As one of the largest and critical industries to the health of U.S. economy, long-haul trucking with outdated approaches is due for a much-needed overhaul. While there have been attempts to address inefficiencies for decades now, they tend to only focus on issues vertically, which is restrictive and ineffective.
So what exactly are these challenges and what do they mean for the future of long-haul trucking?
● Highly fragmented market:
90% of carriers have fewer than 6 trucks in their fleet, and 50% of carriers are owner/operators (source). And the fragmentation continues among the other two key market participants - shippers and brokers. For example, the top 20 brokers account for less than 4% of total revenue and there are more than a million shippers. Each of these participants have their own key business objectives and with minimal communication and collaboration, there’s nothing to bridge the gap and bring efficiencies to the entire community.
● Lack of transparency:
There is very little active collaboration among the key participants in the long-haul trucking market. A climate where carriers, shippers, and brokers don’t communicate with each other, leads to a lack of transparency and difficulty in finding common ground.
● Limited use of technology:
Even as we close 2019, it is surprising to see how little technology is leveraged by shippers, brokers, and carriers to work together effectively. The entire industry is still primarily run on legacy approaches and manual processes making it slow and inefficient. As an example, 67% of shippers still rely on paper records (source).
● Changing trucking regulations:
Many trucking regulations have changed between 2016-2019, creating additional complexities in the space. The most impactful of these extensive changes is the ELD mandate. With the implementation of the ELD mandate, carriers reported decreased productivity and increased costs of regulatory compliance (source).
● Rising costs:
Tight labor market has led to higher driver-based costs in the industry. In order to retain drivers, trucking companies have consistently needed to raise wages paid and increase benefits provided to keep truckers happy and on the road. That, in addition to the ever-fluctuating cost of fuel, leads trucking industry costs to be volatile.
● Environmental concerns:
The long-haul trucking industry is responsible for pumping hundreds of millions of metric tons of CO2 into the environment in the US alone. According to this Environmental Defense Fund report, trucking, along with air and water-based transport, accounts for 16% of all corporate greenhouse gas emissions. Considering many of the miles leading to this pollution are empty, making a change is crucial, now more than ever.
What does it all mean?
These factors and an inefficient network riddled with empty miles and waste make the long-haul trucking industry ripe for innovation. The technology community has taken notice of the massive opportunity and there has been a tremendous uptick in the number of digital solutions. Shippers and carriers can take advantage of these solutions to create a more efficient and effective supply chain.
The SemiCab Platform
SemiCab has built a digital freight ecosystem connecting shippers, carriers and brokers. Our platform leverages metaheuristic optimization in conjunction with AI/ML capabilities to create net new value for the community by building fully loaded round trips and reducing empty miles.
Our platform integrates with transportation management systems (TMS) used by shippers and carriers, as well as ELD providers to facilitate cross-enterprise collaboration and mutual value creation for shippers and carriers who have historically focused on their own operating objectives.