When carriers are able to reduce empty miles, the shipper wins. A carrier carting around an empty trailer continues to incur expenses for every mile it runs, such as driver pay, benefits, fuel, fuel tax, tolls, and maintenance. With no revenue for the empty move, the carrier is forced to add those costs onto the deliveries a shipper tenders. Seems unfair somehow, doesn’t it?
In this ultra-competitive marketplace, you don’t want to pay more, you want to pay less. So how can carriers get more creative in controlling costs for their customers?
Well, what if carriers started collaborating with other carriers who operate in the same general region? Yes, that would mean carriers actually sitting down to compare their lanes. Sometimes, these may be carriers who bid against each other on a regular basis.
KANE is doing just that with Road Scholar , an asset-based transport company based relatively close to KANE headquarters in Northeast PA. By sharing lane data, it became apparent where collaboration efforts would reduce empty miles.
Currently, collaboration has resulted in a reduction of 3% of the collective empty miles. This was achieved by brokering freight to each other and, in a way, exchanging customers. In addition to improving margins and asset utilization, the collaboration has reduced both company’s overall miles driven, leaving a smaller carbon footprint. We are just beginning to scratch the surface of reducing empty miles. As more carriers are added to the program, even greater efficiencies will be realized.
Despite the benefits, carrier collaboration usually doesn't happen. Why?
Probably because carriers don’t want to expose competitors to their customers and risk losing them. They want to hold these customer relationships close to the vest. But that’s old world, close-minded thinking. I remember when shippers went through a similar adjustment period when load consolidation (share-the-ride) programs were introduced.
It’s a new world out there. Price pressures, the driver shortage, and even unconventional competitors (Amazon, perhaps) demand that carriers think in new, and even uncomfortable, ways in order to survive and thrive. Shippers should want to partner with carriers that demonstrate a willingness to challenge long-established practices, especially when those practices inflate freight rates.
Aren’t load boards supposed to reduce empty miles?
You might say that it’s the job of load boards and freight brokers to know the market’s available capacity and fill it. But these methods and marketplaces aren’t getting the job done. There are simply too many trucks on U.S. roads running empty miles, dragging down carrier profits, and inflating your rates. Carriers have to take initiative and determine their own collective fate.
The pilot program with Road Scholar is just the beginning. We are working with a team of logistics MBA students at Penn State University to improve the software technology used to compare carriers’ networks and identify opportunities to share customer freight. Our plan is to attract other carriers to participate in our lane sharing program.
And why stop at freight?
All carriers purchase oil, gas, grease, tires… Why not collaborate to increase purchasing power? Perhaps there are back office services that can be shared reducing overhead. The opportunities of working together are endless.
Shippers win when carriers operate efficient networks
The current market for freight hauling is more a buyers’ market, with excess capacity. But that will change and, when it does, rates will rise and shippers will be under even more pressure to contain freight costs. Carriers need to work together to control costs for their customers.
Shippers should partner with carriers who are committed to taking aggressive measures to reduce empty miles and operate more efficiently. Shippers benefit when carriers can charge less and still make a fair profit.