The excessive fragmentation within the trucking market has implications that run deep, with fleets of different sizes looking at issues related to trucking operations from very different perspectives. Big trucking companies, though fewer in number, have long exerted an advantage over small and mid-tier companies by putting together expansive networks and maintaining steady relationships with companies affiliated with the industry.
For instance, large companies have access to competitive pricing for fuel through fuel cards, discounts for equipment spare parts with maintenance providers and long-standing shipping partners – helping these fleets reduce their operational costs and ensuring they have steady volumes to haul through the year.
However, the advent of digitalization in the freight sector has led the industry to gradually evolve into an ecosystem that presents a level playing field for fleets of all sizes. “Technology in the form of ELD [electronic logging device] systems is bringing new services to small and mid-tier fleets,” said Ken Evans, the CEO of Konexial. “Technology has allowed these fleets to band together and take advantage of aggregated discounts, receive sophisticated real-time telematics, use digital freight matching platforms and be a part of innovative business models.”
These advanced analytics help smaller fleets to understand their operations like never before. For instance, fleets can now train truckers to improve their driving behaviors based on the input they receive on truck idling, reckless speeding and even distractions while in the cab. Companies can now accurately calculate detention billing based on data collected from truck movement, as real-time track-and-trace is now quite commonplace.
All these improvements mean that finally, small and mid-tier companies can stand up to their bigger brothers in the business, without trying to work on wafer-thin margins.
“Freight marketplaces have to provide all carriers with the same set of features – booking loads, tracking, communication tools, management of drivers, tractors, trailer data, among others. That feature set has been – and still is for most carriers – something that only was accessible at a high recurrent cost,” said Ohad Axelrod, the CEO of Fr8Hub.
Access to shippers was a major issue for small carriers, because their reach was restricted to their personal networks and brokers, making it hard for them to scale up or solicit larger shippers and dedicated freight. That apart, these connections are also very localized, with carriers missing out on volumes that could have been theirs if they had greater visibility into the market.
Digital freight marketplaces have bridged that gap by providing all carriers access to tools that previously only large fleets could afford. This has helped the smaller fleets benefit from market access to loads and efficiencies that such tools enable. “Additionally, carriers have access to the marketplace so that they can build their favorite lanes and profiles to maximize their match rates and increase utilization of their fleets,” said Axelrod.
There also is the concept of preferred carriers, in which a continuous association with a freight matching platform can help fleets gain more privileges – like faster payment without factoring, thereby strengthening their cash flow position to scale faster.
“Technology has certainly helped with fleet and driver data management, utilization and documentation management. Today’s technology to manage data on drivers and the fleet is easy to use and gives an accurate picture at any time of available and scheduled resources,” said Axelrod.
“With tracking, we have a much better understanding of utilization, how it can be improved and the return on invested resources. Finally, documentation management, which remains a challenge for the entire industry, is now more easily transferred between carriers, brokers and shippers,” he continued. “There are advances in artificial intelligence that help process it in less time, and we can keep it archived, searchable and available.”
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