“I don’t think that 10 years ago we ever could have envisioned the things 4G eventually supported. We’re at that same point with 5G.”
Mike Katz of T-Mobile US Inc. (Nasdaq: TMUS) was reflecting on unexpected uses for 5G networks following early deployments.
Indeed, the 5G hype machine continues to churn with bold predictions. But as consumers, we have yet to see much progress.
Fifth-generation networks are still being rolled out. AT&T Inc. (NYSE: T) recently announced that 13 more cities were added to its 5G network.
But that brings the total to only 32 cities, and covers just one-third of the company’s mobile subscribers. It’s the same story for all of the major telecom providers.
Meanwhile, other industries are pushing ahead with their own private 5G network deployments.
And the results have been staggering.
In fact, 5G networks are already revolutionizing one industry in particular.
5G Is Remaking Logistics Networks
The logistics industry accounts for the second-highest level of private 5G network deployments since 2016, according to Informa.
That’s because 5G networks are completely remaking the industry in two ways: through fleet telematics and supply chain monitoring.
Fleet telematics uses sensors to relay information about a vehicle, such as location, fuel consumption, engine diagnostics or even driver behavior.
For logistics and transportation companies, this kind of data will help them save a lot of money.
Maintenance alerts will help avoid costly downtime. Route optimization for delivery vehicles will save time and fuel. And those are just a couple of examples.
But up until now, monitoring has been limited. Old networks can only handle so much data.
That’s all changing. As 5G networks expand, the fleet telematics market is expected to reach over $100 billion in just two years, as shown below.
But it’s not just vehicles. Sensors are also increasingly found in warehouses, and even delivery parcels. This allows for constant real-time monitoring across the supply chain.
5G will enable the use of more sensors in vehicles, warehouses and packages. And all of that data will be transmitted faster than ever before.
Spending on all these sensors in the transportation and logistics industry is expected to hit $40 billion this year. That’s up 300% from just five years ago!
The end result: Entire supply chain networks are becoming much more efficient. All told, 5G will have a $659 billion impact on the global transportation market, according to IHS Markit.
And that’s why you should pick up shares in the SPDR S&P Transportation ETF (NYSE: XTN). You’ll get exposure to all kinds of logistics companies. In one simple move, you’ll be positioned to capture a portion of the coming flood of profits from fleet telematics and real-time monitoring of supply chains.
Best regards,
Research Analyst, The Bauman Letter
