In our last two posts, we’ve been discussing the issue of empty backhaul miles, with a focus on lost revenue, safety, and sustainability. As we’ve been hinting at, there is a solution to the issue, and it starts with community; with an equity-based ecosystem designed to ensure all participants benefit—SemiCab—a digital freight platform.
The Basics of Digital Freight Platforms
SemiCab was designed specifically with the goal of creating an equitable ecosystem all parties can benefit from. When looking at a traditional Digital Freight Platform, it’s clear to see 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 the load search which allows users to save time, however, the need to chase demand through dynamic pricing is still very much present.
The SemiCab business model differs in that it provides enhanced efficiency with a focus on equity for all participants, be they shippers, drivers, or carriers. You cannot create an equitable ecosystem unless the model allows all boats to rise by increasing the overall efficiency of the ecosystem. That’s why SemiCab unites supply and demand on a single platform, and provides all users the same visibility into loads, so that everyone is on the same page. 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.
Deep Dive: The SemiCab Ecosystem
When it comes to successfully creating value for all participants within a community, a lot of puzzle pieces have to come into place just right. So, what are the prerequisites needed to create an equitable ecosystem within a community focused on logistics?
- Insight into demand and supply, provided by the community, and powered by API-based technology, which accurately communicates all transactions.
Better yet, SemiCab is less prone to data errors that can creep into other models like Electronic Data Interchange (EDI), and it works in a more real-time manner.
- The ability to analyze historical patterns for demand and supply, seasonality, and other demand-influencing factors to put together an accurate picture of how the demand and supply may evolve.
SemiCab uses machine-learning algorithms that automatically learn from the data, and continuously adjusts the demand prediction algorithms as the data patterns evolve and change.
- The ability to plan trips for carriers/drivers that go beyond single load-matching. You cannot impact empty miles unless you can proactively plan the whole trip for an entire duty cycle.
Currently, a driver/carrier leaves home knowing the details of the first leg of their trip. They are continuously looking out for the best load to pick up. This “best load” must meet a plethora of requirements. It must be close to their first load’s destination, available for pickup when they are expected to be dropping off that load, compatible with their equipment, have a pickup time that is acceptable to the shipper, and allow the driver/carrier to comply with DOT requirements on driving time, breaks, and layovers. With all these constraints, the best the industry has been able to achieve so far is an efficiency of 70-75% loaded miles.
SemiCab uses a combination of proprietary algorithms, AI, and mathematical modeling to plan at this hyper scale and optimize the performance by splitting the problem into its parts and solving them simultaneously.
- The sophistication to continuously react to changes in execution and simultaneously create and implement a back-up plan.
In practice, trucks will be delayed, pickups will be missed, and so on. The network must capture all these unexpected events, evaluate them for their impact and continuously optimize the transportation plan to ensure that the network as a whole can still operate at a 90% efficiency. This requires real time updates on a truck’s location, context, and planned trip/loads on that equipment.
SemiCab has developed an algorithm that can keep up with the unpredictability of the network, and work with it to our shared advantage.
Digital Freight Platforms and Transparency
SemiCab was designed to create an equitable ecosystem, and that starts with transparency. In fact, transparency is another area that is underpinned by the business model more than our technology. We are committed to sharing the underlying cost and revenue numbers with the ecosystem participants for all their transactions.
SemiCab brings companies together to help them identify efficiencies across their networks by partnering them up within the ecosystem. We’ve found that the way companies bid on one-way freight is inefficient, resulting in a lot of empty miles. Shippers aren’t able to look upstream or downstream in their supply chain to find ways to collaborate with customers and suppliers (they have better things to do!). SemiCab allows parties to connect and convert traditional one-way moves into more collaborative round trips.
- Before: A retailer with a private fleet operated by following prescribed routes between manufacturing facilities, distribution centers, wholesalers and retailers, and company domiciles. Though this worked to keep their headhaul miles full, they found they had a $100M fleet being utilized at 60%. That left a lot of opportunity on the table, but this retailer did not have the resources in place to secure backhaul freight that met its precise parameters, including equipment/vehicle type, weight, capacity, current location and destination, and available drive time (HOS) to deliver the load.
- After—As a member of the SemiCab Ecosystem: With SemiCab’s proprietary prediction optimization algorithm, shippers (retailers) find capacity that lines up with a retailer’s available capacity parameters on a regular basis. This retailer would then regularly run full backhaul miles, granting them increased fleet utilization that could range from 60 to 80%. SemiCab does the heavy lifting of securing the freight, so the retailer can concentrate on running their core business.
Digital Freight Platforms: Sustainability and Profitability
This one is pretty obvious, and yet, it bears outlining. By reducing empty miles for the entire network, we create a more sustainable and profitable future. First, we remove unnecessary trucks from the road, reducing our carbon footprint. And second, with fewer trucks on the road, we spend less on fuel, driver compensation, etc.
To truly understand how this works, let’s look at an example of how the current model operates:
Out of every 1,000 miles driven, trucks run empty for 300 miles
- This spews carbon into the atmosphere without the truck being used for a productive purpose.
- This keeps a driver on the road when there is no cargo being transported.
With this model, 30% of miles are empty, but the carrier still drives a total of 1,000 miles:
- This means that out of 1,000 miles, only 700 of them are revenue-generating (1,000: 700)
- Assuming the shipper pays $3 per loaded mile, and a broker takes 20% commission, the revenue earned by carrier = $2,100 ($3 x 700) - $420 = $1,680
- However, as the carrier is driving 1,000 miles (for every 700 loaded), their true revenue per mile = $1,680/1,000 miles = $1.68
- This means the shipper is paying $3 per mile, but the carrier’s effective payment is only $1.68 per mile since the rest of the money is lost in driving an empty truck.
We can all see this isn’t ideal, and yet, it’s been the norm for decades. Enter Semicab, with a solution to finally change the way the system functions as a whole.
Let’s look at how SemiCab tackles the profitability and sustainability issue in one fell swoop:
- On the SemiCab platform, only 10% of the miles driven are empty, with a carrier driving 1,000 miles:
- This means that out of 1,000 miles, 900 of them are revenue-generating (1,000: 900)
- The shipper pays significantly less than $3 per loaded mile, which is up to 10% lower than their usual payments
- The carrier receives $2 per mile for all miles driven (1,000 miles). That’s $2,000 of revenue earned by the carrier, which is 20% higher than their usual revenue intake.
With SemiCab, everyone benefits - carriers are more profitable, shippers pay less, our carbon footprint is reduced, and we build trust within the Digital Freight Ecosystem.
SemiCab: The Digital Freight Platform You can Depend on
There’s really no reason not to join SemiCab: Join the network, reap the benefits, and don’t change a thing about your day-to-day. There’s no added work to join the network, if anything, it makes your day go by more easily.
Hear what industry experts Ragiv Saxena, ElMarie Huge, and Jagan Reddy have to say. Watch our webinar, How to Monetize Empty Miles in a Private or Dedicated Fleet today.
Or, if you prefer a more personal approach, set up a call with one of our executives to get all the details you need.