These days, US truckload carriers are turning down more loads than they are accepting — as many as three times the amount — due to current high demand and low market supply. When I ask carriers about the reasons for accepting the loads they do, a pattern emerges, falling into three main categories:
1) Allocating capacity to the shippers who have treated them fairly in recent years, while the market was in the shipper’s favor
2) Prioritizing loads to keep their drivers happy; without happy drivers, costs go up and margins suffer
3) Accepting loads that are efficient for the carrier’s network to avoid empty miles and have a net-positive impact on both the carrier’s and driver’s bottom lines
There have been plenty of articles published recently that discuss how companies should make their freight more attractive to position themselves as a preferred shipper or a “shipper of choice.” This is a logical strategy to follow. While there is no doubt that presenting organized freight, proper paperwork, and minimizing dwell time will place shippers in a positive light, these initiatives should be the price of admission. If you can’t provide organized freight, you should be last in line for a truck, regardless of market conditions.
In the current market, making freight attractive to carriers now must include making it attractive to drivers, too. And there is no secret to driver happiness. They all want a route that makes efficient use of their hours of service. At the same time, every driver has their preferred duration on the road. Drivers with day-cabs need to get back home each night. Drivers with sleepers may choose to stay out on the road longer to maximize earnings, or maybe prefer to get home to their families more frequently. A happy driver is one who is not having his or her time wasted and is getting home as often as he or she wants. I saw a recent YouTube video that showed two kids sitting on the curb waiting for their father to get home in his big rig. He had been on the road for 37 days. It is a powerful illustration of a driver who probably wants a better work/life balance.
Why is matching a route to a driver’s interest so difficult? A key reason is because shippers do not plan well, and carriers are left with little ability to plan their capacity to meet actual demand as it happens.
One cause can be that most shippers do not make a commitment at the end of their annual request for proposal (RFP) — despite what volume “commitments” the bid may have contained. Transportation teams argue that they have no control over the timing of inbound shipments, and simply wait for loads to materialize. Then they work the routing guide until they find a carrier to take the load. Similarly, outbound customer shipments happen only as sales orders or requests to move inventory appear, again working the routing guide until they find a taker.
It’s this lack of coordination that causes RFP savings to vanish and the panacea of network optimization and continuous moves to routinely fail. The result is an unnecessarily high portion of a shipper’s volume ends up with brokers or on the spot market — and moved at higher rates. The lack of coordination is also why the carrier does not have a prayer of putting together a predictable route to match the interest of the driver.
A better way
There is a better way, and analytics are the key to better planning shipping volume, even with complex and dynamic upstream shipper and carrier market conditions. The right technology, one that provides visibility to both true market demand and capacity is the solution. Having the ability to analyze key data points at scale can provide the basis for finding predictable moves which, among other benefits, can become the basis for driver-friendly routes.
Consider the following example and how it can be solved:
- A driver would like to start a trip somewhere near home in city (x).
- The driver would like to be on the road for no more than (y) days and then finish the trip near home.
- The driver does not want to drive more than (z) segments and the deadhead distance between the endpoint cannot exceed more than 10 percent of total trip miles.
A properly designed analytics engine, with visibility to the current marketplace of available shipments and capacity could then deliver a detailed list of routes, with predictable volume, that meets the driver’s criteria.
So then, what does it take to make these routes work in real life? The answer is a platform that facilitates a real binding commitment that both the buyer and seller can plan around.
As soon as the digital contract is finalized through such an analytics platform, the segments are linked together in a way where each party is focused on making the route happen. The load is made available, as promised, because the binding contract is effectively a take-or-pay model for the shipper. It’s not just a promise made in an RFP.
For shipments executed in this way, the entire process works better for the shipper, carrier, and driver. As one example, loading is prioritized because excessive dwell costs money to preserve the driver’s hours of service. The carrier accepts the load and picks up as scheduled to honor the terms of a contract with real teeth. Ultimately, this is a way for parties to come together to create the binding contract and the mechanism to ensure that payment occurs as contracted, streamlining settlement.
Better planning leads to better execution and better outcomes; guaranteed, like the smile on your driver’s face.
Jeff Ryan is a customer success lead with LogisticsExchange, a firm that is bringing financial market efficiency to the truckload transportation sector. Jeff previously worked as an industry executive responsible for operations and procurement at companies like Bristol Myers Squibb. He also held leadership roles at technology and consulting firms.
Contact him at: email@example.com.