Over the last year there has been a great deal of talk about the expected impact of the ELD (Electronic Logging Device) Mandate. Many of the conversations had centered around the anticipated impact with respect to capacity that was anticipated to be felt starting in December of 2017 and then would be at an acute level starting April 1, 2018 once full enforcement occurred.
Now with the ELD mandate in full effect, many shippers are looking for effective ways to expand their FTL capacity. At NEXT Trucking we are a carrier, a broker, and our sister company, IDC is a 3PL. As a result, we are in a unique position to understand some of the challenges our industry faces and how technology can enable success and have a dramatic impact on our business and that of our clients.
We seem to be approaching the perfect storm in 2018 and there are several factors that contribute to the current market conditions. Some of the most impactful conditions include:
- Aging carrier population - As an industry we are not recruiting enough young talent to replace the current generation of carriers.
- Low national unemployment rate - A reduced demand for work and low carrier pay rates make driving a truck a less desirable alternative. Pay rates are beginning to increase but we will see if they will increase fast enough to make a difference.
- Carrier shortage - There is a significant carrier shortage. Long haul trucking is a difficult job that puts carriers on the road many days and weeks during the year. Companies are using relays and drop yards to try to keep carriers more local but this can still be a challenge in recruiting carriers.
- Aging carrier base - The carrier pool is not getting any bigger. The same companies are competing for the same carriers leading to high turnover rates that can reach 80-100% a year for some fleets.
- Nationwide economic growth - While there is a great deal of growing uncertainty reflected in the stock market as we navigate through potential trade wars due to tariffs with several of our largest trading partners, the economy is expected to grow at a 2.5 to 3% rate.
- The rise of digital commerce - E-commerce growth has had a tremendous surge during the 3rd and 4th quarters. While this has a large impact on the parcel business, it also has a tremendous impact on truckload volume, as well as product that is moved to DCS and final mile deconsolidation centers.
How do we maximize capacity in this market and become a “Preferred Shipper”?
Use data to manage your business. You can always make decisions and act on your impulses and feelings, but having data to identify opportunities for improvement will enable you to be more strategic in putting programs in place to support your carriers. Carriers don’t make money when they are waiting at your facility to be loaded or while they are waiting at destination to be unloaded. With the HOS(hours of service) now being electronically tracked we have to work together to maximize available capacity.
Some KPI that will be insightful:
- What the average wait time is for a carrier to get a dock dock after check-in?
- Once carrier checks in and backs into a door, what is the average loading time?
- How long does it take the carrier to exit your facility?
- How much are you paying in accessorials (wait time, Truck Order Not used, etc.)?
Analyzing this data over time will create insights into your business and identify opportunities for improvement. Once changes are made, it is important to track your success and make minor adjustments as needed.
Carriers have a tough job and appreciate when shippers and receivers provide a carrier lounge or area for carriers to relax and provide carrier parking as well. Making a little effort can go a long way to build alliances with the carrier community - it can be something as simple as putting chairs and a bowl of candy in your warehouse. Let them know you appreciate them and their work.
Evaluate How you Run Your Business
With vacancy rates at warehouses continuing to remain low, many facilities are pushing out high volumes of loads with constrained warehouse space, constrained yard space, and limited numbers of dock doors for the throughput that is needed at facilities to meet demand. Below are a few factors shippers should evaluate in order to streamline their supply chain:
- Business Processes - Do you have SOPs (Standards of Practice) for all aspects of your business, including:
- Yard Management
- Warehouse Management
- Production Management
- Load Management
- Training, Mentoring, and Evaluation
- Do you have a formal training process for new employees?
- Do you have a mentor program for employees? Should you have a mentor program?
- Do you have an evaluation program to collaborate with employees and provide feedback?
- Live Load vs. Drop Pools
- With the HOS requirements electronically logged it is now more important than ever that carriers spend as much driving and on the road rather than waiting. When Trailer Pools are available preloaded trailers are a great option as they virtually eliminate carrier dwell time as long as you have an organized yard and a solid SOP in place to preload trailers prior to carrier arrival. When ON TIME DELIVERY is important trailer pools help you achieve your goals by enabling carriers to spend their time on the road rather than missing delivery appointments.
- Have you considered the impact on your business of drop trailer pools?
- How can a trailer pool drive efficiency?
- How can a trailer pool help with throughput?
- Does your carrier understand your business and offer the following:
- Innovative ways to help you meet capacity during slack and surge periods?
- Does your carrier collaborate to identify opportunities for improvement if challenges occur?
- Does your carrier understand your business goals and objectives and work with you to help you achieve goals?
- Does your carrier work the same hours as you?
If we collaborate with all stakeholders in this equation - carriers, shippers, and consignees - we can create a “best case scenario” for all parties involved. This scenario enables us all to be successful and take on the challenges ahead in a more strategic manner and use the limited resources we have to improve the industry’s conditions for all stakeholders.