Trucking Industry Trends For 2013
Truckload carriers consistently innovate to keep their business profitable, especially through driver retention and service diversification. Carriers are diversifying the business options with bigger margin services, which include logistics, brokerage, intermodal services, dedicated services, specialized hauling, and LTL to TL consolidation. Major truckload carriers who are looking to diversify are doing so in dedicated services and brokerage services. Mentioned below are findings of surveys which point to the existing factors at play in the trucking industry.
The primary factor for driver retention is driver miles. Utilization and turnover are tied directly to the pay miles of the driver. The turnover rates very closely follow the revenue mile in every week of a driver. Organizations with the most number of driver logs are usually the ones with very low rates of turnover. This indicates that as utilization increases, the turnover decreases. Trucks sitting around in a garage can affect the overall retention and driver morale, apart from the financial performance of the company. While the home time may be an important factor, to be constantly productive drivers should spend that time away from home.
The fleet downtime has continued to pose challenges for companies. In surveys, it has been reported that almost 6% of tractor fleets in companies have not been up and running in the past year. This is quite alarming, as anything above 5% is generally considered to be unacceptable. Also, the mean life of truck fleets is pegged at 44 months, which is more than what is ideal. This has resulted in more unscheduled breakdowns, which negatively affects the asset utilization. Specialized hauling can also affect the downtime of trucks, if it hasn’t been conducted properly.
Increasing equipment costs, driver constraints, labor, and government regulations are a few factors that keep the operating ratio (OR) quite high. In a recent survey, it was found that 71% of respondents reported an OR of 94% or more. The best industry performers have operating ratios less than 90%. There is a strong correlation between OR and utilization, and as such it becomes clear why the issue of OR is among the top in fleet priorities.
The respondents of the survey discussed above described the toughest challenge in the next couple of years to be maximizing the asset utilization. The mean utilization – the revenue miles per week of a seated truck – was found to be 2230. Companies having this figure less than 2000 were found to have an OR of more than 97%. Specialized hauling can come in play in asset utilization also.
The increasing regulations, rising equipment prices, and constraints in driver operations, have all led to a tough time for trucking companies to stay afloat and profitable. Having management based on metrics is essential for keeping any trucking company competitive. Some of the progressive trucking companies have started investing in and deploying new technologies to improve their asset utilization, such as specialized hauling, and have been reporting positive outcomes since then. As such, the other trucking companies have to realize their potential and work on the factors discussed above to change the status of their business from barely afloat to a profitable company.
In order to stay profitable, trucking companies need to approach their business through metrics-based systems and stay up-to-date with the new technologies and trends in the industry.
Oversize Load Trucking Companies
The drive to get benefits of outsourcing has far exceeded the systems and processes required to effectively maintain the global supply chain. Many importers, such as oversize load trucking companies, lack a formal solution to efficiently manage international transportation. They are adept at domestic transportation, but lack the skills for airfreight and containerized transportation services. Technology is the key in making it possible to curtail the escalating transportation costs for international freights.
To ensure that transportation is carried out successfully and at lower operational costs, there are three main steps that you can follow:
- Maintain the searches centrally and offer searches for total rates.
- Optimize the selection of carriers before booking them.
- Correctly pay the bills of lading.
Centrally managed data
Centrally managing important data pertaining to total rate search and contracts can help in reducing the overall operational costs. You can access the various freighting rates of oversize load trucking companies and other carriers by using a powerful search engine. This means that the users of the service don’t have to know anything about airfreight or ocean freight pricing. They can simply enter details such as origin, destination, and date, compare the services available with each other, and choose a carrier that can offer the best service and price.
By monitoring the carrier’s tariff rules you can chart out a route that is flexible as well as optimized for the transportation service you are seeking. You can check out the approved carriers and their operational costs on powerful search engines and decide the best option from the available choices.
Optimized carrier selection
The key to cutting down on transportation costs is to automate the carrier selection process and quickly identify all the options available to you, to make better cost and service tradeoffs before initiating the booking process. Shippers efficiently manage contracts and optimize selection of carriers, such as oversize load trucking companies, by automating the contracts with Transportation Management. You can search for a wide range of rates and routing options in a powerful search engine as described above, and choose the best option based on your needs.
Paying the bills of lading on time
With complex rules and specially negotiated contracts, you can expect much higher number of cases of carrier rating errors in oversize load trucking companies and other carriers. You can use the search engines described above to search the actual date of shipping to initiate the lading’s service parameters bills auditing process. This takes only a few minutes at most, and is simple enough to be done by employees under you.
Once you have rated the bill and calculated a bottom line, you can easily determine if the variance has gone “out of tolerance” and needs more study. You can dive into the charge details with a simple click and determine where the discrepancy has occurred. You can even share this with the carrier so that they can correct it as required. Reducing the overall international freight costs can leave you with margin for profit, which you can then invest elsewhere to grow your business.
As the prices for international freighting continues to escalate, it has become important to optimize the routing and pricing so as to cut down on the high costs of operation.
Shipping Strategies for Cost Effectiveness