Operational trucking charges and costs are nothing new. They derive from a confluence of factors, including truck industry volatility. While a scorecard of operations, similar to the lane scorecard used by shippers, can help carriers manage their fleets, it still leaves much to be desired. According to the Harvard Business Review, “The challenge for companies will be to make their supply chains more resilient without weakening their competitiveness. To meet that challenge, managers should first understand their vulnerabilities and then consider many steps – some of which they should have taken long before the pandemic struck.” To that end, here are the top steps for carriers to get more from their fleets and proactively manage operational trucking costs.
The beat of logistics follows a peak and lull cycle. Unfortunately, the wide variances of 2020 revealed those fluctuations could grow more severe than anyone realized. As a result, carriers found themselves at the heart of an in-demand crowd with finite capacity resources, facing a growing carrier trend for more and faster service. As reported by Talking Logistics in 2017, “With more than 100,000 North American truckload carriers, you can secure truckload capacity by first identifying credible carriers that share the same values as your company. This will help build and solidify the relationship over time.” Expansion of your network through outsourcing is the only thing that can add capacity when demand suddenly soars.
The next step to increasing trucking network profitability can seem counter-productive. Carriers need to offer their drivers sensible rates. Lower drivers’ rates would seem like the best way to increase profitability per load. However, driver turnover rates will likely increase, and the attention to detail paid by those drivers will be scant at best. Instead, carriers need to incentivize their freight with realistic rates for their drivers. And part of the ability to offer those freight rates goes back to seeing what’s happening within the market to ensure only the most lucrative and profitable loads are accepted, enabling route optimization as well.
Route optimization is an absolute necessity for effective control of trucking costs. As further explained by Joseph Evangelist of Fleet Owner, “Dynamic routing looks at all the stops for each day and puts them in a sequenced format that will optimize the utilization of the assets and the drivers. Consideration needs to be given to returns, racks (bakery business), totes (retail), etc. An effective dynamic routing program can measurably impact both drivers and equipment utilization. Backhauls can be factored into that routing.” While his sentiment is true, carriers know that change isn’t limited to the beginning of the day. And having access to freight data on the fly is critical to maximizing asset utilization and load profitability.
Another opportunity to get more from your fleet involves a strong focus on knowing your drivers’ current hours worked and existing hours of service (HOS) limitations. During the past year, many of the HOS regulations were suspended to keep the supply chain functional throughout the unprecedented peak season and COVID-related demands. However, HOS regulations will always play a role in ensuring your company stays fine- and fee-free. But how can a trucking company achieve this goal?
The answer lies in considering HOS rules and driver availability when planning every move. After all, the best backhaul opportunity is meaningless if the driver must violate regulations and risk a fine. Remember that those fines amount to extra overhead expenses for carriers, so it’s a cause-and-effect relationship. So, the best way to avoid that problem is to consider everything. And remember the net revenue per driver per load and per week?
Using the calculations provided in the Freight KPIs infographic, it’s possible to derive a net gain per driver rate for each driver in your company, especially when using the FreightWaves SONAR Revenue Per Driver Per Week index offered for carriers to use in the platform. Thus, it’s easier to see which drivers have the most robust profitability, which will expect the best rates, and when the net revenue might lead to a possible breach or approach the limits of HOS regulations. In a sense, it all goes back to tracking the profitability per driver, truck and load. Together, it provides a more comprehensive picture of your trucking company’s health, keeping trucking costs at bay despite trucking industry disruption.
The final step to getting more from your fleet requires freight forecasting tools. While seeing what’s happening in the market now is excellent, it misses part of the bigger picture. If a company’s staff can see what may occur based on current trends, they can better assign prices for loads. And that will help to avoid under- or over-valuing shipments. It adds up to better control over trucking costs and improved throughput too.
Learn how your fleet can become more strategic and proactive with the right freight forecasting platform. Click the button below to request a FreightWaves SONAR demo, and become a strategic carrier regardless of your size or tech know-how.