In today’s challenging transportation environment, the more avenues shippers have to find and secure capacity, the better. While there is currently considerable investment and effort to add capacity to the market, there’s also a lot of wasted capacity such as empty private fleet backhauls. How can shippers tap into this source more efficiently? What are the main challenges and how do you overcome them? That was the focus of my conversation with Dan Clark, President and Founder of Kuebix, in a recent episode of Talking Logistics.
Challenges facing the trucking industry
Anyone involved with the trucking industry, whether as a shipper, broker or carrier, knows that finding capacity is a key issue. So I began my discussion with Dan by asking him what he sees as the main issues causing this crunch.
Dan laid out two challenges coming from opposite ends of the business. He says for carriers the big issue is finding enough drivers. At the price point of average trucker salaries there are plenty of other job opportunities that don’t require long absences from home. For shippers, the challenge is getting visibility to the capacity that is available at reasonable rates.
Dan says, “Technology platforms are part of the solution by providing shippers with broader visibility and access to available capacity. Shippers today are looking for new, innovative ways to obtain that extended visibility.”
Underutilization of capacity
If you read the reports, trucking companies ordered record amounts of new equipment last year, yet the capacity crunch persists. Part of the problem is that the equipment is underutilized because trucks are still driving empty a considerable amount of the time. I asked Dan to explain what’s happening.
Dan argues that, “The equipment is not the issue. It’s the lack of drivers. And there will always be some degree of empty backhauls because more stuff is produced in the Midwest than in the Northeast, for example. The less-than-truckload (LTL) community typically has the infrastructure to move loads around their network area. But truckload carriers must be able to position their equipment where they expect their next load to come from. They are using technology to get that visibility to keep their equipment moving. That, in itself, will help with capacity.
“When it comes to backhauls, who is the largest trucking company in the US? It’s Walmart,” continues Dan. “The issue is how can other shippers get access to this and other large private fleets to leverage their empty backhaul capacity.”
Utilizing backhaul capacity
Attempts to better utilize backhaul capacity have been around for many years, so why haven’t there been more success stories? Dan says the problem is resources. “You need a number of people to go out and search for the available backhaul space. That’s a rather difficult task, especially when dealing with private fleets. And there are a lot of constraints to consider such as you can’t ship food in trailers used for hazardous materials or you can’t stack heavy loads on top of crushable ones. Then even if you can secure that capacity and deliver the load on time, how do you accurately compensate the fleet owner for utilization of their capacity? That takes more resources. There are a lot of details and resources involved and that may make companies question whether the end result is actually worth the effort.”
Tapping into “empty mile” capacity
According to the National Private Truck Council, 26 percent of private fleet empty miles are available for backhauls, with 42 percent of those empty miles available ‘for sale’ to others. However, as Dan noted, matching this available capacity with available loads, and managing the execution and financial transactions, has always been a challenge.
This is where network-based transportation management systems and the right partnerships can help. Dan explains, “It has to be a win for all parties and you have to keep it simple. Fleet owners want to accept a load, deliver it and get paid. Shippers and brokers want to find the capacity, contract for it, then pay when the load is delivered. The software makes the process simple by automating the majority of the tasks that were previously manual.”
For more of Dan’s insights and advice on this topic, including how such a program would work and the benefits, I encourage you to watch the full episode. Then post a comment and share your perspective!