Carriers are inevitably the glue that hold transportation and freight services together. Without them, the entire industry would come to a standstill. At FreightWeb we are looking deeply at building the first Carrier Optimization Engine to propel carriers to operate at the speed of information.
Our next set of blogs, webinars and interview series will focus on some of the common carrier and owner operator pain points. Each week, we will do an in-depth analysis of each problem and share our solutions.
Drivers mainly look at the cost per mile for a lane and based on their knowledge of the average price in the last 30 days, they come up with a fair rate. While this may seem simplistic, this is only half of the equation.
There are the variable costs that together add up to be significant. Fuel costs, Maintenance repairs, Tolls, Lodging. It is hard to keep up with market rates for all lanes and know what the averages are vs. what the higher end of the rate can be given current demand. This puts carriers at a disadvantage when it comes to negotiating power with brokers and shippers.
High Fuel Costs
Fuel prices have a direct impact on freight. With the volatile complexities of oil prices, this keeps the entire transportation industry alert. This not only spikes quotes given to the shippers, but it can also trickle down and impact the revenue and salary of drivers.
Business Process Improvements Exist but are Not Accessible
While transportation management systems (TMS) have been created to streamline logistics companies, the act of implementing them can be a battle. The mentality, “if it ain’t broke, don’t fix it”, is heavily prevalent in freight. The idea of slowing down and installing a new system may be overwhelming in itself and as a result, is placed on the back burner.
To optimize is to make most of a situation or resource. To connect this to logistics, it means to streamline all areas of the transportation industry, especially when it comes to load planning. Creating load plans for the entire trip (including backhaul) is a big gap in current transportation management systems (TMS). This is one area that needs significant improvement for any size carrier, whether it is one truck or 100.
Improved Shipper Experience
Shippers have the expectation for complete transparency when it comes to load tracking; however, delivering a system that is accurate and affordable is not always readily available.
Slowed Economic Growth
When fuel prices go up, it creates a trickle effect amongst the economy. This, in return, raises the inflationary demands worldwide.
Driver Shortage and Retention
Not only hiring, but maintaining drivers, remains an issue in transportation services. There is an area of tension between carriers and drivers. The carrier policies created to protect the carrier-side oftentimes leave the drivers feeling unprotected.
Stricter Compliance and Regulations
Compliance regulations are expanding and are being reprimanded by federal, state and local governments. This creates more hoops for carriers to jump through for each delivery.
Environmental Compliance Costs
State and local governments have created trucking regulations to reduce emissions. While this is vital for environmental protection, it also sparks debate on whether the compliance expenses may exceed benefits.
Insufficient Technology Strategies
Installing new systems raises two concerns: affordability and who will assist in the implementation process. While obsolete technology practices may save time and money initially, it may negatively impact logistics professionals’ financial gain, time management and potential business in the long run.
This is the tip of the iceberg; in the next few weeks we will be going into all details for each topic. Here at FreightWeb, we are dedicated to building a more optimized transportation industry, one truck at a time.