tyre quite a big component in the total fuel consumption because the tyre gets hot and wastes energy.

All of the top tyre manufacturers are aware of this, and therefore, they’ve been developing technologies to make tyres consume less fuel. The problem with the industry is that it simply does not believe that it is possible to save fuel from tyres – it’s intangible for them as it’s hard to imagine a tyre having that impact.

Secondly, the tyre manufacturers are poor at demonstrating the impact of fuel saving tyres, and in the past there were some negative effects of some fuel saving tyres – they didn’t last very long and had other downsides. There were very poor arguments made previously about tyre choice, and it was seen perhaps with some scepticism from fleets as obviously the tyre manufacturer was just trying to sell a more expensive kind of tyre.

That technology has improved significantly now. We are at a point where the tyres that save fuel also perform well in terms of longevity and resilience. The argument is very clear; if you use the right data analytics tools, they do work, and what we’ve done is we’ve created those tools. So the tyre manufacturers can demonstrate their technology, or a fleet can use the tools to investigate different tyre choices.

What we wanted to do with the Asda case study was create an example for everyone to see, which was the most extreme case that we could make – driving at a constant speed on the track both with and without the new tyre technology. Then we could demonstrate that the vehicle will use less fuel on a particular set of tyres, and say that you should perform your analysis as a fleet to find out what the benefit is for your specific operation.

A lot of hauliers are looking to invest in electric vehicles, particularly for deliveries over short distances. Given the differences in vehicle technology how will this affect the decision-making process for hauliers?

Angus: Yes, so we’ve been talking about the traditional vehicles, the vehicles that burn hydrocarbons and when you have a fleet of these vehicles, you are trying to minimise your fuel consumption.

However, the future is not those vehicles, the future is electric and hydrogen. Your fuel bill is going to be much lower in the future, but your vehicle cost is going to be a lot higher and you’re going to need more vehicles because the range is probably not going to be as good. So we’ll need more vehicles to transport an equivalent amount of cargo. Therefore, there’s going to be a complete transformation in the economics of logistics with these new vehicles. That needs to be fully understood by the fleets, and fully understood by the manufacturers.

The manufacturers are likely going to provide these vehicles in a solutions/service business model and therefore the fleet-specific operating costs need to be fully understood by the manufacturers. The problem is that the economics of these vehicles is completely different to the vehicles of today. So the importance of data analytics is growing.

It’s a huge transformation. It’s very exciting for the industry because C02 will go down, which is amazing, but the economics of fleets will completely change.

When most people think about aero efficiency, they see pictures of Formula 1 cars in wind tunnels. It’s not something the public would necessarily associate with lorry fleets. However, I presume it must have a noticeable effect on mileage given what I’ve seen from your aero analytics business. Just how big a difference can aero analytics make?

Angus: The two biggest markets for aerodynamics are the UK and the USA. In Europe it’s not such a big market because the trucks are more streamlined. The trailer heights are much lower and there’s much more commonality between the vehicles. The opportunities for aerodynamics in Europe do exist, but when you look at the UK market, where you’ve got big tall trailers – big 'bricks' that are being pulled along at 55mph, then the opportunity for aerodynamic improvement is very big. If you go from a very un-aerodynamic vehicle to an aerodynamic one, you’re talking about a 10% fuel saving.

Looking at things from an engineering perspective, anything moving through the air experiences aerodynamic drag. The bigger the object is, the higher the drag, the faster it goes, the higher the drag, the less streamlined, the higher the drag. Trucks are big, they move pretty fast on the highways, and they’re pretty unstreamlined, so there’s a big opportunity to reduce the drag. All that drag has to be overcome by the engine, and when the engine’s doing more work, it’s using more fuel. It’s as simple as that.

Our tool, Aero Analytics, is a really easy tool to use where a fleet can look at their vehicles, look at the aerodynamic products on the market that would fit on these vehicles, and see the cost saving opportunities for them very clearly. In the US, there’s also the same opportunity – you have these big long trailers with big gaps under the trailers that can be streamlined with aerodynamic solutions.

The data you gather must have allowed you to observe a number of trends in the industry, and whether following those trends works from a business perspective. From your experience, are there any common mistakes logistics companies are making?

Angus: I think there’s probably two areas where the good fleets focus on. One of them is total-cost-of-ownership, that is trying to have an answer for all costs and making procurement decisions based on the total-cost-of-ownership – not just buying the cheapest.

The other area is understanding the benefits of new vehicle technology. New vehicle technology often has a higher purchase price, which can be off-putting for traditional fleets. However, new vehicle technology has been developed to help fleets and in most cases reduces total-cost-of-ownership. The smart fleets are actively looking for new vehicle technology that can help their businesses, and they are using our tools to make these procurement decisions.

To give you a specific example, the tools that we developed to help fleets buy tyres has really identified the importance of the total-cost-of-ownership. If you choose the optimum tyres for minimum total-cost-of-ownership, you may spend a few hundred pounds/euros more per year, but you will save thousands of pounds/euros in fuel.

By thinking in terms of total-cost-of-ownership you can make significant cost savings. The critical mindset is to decouple the price of the product from your procurement decision. When you start thinking about the total-cost-of-ownership you start to see the real benefits of new vehicle technology and smart procurements.

