How to Monetize Empty Backhaul Miles Through the Use of Collaborative Transportation Networks
Last month, SemiCab got together with industry experts Rajiv Saxena (Kenco Logistics) and ElMarie Hugo (Supply Chain Expert) to discuss the issues associated with empty backhaul miles, in particular with regard to private and dedicated fleets. We looked at freight industry trends, the rise of technology, and everything in between. We also took the opportunity to explore solutions to empty backhaul miles, like how to monetize them through the use of Collaborative Transportation Networks.
Read on for our top five takeaways from the discussion, and if you missed it, don’t stress! Watch a recording of it at your leisure, just click here for access. And be sure to sign up for our 12/9 webinar where we’ll be discussing market capacity trends and how to navigate them in the coming year.
1: The Freight Industry is Volatile Historically, and especially over the last few years, the freight marketplace has faced volatility in capacity, availability, and rates. A lot of factors contribute to this volatility, be it the economy, trade negotiations, or the constant change in supply and demand. In 2017 rates began to skyrocket, and trucking companies could not honor their contractual commitments. Prices for spot market shipping rose. Pair that with the ELD mandate, a truck driver shortage, and the trade war between the US and China, and we wound up with the perfect recipe for continued volatility. The COVID-19 pandemic added to the madness, especially as customer-use of ecommerce grew significantly due to stay-at-home orders. As we wind down the year and move into 2021, e-commerce shows no signs of slowing down and will continue to have a tremendous impact on the freight marketplace as consumers continue to demand faster delivery times.
2: Securing Capacity is Challenging Though capacity needs vary among shippers, there are three traits that all shippers, regardless of industry, share. The first is that shippers are always looking for dependable capacity—it’s vital for their survival. The second trait goes hand in hand with the first—access to capacity must be reliable and consistent. And finally, shippers need their capacity to be cost-effective, preferably with predictable pricing, so they don’t run into any nasty surprises down the line. The need for reliable, consistent and cost-effective capacity has led to a rise in private and dedicated fleets.
Though working with a private or dedicated fleet demands significant up-front costs, this approach grants shippers access to capacity that is reliable and predictable. However, there is a flip side to this setup, namely, lack of utilization and flexibility. As more and more shippers turn to private or dedicated fleets, we’re seeing more and more empty backhaul miles, which translates into lost revenue. And so the issue with obtaining reliable capacity grows to include lost revenue due to empty backhaul miles.
3: Dedicated and Private Fleets Present an Untapped Opportunity It’s undeniable, the use of private and dedicated fleets is growing. Retailers and brands are under increasing pressure to speed up their delivery timeframes. In fact, there has been a year-over-year growth of dedicated and private fleets of 8%, so the issue then becomes, how can these established fleets be used more effectively? And this is where the opportunity lies: fostering collaboration between shippers so that utilization can be improved without the need of additional trucks. By monetizing empty backhaul miles, we can generate revenue to offset some of the costs associated with lack of utilization.
4: Collaborative Transportation Networks Can Help The idea of monetizing empty backhaul miles isn’t a new one. However until recently, technology hadn’t been up to the challenge of creating a network that solves the issue as a whole. When looking at traditional Digital Freight Platforms, it’s clear that they were designed to bring demand (shipper) and supply (carrier/driver) together in a more accessible way through the use of technology. They automate certain aspects of load searching which allows users to save time, however, the need to chase demand through dynamic pricing is still very much present, as is a lack of flexibility and transparency. Collaborative Transportation Networks differ in the sense that they can help shippers with private or dedicated fleets keep their trucks full by identifying and connecting them with other shippers seeking regular capacity in their specific freight lanes.
5: SemiCab is the Solution Attempts have been made to bridge the collaboration gap, but to date, what has been missing is a platform that brings everything together. Finding freight that meets your precise parameters including equipment, vehicle type, weight, capacity, current location and destination, and available drive time (HOS) to deliver the load—used to be like ‘finding a needle in a haystack’—but not anymore. The SemiCab platform combines all the specifics of the industry: service level expectations, scheduling demands, and equipment type into one cohesive network.
The SemiCab business model is different. It provides enhanced efficiency with a focus on equity for all participants, be they shippers, drivers, or carriers. SemiCab unites supply and demand on a single platform, and provides all users the same visibility into loads. All members of the SemiCab ecosystem can bring in demand and supply, which allows the platform to increase the efficiency of the whole network. This provides equal footing between all parties involved.