Trucking Strategies for Whichever Way the Wind Blows

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Small Fleets Dominate
The Right App-titude
Fleeting Capacity

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What a difference a year makes.

When the market was tight a year ago, Inbound Logistics’ trucking edition feature article was titled, “Six Ways to Find Capacity.” This month, while not exactly the opposite of a year ago, finds the industry with more capacity and as a result, with lower rates, too.

“Truckload freight rates hit record highs last year, and for-hire carriers did very well,” says Eileen Hart, vice president of marketing and corporate communications for transportation information company DAT Solutions. “Many invested their profits back into the business, buying record numbers of new trucks and improving driver compensation.”

In addition, new carriers attracted by the high rates also entered the market. “As a result, there a lot more trucks are available this year,” Hart adds.

And while truckload freight volume has grown compared to 2018, it hasn’t been at the same pace as capacity. That extra competition for freight has pushed rates back down.

DAT tracks load-to-truck ratios, which measure load posts divided by truck posts on the DAT network. When the ratio goes up, there’s more competition for trucks. When the ratio goes down, there’s more competition for loads. In July 2019, the ratio for dry van freight fell 40% compared to July 2018, which underscores how much more capacity is available this year.

Don’t get too comfortable though. Experts warn that capacity is bound to get tight once again.

“It’s important for shippers to realize that capacity can change very quickly, like it did in the second half of 2017,” cautions Curt Stoelting, CEO of Roadrunner Transportation Systems, a transportation service provider based in Illinois.

“Take a strategic, long-range view and understand that while there’s a dip in demand today, over time that will change,” adds Geoff Muessig, executive vice president of Pittsburgh regional carrier Pitt Ohio. “Partner for the long term, not the short term.”

in it for the long haul

Carriers point out that shippers who approach transportation sourcing from a long-haul perspective, so to speak, will do best in all market conditions. They advocate for three constants in the shipper-carrier partnership:

1. Building and maintaining relationships

2. Good communication

3. Taking advantage of technology

“Having solid relationships and a good understanding of the partners you’re working with and their ability to execute on the promises made are critical, not just for long-term, high-volume relationships, but also for individual transactions,” says Tim Gagnon, vice president of analytics and data science at C.H. Robinson, a third-party logistics (3PL) provider.

He uses a soda manufacturer as an example. Consumption typically increases in warm weather months; freight planning takes that into account. But what happens when a temperature spike earlier or later than usual causes a surge in demand? The shipper needs a capacity procurement model that not only executes against plan, but also prepares for the unexpected. That’s where relationships play an important role.

“It’s a given in our landscape that when we commit to plans, they’re right until they’re wrong because of variables, whether it’s the economy or the weather,” Gagnon says. “They all point back to the best practice of having relationships and understanding each other’s business.”

Tina Satariano, director of strategic accounts for Florida-based 3PL BlueGrace Logistics, agrees. “Relationships are what will save you in a tight market like last year,” she says. “Carriers can see you through in both an up market and in a down one.”

“When capacity loosens up, we ask shippers to stay with us because we stayed with them when capacity was tight,” Stoelting adds.

Good communication is essential in any partnership, but particularly in transportation sourcing. Carriers need to ask questions; shippers need to share specifics. “We want to understand the shipper’s business model so we know what’s required for them to be successful and how we can help them do that,” says Gagnon.

Satariano recommends establishing baseline requirements that include specifics ranging from the minimum cargo insurance necessary to general loading requirements.

“When you have an honest conversation with your vendor, you can understand that it is well-positioned at one shipping location, but not at another,” says Muessig. “The key to getting the best value over time is having these exploratory conversations with your carrier base.”

TECH IMPROVES RESULTS

Most agree that technology is essential to finding capacity. Whether it’s through a transportation management, digital freight matching, or other type of system, technology can help all parties operate more efficiently and effectively.

Loadsmart, a digital freight broker specializing in full truckload shipping, works to improve results for all parties by linking them with information available within its technology.

“We spend a lot of time working to understand carrier preferences,” says Erik Malin, vice president of operations for Loadsmart. “When you use technology to learn more about your carriers and understand how to support them better, you can decrease transaction costs and create a better result.”

He cites an example of two shippers going in opposite directions in the same region. One might be shipping from Hialeah, Florida, to Baltimore; the other from Upper Marlboro, Maryland, to Atlanta. The Florida shipper might use that lane with predictable frequency and work with a carrier that isn’t accepting the load according to contract requirements because it isn’t finding enough backhauls to Florida.

Technology can help that carrier accept more of the Florida shipper’s freight by connecting it with the Upper Marlboro shipper’s load that isn’t going all the way to Florida, but will bring a full truck close enough to make it worth considering.

“While the carrier doesn’t currently have the backhaul to mitigate that cost, we can see that we have another opportunity that could make it work,” Malin says. “Both shippers and the carrier can benefit from that.”

It’s not just about technology, though. Both Malin and Greg Carter, chief technology officer of GlobalTranz, a 3PL and transportation management system provider, note that technology is only as good as the people behind it.