This will become even more important when we talk about zero-emission vehicles, because these vehicles are going to be very expensive. There will be a strong desire to reduce capital expenditure, but the impact this will have on total-cost-of-ownership will need to be quantified to identify the optimum vehicles. We are developing new tools to solve this challenge.

The logistics companies that do this will be the winning logistics companies of tomorrow because they’re going to be able to offer cheaper prices to their customers, or they’re going to make bigger profits. Either way, they’re going to survive, they’re going to be more resilient and grow larger, and that’s the philosophy that needs to be adopted by the industry if it wants to be resilient.

At Dynamon you’ve concluded that good hardware can lead to a significant decline in fuel consumption – even when accompanied by a bad driver. Can you foresee a situation where an autonomous vehicle with the right hardware can further reduce consumption to a noticeable extent?

Angus: The short answer is that it’s going to be enormous. As new autonomous vehicle technology is released the impact of the driver will reduce over time. Drivers are having the biggest impact on cost today and it will get smaller in the future as vehicles become more autonomous. The percentage of time that vehicles spend in cruise control or auto-pilot is going to increase over time, because the vehicle itself can do more of the driving. That will continue until the day when there is no driver in the vehicle.

Therefore, we have strategically focused as a business on the vehicle, because the importance of the vehicle is increasing. The vehicle is going to do everything in the future, and therefore understanding the right vehicle for your operation is the absolute most important thing for a logistics company to start doing today.

We’re building the tools for that future, which will hopefully be used by all logistics companies and manufacturers. That’s how we see the industry looking in the future.

Recent tests indicate that solar panels attached to the sides or roof of a lorry may reduce its fuel consumption by around 4%. Do you see this as one means companies can use to reduce their costs and carbon footprint in the near future? Would you be keen to conduct some of your own tests to see if such a solution could offer value to your clients?

I would like to see independent trials of these solutions; I would like to see more data. The correct tools are needed to analyse this data because a 4% fuel saving is a very significant fuel saving, and if you think about that in terms of energy, these panels must be producing a lot of energy to generate that 4% fuel saving.

Let’s consider an electric truck; it will use more electricity in a day than an average household uses in a year. So when we are talking about solar panels, saving 4% on fuel entails a significant amount of electricity. It must be a very large, very efficient panel, in a very sunny climate.

If you put a solar panel on the roof of a truck and reduce the energy from the engine, you will save fuel. Just like if you improve the aerodynamics or make the tyres more efficient or make the engine more efficient. The question is, how much do you save?

Measuring a small fuel saving on a truck is extremely difficult. It’s almost impossible without the right analytics tools because you will measure all sorts of variabilities. So if your trial is designed poorly, a very large saving may be recorded and attributed to the solution being trialled. However, it may in fact be coming from another variable in the data that is not understood.

I’m interested in any technology that may save fuel. I think it should be trialled using the right tools so that we can get the real answer. Big numbers produced by manufacturers are bad in the long term as they overpromise and underdeliver, which could lead to scepticism in the future. So I think it’s important that manufacturers use real world evidence of their solutions.

That’s what we’re helping the tyre manufacturers do today. They went through a few decades of scepticism around their tyres, and now they’re producing the evidence and it’s working and bringing success.

Basically, I think any solution that wants to help a fleet should be proven in the real world using good quality data-analytics tools.

One of the interesting points I’ve seen Dynamon raise is that if the road logistics industry adopted the aviation procurement culture, which looks at total cost, it would prioritise operational expenditure. What do you think is preventing the road transport industry from going in that direction, and what would the benefits be if the industry were to adopt that culture?

Angus: Some companies are beginning to adopt that culture now – the smart companies. However, the exchange of information between manufacturers and fleets is still very poor. It is a very poor quality transaction that focuses too much on price and broad, general claims. Whereas in the aviation industry, businesses have learned that they will fail if they don’t focus on total-cost-of-ownership.

The reason why it is not currently as critical in the road transport industry, is because the majority of companies have not been doing it optimally. But, as more road transport companies focus on total-cost-of-ownership, freight prices will come down and the companies that don’t focus on it will not be able to compete.

When an aircraft manufacturer produces a new model of aircraft, there are huge order backlogs. The companies that get that fuel efficient aircraft first are able to charge lower prices.

A classic example was with Norwegian, who bought a lot of Boeing 787s and filled up the order book, which prevented a lot of other airlines from having access to this aircraft. That meant that they were able to fly that aircraft years before others, capturing the market and increasing their market share. 

And finally, what are you currently working on at Dynamon, do you have any more projects in the pipeline, and what areas of the company are you looking to develop?

Angus: Yes, we are now developing tools to help fleets transition to zero-emission vehicles. It is the biggest transformation the industry has ever undergone. Road logistics has used the internal combustion engine for over a century and that is now about to change to battery-electric and most-likely hydrogen-electric. And with this change comes completely new economics. The companies that understand that best will be very successful, while the companies that don’t will struggle. 

Manufacturers want to offer mobility solutions, where they own and supply the vehicles on a service-based business model. This will require them to understand specific operations very well to ensure they can offer a price that is both competitive and profitable. This is a huge opportunity for Dynamon because these business models will require sophisticated data analytics. 

We are now building the tools to help manufacturers adopt these new business models and to help fleets optimise the procurement of zero-emission vehicles. It is a very exciting time to be in logistics.