Faster supply chains creating US truck capacity

Faster supply chains creating US truck capacity

A truck being loaded.

Shippers facing concrete limits in physical capacity need to work with time to create capacity without adding assets. Photo credit: Shutterstock.com.

For US shippers struggling to secure truck capacity, now is the time to act, and the first thing they should think about is time, especially how much time is lost in their supply chains.

Capacity most often is measured in drivers, tractors, trailers, containers — all physical assets, human or otherwise — and space, as in the amount of space available in a trailer or on a pallet. But the fourth dimension is capacity’s hidden dimension. Shippers facing concrete limits in physical capacity need to work with time to create capacity without adding assets.

They can do that in several ways, starting by turning loads more quickly and keeping different types of capacity — especially the truck driver — in motion rather than idle. Sharing information on shipments digitally also will help trucking companies make more efficient use of existing capacity.

The biggest gains will come not from immediate operational fixes that focus on individual, or transactional, problems but from deeper changes in processes and procedures that free up time on loading docks and in truck cabs, eliminating detention and speeding the flow of goods.

“Instead of having conversations about what the detention rates are going to be, I’d rather focus on not having detention at all,” Rob Roberson, director of logistics at steelmaker Nucor, said at the JOC Inland Distribution Conference in Oak Brook, Illinois, on Oct. 24. “We’ve used our transportation management system [TMS] to make load times a critical metric for us.”

North Carolina-based Nucor, a US steel producer with $21 billion in annual revenue, has concentrated on using its TMS to improve its loading process, preloading flatbed trailers for Montgomery Transport. That speeds Montgomery’s drivers in and out of Nucor facilities, giving them more time on the road, which equates to more mileage and pay.

It also produces more actual capacity for Nucor. Every extra hour a truck driver waits for his or her truck to be loaded is an hour that capacity isn’t being used. “We’re doing things in our operations that create efficiencies for the driver,” Roberson said.

That’s efficiencies, not just courtesies. “We leverage our TMS so that if a truck takes more than X amount of minutes to load, the folks on shift that day get alerts and are told to find out why it’s taking so long for that truck to get loaded, find out what the problem is and rectify that,” he said.

Addressing ‘time shortage’

Much has been written about the driver shortage, but what about the time shortage? Take an hour or more from a truck driver’s daily hours of service (HOS) and the importance of time to capacity is immediately clear. The industry has seen capacity shrink when HOS are adjusted on more than one occasion, in 2004 when the 14-hour daily on-duty limit took hold and in 2013 when HOS changes temporarily made it harder for drivers to use the 34-hour restart.

Current efforts to rewrite or amend HOS rules could change the calculus again.

Those instances pale, however, next to the disruption caused by the introduction of the electronic logging device (ELD) mandate in 2017. The fact that truckload and drayage capacity tightened so much after the ELD mandate took effect indicated shippers were relying on drivers to habitually violate HOS rules to provide capacity.

Within a few weeks of the Dec. 18, 2017 implementation of the mandate, shippers reported shortages of drivers and assets and soaring rates, not just in the so-called tweener lanes — trips of 400 to 700 miles that had been one-day runs — but in shorter 250- to 400-mile runs.

Transit times on those shorter hauls grew by 16 percent, Zipline Logistics reported in February. “If you talk about a 16 percent increase [in transit time], that’s a pretty massive hit on productivity, which flows into capacity turns,” Zipline president Andrew Lynch said at the time. “If the number of turns goes down, that’s an impact on supply.”

The cause behind the sudden increase in transit time? Truckers cut back driving time to avoid potential violations. In a recent survey by CarrierLists and Kenco Logistics, 71.8 percent of truck drivers said they experienced a reduction of hours on the road post-ELD mandate.

In its fourth-quarter market update, C.H. Robinson Worldwide said the loss of “market hours” was roughly 3 percent. “The inflexibility of ELDs means shipments that previously fit into one-day transit times — 400 to 700 miles — are now two-day shipments,” the Eden Prairie, Minnesota-based logistics and brokerage company said. “Some longer dray destinations are now out of reach for local carriers.”

The reduction in driving time, and the number of turns truck drivers can complete weekly, has had a bigger impact than expected on productivity and available capacity. Prior to the ELD mandate, the biggest impact was expected to be from the loss of drivers. The real consequence was a loss of time, just as freight demand and pressure on supply chains surged.

Time to stop ‘stealing time’

Shippers have tried to adjust to the new normal of the ELD era this year by better aligning their freight and their schedules with their trucking partners’ networks. Some are going as far as changing production schedules to ensure more consistent freight volumes that would attract the capacity they need, said Brian Bourke, vice president of marketing at Itasca, Illinois-based freight forwarder Seko Logistics.

