While delivering packages and small pieces of freight to non-commercial and even residential locations is not a new phenomenon; the sheer rate at which business to consumer shipping volume is growing at is what makes this a pivotal point in the industry.
All active players are experimenting and learning quickly which of these are the best fit for their current capacity and business model. Some are partnering with entities that are already largely involved with final mile delivery. Others are acquiring and utilizing the equipment needed to accomplish this work at the lowest possible cost. Then you have those companies (XPO) and the like who just go out and buy other companies who are already executing on a part of the market that they want to be involved in.
As is the case in any industry when the ecosystem changes this rapidly — there will be ventures that win and some that lose. This will take some time to sort out in the wash.
The transportation sector that is poised to rapidly acclimate to this B2C shift could quite possibly be LTL carriers. Especially those that have been building their infrastructure and investing in technology over the past five or six years. Among others, Southeastern Freight Line is ramping up the hiring of small straight truck drivers to cover this need for their customer base. XPO has a final mile division that works hand in hand with their freight arm. Rumor even has it that Amazon is shopping around and quietly looking to scoop up a national LTL carrier. We’ll see how that turns out. If it happens — watch out everybody even more than you are now, because Amazon will become a cross between XPO Logistics and Walmart. Scary dangerous.
Another angle could be to capitalize on all the vacant real estate available pretty much everywhere as shopping malls and big box retailers downsize and close their doors on brick and mortar. What if final mile hubs were to be implemented — giving consumers options for pickup themselves, as well as various carriers dropping residential deliveries off at a nice commercial dock door for small local hot shot carriers or couriers to zip in and out, completing the final mile in a leaner fashion.
Let’s take it one step further shall we?
No…that’s a joke.
But seriously. If Walmart is daring enough to experiment with employees making deliveries on their way home from work — why wouldn’t the rest of us consider making use of all the available non-traditional capacity that’s out there in every city on an average day? Think about building supply stores that have delivery trucks only being used half the day. Moving companies. Uniform vendors. Those guys that buy straight trucks just to put massive ads on the side. There is space in trucks for everyone! We just need to make it more accessible to those who need to move a piece of freight from point A to point B.
There’s a well-known quote that says “the future is already here, it’s just not evenly distributed.” Oddly enough we believe that future can be swapped out for trucking capacity. Which will be the future.
Visualizing data is a powerful method for better understanding the macro level picture of your transportation network. Similar to executing a pivot table in Excel – a tool like this gives the user a powerful look at what is working and how their freight, lanes, classes, and carriers are distributed.
The possibilities are endless with Tableau — which has a free version, personal version and several organization options. There are several other options for BI and analytics however Tableau seems to be one of the front runners currently.
More of this to come….
We all know that one of the mainstream messages being buzzed around is the impending and massively disrupting driver shortage in the trucking, transportation and freight industry. Is this true or just a good headline?
As with any complex question involving hundreds of thousands of data points — it’s best to look at the numbers. The American Trucking Association did an interesting study on current trends in driver shortages back in 2014. According to their work and predictions, the ATA stated that due to the high turnover rates in the full truckload side, and the aging driver population in general – we can expect the driver shortage to grow by 20,000 to 30,000 points each year.
With that in mind – QF looked at the Federal Motor Carrier Safety Administration’s database of registered US carriers, their number of power units as well as driver counts – and measuring both of those by the number and year that each were added.
What we see is a considerable spike of both drivers and equipment being added to the registry in 2016. Of course – the above mentioned study was done three years earlier, and could have possibly missed the prediction by some margin. Or this could have been massive turnover and the registry doesn’t track how many drivers left – just the total head count at census time. Would be interesting to delve into that idea on a later post.
What we see is a large jump in both drivers being added to companies and tractors or equipment being purchased. This also coincides with the increased economic growth and subsequent freight totals so far in Q1 2017.
If a nuanced guesstimate has any place in this analysis — I would say that driver shortages will still continue to trend upwards, but not at the rate that was initially expected. With 24% of drivers being within ages 35 and 44 as well as roughly 30% between 45 and 54 — coupled with the fact that 401(k)’s still haven’t bounced back from the recession, along with union pensions quickly evaporating — I would wager that we see the average age of US commercial drivers rise over the next five years. There will be more elderly gentlemen sticking around for that paycheck, and not because they can’t stand to be at home with their wives.