“We’re combining our tribal knowledge with shipping freight history, and digitizing that with machine learning and automated intelligence to automatically match the load while taking its characteristics into account,” Carter says.

For example, the GlobalTranz system knows that rolled steel transported in inclement weather will need tarps and chains. It also knows that the truck has to arrive early enough to allow for a long load time. “We don’t just find capacity; we find the best capacity,” he says.

Technology can help shippers find capacity in the spot market, as well. Roadrunner Freight recently introduced a new tool for that, but Stoelting advocates for a strategic plan that strikes a balance between contracted and spot market freight.

“A good 3PL will help set a strategy for total transportation spending that takes into account how much to lock into on a contractual basis and how much to play on the spot market,” he says. “You don’t want to be completely locked up on contract or play the spot market too much.”

Take It Easy

While the industry increasingly relies on technology, Dan Clark, president and founder of Kuebix, a TMS provider that offers digital freight matching (see sidebar), notes that the industry sometimes makes it more complicated than it needs to be.

“It still comes down to getting access to capacity at the best price and making sure the truck shows up and delivers freight hassle-free,” he says.

Right now, getting that access is easier than it was one year ago.

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Small Fleets Dominate

The fact that the trucking industry is so fragmented makes it even more important for shippers to build relationships, communicate effectively, and use technology to find capacity. Almost three-quarters of the country’s carriers in 2019 have 20 or fewer units, according to the U.S. Department of Transportation. Here’s the breakdown.

The Right App-titude

An increasing number of freight-matching smartphone apps are making it easier for shippers of all sizes to access capacity options. Here’s just a sampling of what’s available.

123 loadboard

Brokers and shippers get access to thousands of trucks and have the option of broadcasting specific loads through alert notifications to drivers’ mobile devices. Post loads and immediately locate real-time GPS-verified trucks near your load.

Cargomatic

Founded by a tech entrepreneur and a logistics expert, this app seamlessly connects shippers with local freight and vetted truckers through mobile and desktop options. It also provides real-time tracking and full shipment transparency.

Convoy

Shippers enter load details to get an instant, guaranteed price; carriers review the load details in the app and accept the job. After the system sends shippers notification that the load is picked up, shippers can track the load with real time GPS.

HaulHound

Carriers post availability for full truckload and less than truckload freight on types ranging from refrigerated, flatbed, and cargo to tankers, logger, and livestock trucks. The Basic version is free; there’s a fee for Pro and Enterprise options.

Navisphere Carrier

The free resource lets C.H. Robinson carriers find available loads, review shipment details, provide status updates, and upload documents. The company offers companion apps for shippers and drivers, as well.

QuickLoad

Shippers can find vetted carriers ranging in size from owner-operators and small organizations all the way up to large trucking companies can accept and manage their less-than-truckload, full truckload, and container loads. They can also plan their trip and get paid within five business days after the job is completed.

Transfix

Owner/operators and small carriers that do full truckload shipments with dry vans, refrigerated trucks, and flatbeds can use the company’s online booking system to find, accept, and manage loads.

Truckloads

Touted as the highest rated and “the most popular load board app in America,” this free option from Trucker Path lets drivers customize their search criteria according to trailer type, deadhead, pickup date, and destination and get paid quickly with InstanPay.

Uber Freight

Designed to match shippers with carriers, the app offers shippers upfront, instant quotes; real-time tracking; and 24-hour access to carriers. Loads are exclusive to the app through Uber Freight’s contracts with shippers.

 

Fleeting Capacity

A transportation management system (TMS) provider and a subsidiary of the largest privately held carrier in the country have collaborated to make private fleet backhaul capacity available to shippers.

TMS company Kuebix recently introduced FleetMAX, a service that gives Kuebix’s ecosystem of brokers and shippers access to open capacity on participating private and dedicated fleets. Estes Truckload Management has partnered with Kuebix to handle administrative aspects, including charging shippers, collecting payment, and paying fleet owners.

“We’re introducing shippers to private fleets but taking away the barriers involved with finding, onboarding, and managing them,” says Dan Clark, Kuebix founder and president. “And we are doing it with a company that both fleet owners and shippers trust.”

Just over one quarter of private fleet empty miles are available for backhauls, with 42 percent of those empty miles available to others, according to the National Private Truck Council.

Kuebix TMS users access, book, and manage fleet capacity through the platform’s spot market function, Community Load Match. The system shows available private fleet capacity under the Estes Truckload Management banner. This adds 15,000 fleet-owned assets to the carrier mix in Community Load Match, giving users access to capacity that hasn’t been easily available in the past.

“The idea of filling fleet backhauls is not a new concept, but a tremendous number of trucks run empty due to the challenges of filling that capacity,” says Clark. “FleetMAX solves these problems for all parties by removing the risk and administrative barriers for the private fleets, and making it easy for brokers and shippers to access a large network of fleet capacity through Estes Truckload Management.”

In addition to helping shippers find capacity at the right price, the program helps fleet owners generate revenue from previously empty backhaul miles without creating corresponding administrative overhead.