“If you’re going to produce one thing six months out of the year and then you stop, you don’t get those carriers back in six months,” he said. “Changing your production line so you’re making and shipping your product more regularly, that’s a big deal. You’re going to keep those carriers, who are more likely to bring capacity to you than to other shippers that don’t ship regularly.”

Then there's driver detention. A driver who waits at the docks to load or unload for hours beyond the typical two-hour limit hasn’t only lost time on the road but also probably can't make the next scheduled pickup on time. In effect, the shipper (or consignee) that detains a driver effectively is stealing capacity from another shipper and costing that shipper money.

The guilty party might not care much about the impact of detention on shippers down the line. They’ve detained drivers because it costs less than hiring the labor to load or unload trailers promptly, and there was little financial penalty, at least until carriers became more willing to levy and collect detention penalties. Now, however, detention ultimately will cost them capacity.

A Zipline Logistics survey released in October found 77 percent of carrier respondents were more selective about shippers and receivers post-ELD mandate, and 80 percent of the carriers said there are facilities they now won’t serve because of extensive detention time. More than half the carriers said they have changed how long they will wait to be loaded or unloaded.

So, hold up a trucker, and the odds are increasing that the driver, or any other driver from that trucking company, won’t return. Many shippers realize that and are working to eliminate or reduce detention. Those who don’t will simply pay a higher price to move goods until that price becomes too high to pay and they’re forced to take action or get fired.

Extending shipping hours to weekends is another step that may increase available capacity. That may mean additional costs, but it creates flexibility for truck drivers. “Companies need to make more decisions to open up capacity rather than restrict it, or else costs will keep going up,” said Andrew Nutting, a logistics executive formerly with Bob’s Discount Furniture.

The basic point is that delays, such as driver detention, and inefficiencies that add time to shipping processes reduce available physical capacity. Many of those inefficiencies result from bad habits that have been baked into business processes over decades. They often revolve around forecasting and “demand sensing,” load scheduling, and planning. 

Shippers have relied on transportation providers to make up the time removed from supply chains through just-in-time manufacturing and lean inventory management. The burden of making up lost time has often fallen on the truck driver. Ordering or stocking only what is needed when one needs it often means calling for a truck at the last minute to replenish the product.

Avoiding ‘time sumps’

Businesses that want to become a “shipper of choice” are resetting their supply chain clocks. Advanced shipment scheduling and load planning is one way to return time to the supply chain. For example, a shipper that lets a carrier know it will need four trucks on Tuesday five days ahead of time gives that carrier time to plan and allocate capacity in the form of trucks. 

That’s why less-than-truckload (LTL) carriers are pushing shippers to provide digital bills of lading early in the day, so they can use shipment data to plan linehaul operations hours before pickup and delivery trucks return to the terminal.

“The biggest payoff is reduced empty miles in our linehaul operation,” said Geoffrey Muessig, chief marketing officer at Pitt Ohio Group.

“We can get freight on the street earlier in the day and deliver it earlier the next day,” Muessig said. “Shippers win through improved service and, in some cases, extended pickup times.” By sharing information as early as possible, shippers help carriers better utilize existing capacity, which in effect creates capacity without requiring additional tractors, trailers, or drivers.

Unfortunately, there are plenty of inefficiencies in shipping and transportation networks that act as time sumps, sucking hours of productivity out of supply chains each day. Take chassis splits as an example. A chassis split occurs when a drayage driver goes to pick up a container at point A but has to go to point B to get a chassis, sometimes a specific type of chassis.

Having to spend 90 minutes driving to a different intermodal ramp to get a chassis and then driving back 90 minutes to get the container kills three hours, and that could be enough to delay delivery by a day. Solving these types of logistics problems will create truck and drayage capacity without adding drivers or equipment. That’s the challenge for 2019.

Those changes will likely require greater use of technology, including artificial intelligence, to better manage and identify sources of capacity. “I think of it as productive capacity,” said Tommy Barnes, president of software developer project44. “Productive capacity is about being able to partner with a carrier to find ways to help make them more efficient.”

“To get there, the carrier community has to buy into the idea,” as do shippers, Barnes said. “It’s going to take some progressive carriers and customers getting together.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.

 

 

Comments

A reflection of necessity being the mother of invention. Not really invention, but proper prior planning. For decades shippers have gotten away with bad habits, many named in the article, and most of it revolved in not properly planning. Poor forecasting. If the trucks wait, so what?? That's their problem. Not any more, and many are now doing what should have been done long ago, look at yourself, find the flaws/inefficiencies, and fix them. "Partnering with the carrier", an expression used for a couple of decades - and rarely used, while shippers had the upper hand, it was a one way street. Necessity, what a concept.