Habits and systems, when built and implemented in the right way, are powerful tools for productivity. Ultimately, it’s a way to automate a human process which will conserve your cognitive load and reserve that mind juice for more important, high value decisions.
This model can and should be applied to shipping LTL. Seemingly simple, but with many factors at play due to freight classification, packaging options, carrier selection, and more — effective navigation of this trucking mode is vital to saving costs and ensuring your company get’s its products where they need to go.
An effective way to do this is to step out of the weeds and develop a systemic approach to solving problems and finding answers. Not every situation is automated and repeatable — especially in LTL. This is why humans are still required and robots or computers are not yet manning outbound warehouses. There is not a standard sequence or algorithm to program into a machine. Lot’s of gray area.
By building your process a few floors up from the micro level view — this will make it easier to automate scenarios that you haven’t done before and need to solve on the fly.
For example: rather than memorize and habitually input the same NMFC classification code, automate a system where you can effectively research and navigate this complicated information and find the correct result. There has never before been a search function tool that so badly needs Google’s help (online users you know what I’m talking about).
QF has long thought that there needs to be an app or program built that uses reverse engineering and a process of elimination to decipher the correct NMFC code. It could be similar to the Akinator entertainment app () – but rather than guessing characters it would ask questions that can either identify or eliminate the correct group, article and classification for what you are shipping.
If this already exists or someone decides to take a stab at it — let QF know and we’ll help share the word!
Yes…shipping LTL is complex and many people do not pull it off in the most cost effective way. Some of that wasted time and money can be prevented by putting in place the right systems, habits, and process to mentally automate and streamline the operation. Identifying and reducing waste and redundancies can also bring to light company byproducts or what we like to call them…additional revenue possibilities (ARP’s).
Don’t ship anything.
Yeah — that’s the easy answer. But that isn’t what we are here to talk about. Let’s talk about the B word. Byproducts. Every single business out there produces one or more byproduct whether they know it or not.
[bahy-prod-uh kt]. noun. A secondary or incidental product. The result of another action, often unforeseen or unintended.
Going back in history – many companies have capitalized on, benefited from, and even re-branded completely based on a byproduct they discovered.
No I’m not talking about some cheesy one-liner that’s supposed to magically elevate everyone’s mood at work — therefore making the entire company more productive and sales go through the roof…Bonuses for everyone…yay.
I’m not sure about you, but I sure feel better now.
I’m referring to something of value that your company already produces either by accident or in conjunction with the output of another core commodity. These elements need to be recognized, harnessed, and recycled so that they either become another revenue stream for the business or will flat out eliminate the cost of disposing of it. Your company may break even on another key investment, or maybe it’ll allow for a strategic partnership with another business in your area. The commonly told example of selling a byproduct is this:
Henry Ford was going through wood like nobody’s business.
Back in the day Model-T’s were outfitted with that sweet ligneous trim. Now they’re all fiberglass and carbon… Anyway — Ol’ Henry was famous for constructing a sawmill or two in the same vicinity as his motor car plants. I’d like to think he was also selling its services to local contractors and builders as well since he had the equipment and facilities to produce lumber packages, but I’m really not sure about that.
Gone are the days of “cover the floor and shut the door.” The carriers have been upping their game since 2008 by hanging their “fricking lasers” from the rafters of their barns. No longer does an LTL pricing analyst look over a bid request and utter the words “meh…I see a lot of class 50 on here…that’s probably like 45 PCF freight. It’s probably square too.”
Everything is data driven now (how it should be). This drives transparency in the market. The only ones upset are the shippers who were getting a sweet deal by minimally describing their freight and slapping the ol’ class fitty on der.
Nowadays – nothing is going to make a pricing manager more skittish than a data file showing up with all one rated class and no den
sity info. Luckily enough – if they have the commodity identified, they can run averages based on various other handled accounts shipping similar freight — but yeesh, that just doesn’t cut it anymore. Precise shipment data = confident, competitive pricing proposals.