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OODA Special Report: Digital Transformation in the Transportation Sector

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This OODA special report focuses on the Transportation Sector. It is written both for firms that are in the sector who are seeking competitive advantage and for firms in other sectors that can use this awareness for strategic planning (all our market based special reports are available on our OODA network resources page).

As a market-based assessment, this special report will be of most use when read in conjunction with the functional and technical research we provide OODA network members, and we provide contextualized recommendations for related research throughout this report.

This sector contains businesses that provide transportation services, including airlines, couriers, marine, road & rail and transportation infrastructure. The sector is highly dependent on fuel costs and also sensitive to other expenses like labor costs. The sector is highly regulated by governments globally and is also one with a high exposure to geopolitical risk. Major firms in the sector include CSX, Norfolk Southern, and Union Pacific (major rail transport providers for agriculture, food, fertilizers, chemicals, automotive, metals, equipment), airline providers like United, Delta, Southwest, Trucking firms like UPS, FedEx, JB Hunt, and ocean transport firms like Maersk shipping.


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Innovation In The Transportation Sector:

The core business of this sector remains the same as it has always been, move something from point A to point B. But IT based modernization has been dramatically changing how that is done. Most innovation to date has been around transportation optimization, making it faster and lower cost to get from point A to point B. However, widespread innovation has also been underway in areas like transportation safety, ride-sharing, freight carrier sharing, and automation of transportation.

  • Every corner of the transportation industry has seen improvements because of the wave of IT modernization and digitalization which has swept through industry. Every mode of transportation is now leveraging the benefits of enhanced IT and connectivity with the Internet.
  • Although digital transformation is touching every element of the sector, modernization is uneven. In automobiles, for example, antique cars may be on the road right next to highly automated, Internet connected cars with millions of lines of code. The same situation exists in shipping, trucking, and aviation. Automation is the trend, however (so it is the highly automated use cases that we should study for lessons).
  • The rapid acceleration of robotics research and artificial intelligence disciplines have brought the community to the point where self driving cars are a realistic part of our future. At this time, automation in vehicles is serving to aid drivers, and prototypes have shown full self driving is in our future, but the state of the art today requires humans to be in continuous charge of vehicles. Even the best at this, like the Tesla with all advanced features, requires human supervision.
  • The US Department of Transportation has been working with academia and automakers for years to advance concepts of connected vehicles that can exchange information with other vehicles and roads in real time. The objective of this decade long pursuit is safer, more efficient public transportation.
  • The FAA has been working on next generation air traffic control for decades and is now in the midst of fielding a system coordinated globally to reduce the dependence of aircraft on ground control. Concurrent with this, aircraft manufacturers and airlines have been pursuing Internet connectivity for pilots, air crew and passengers. In all these pursuits, cybersecurity has been added almost as an afterthought (for more see the next section).

 

Cybersecurity in The Transportation Sector:

Transportation of cargo requires cybersecurity of course, but transportation of humans is especially important to protect meaning cybersecurity should be treated as a critical factor. The bad news is that this was realized far too late. There is a great deal of activity designed to improve cybersecurity in transportation but it is a game of catchup.

Our recommendations for cybersecurity in the transportation sector:

  • Establish a relationship with the appropriate cybersecurity information sharing organization for your firm. There are many ISACs to chose from depending on which part of the sector your organization operates in. For example, a public transportation ISAC, a Surface Transportation ISAC, and Auto ISAC and a Aviation ISAC. For a list of all see: ISAO.org Membership in an ISAC will enable sharing of information on threats but also provides a venue for exchange of best practices in cybersecurity. There are many very good resources for organizations seeking to improve cybersecurity, the appropriate ISAC can help save time in finding the right resource to meet the needs of your firm.
  • If for any reason, joining an ISAC is not the right approach for your organization, take advantage of the wealth of high quality recommendations provided by DHS. Start with the DHS Cybersecurity and Infrastructure Agency (CISA).
  • Larger firms can aid in improving the security of smaller firms and their entire supply chain by advocating for use of common cybersecurity frameworks and taxonomy’s, like the NIST Cybersecurity Framework. Smaller firms can proactively show how serious they are about security by adopting this framework.
  • All businesses in the sector should ensure executives in the business have a baseline understanding of cyber threats as well as geopolitical threats and technological risks. We provide a plain english daily threat brief designed to improve this awareness. Sign up at The Daily Pulse
  • Think through your nightmare scenarios. In this sector it could include compromise of passenger private information, disruption of communications to vehicles, ships or aircraft, or potentially threats to safe transportation by malicious actors. Thinking through nightmare scenarios will help you plan to mitigate risks and prioritize resources appropriately.
  • All firms, large and small, should leverage outside experts to evaluate security. This type of external assistance can include review of plans, policies and architecture. External red teaming efforts should also be leveraged as an independent way of evaluating comprehensive security programs.  Contact us for more insights into all aspects of assessments including red teams.

Enhancing Innovation in The Transportation Sector:

Few sectors touch people in such a personal way as the transportation sector, so improving transportation by innovation will potentially improve the lives of a wide swath of humanity.

  • Today most (95%) transportation fuel is fossil. Expect the future of transportation to be focused on decarbonization. One key way of doing this is by electronic vehicles. All firms in the transportation sector should be tracking the status of EVs and determining how to leverage them.
  • Rail firms should consider accelerating innovation around data to including instrumenting all tracks and cars and locomotive power to enable better anticipation of problems and proactive solutions.
  • Water transport and shipping should all take advantage of the revolution in space to ensure use of GPS and high speed communications. Challenges in security of shipping indicate more focused security work needs to be done for the shipping industry. This should occur asap to enable more/faster innovation.
  • Trucking/ground transport can now all take advantage of highly precise GSP and soon can take advantage of space based internet connectivity for continuous insights into location of every truck, employee and package.
  • The move to self driving vehicles is an unmistakable trend, even though it is several years away. Firms in this sector should be thinking through how to optimize business growth in a world where autonomous vehicles are on the road, in the air and on the sea.

For Businesses Seeking To Serve the Transportation Sector:

  • Executives in this sector stay very busy. Do your homework and prepare prior to any discussion so you never waste their time. Understand as much as you can about their needs before any meeting. Also understand what you can about their clients and supply chain since increasingly these are topics on the mind of corporate decision-makers.
  • Every publicly traded company in the transportation sector provides an annual report that captures specifics on their market and approach which includes intentions for the near future. These are available on corporate websites and should be one of the first documents read before any sales call.
  • Track the activities of the U.S. Department of Transportation, available on their website, as an insight into issues facing companies in this sector, as well as insights into the future of this sector.
  • Be fluent in the technologies of high interest in this sector including Cyber Security, Robotics, Cloud Computing, Quantum Computing, Quantum Security, and Artificial Intelligence.

These are additional references that can help accelerate digitization in the Transportation sector:

AI Topics:

Quantum Computing:

Cybersecurity Topics:

OODA network members can find these and all other research reports at our OODA Network Resources page

About Bob Gourley

Bob Gourley is an experienced Chief Technology Officer (CTO), Board Qualified Technical Executive (QTE), author and entrepreneur with extensive past performance in enterprise IT, corporate cybersecurity and data analytics. CTO of OODA LLC, a unique team of international experts which provide board advisory and cybersecurity consulting services. OODA publishes OODALoop.com. Bob has been an advisor to dozens of successful high tech startups and has conducted enterprise cybersecurity assessments for businesses in multiple sectors of the economy. He was a career Naval Intelligence Officer and is the former CTO of the Defense Intelligence Agency.