Mike’s Thoughts #2: Intermodal- Are we ready for the future?
I have worked across logistics my entire career, from trucking to warehousing to complex supply chains. The times I cherish the most are my 27 years of interacting with truckers. That’s why in the last 10 years I have invested my working energy into trucking, specifically the Intermodal Trucking Industry. Truckers are the lifeblood keeping the American economy in motion, and without them our way of life would come to a standstill in just a couple of days. On average 57 tons of goods are moved per person every year within the U.S. freight system, according to the United States Department of Transportation.
However, after 10 years in the Intermodal industry, I have become frustrated at the slow pace of change in Intermodal trucking and the desire from many to protect the status quo. The current intermodal system needs to change and change now.
Within Intermodal, it’s amazing that many still think fax is acceptable, and emails are thought of as useful as EDI or APIs. A delivery is considered to be “on time” if the IMC does not receive an angry phone call from a shipper. You will often find that no one questions these systems because “that is just the way it is”. It is crazy to think that truckers have to compile all their paperwork for loads, such BOL’s and POD’s, and send them back to the Intermodal Marketing Companies (IMCs) via email or worse, mail. The few new advancements have benefitted shippers, IMCs and Railyards, but rarely carriers and their drivers. The carriers and drivers should be the most valued user in the transaction; they are the individuals the end customers experience! In no other industry would it be acceptable to invest the least in those that provide the ‘user experience’ to customers. As I tell my 15, 12, 11 & 7-year-old children, and I promise the newborn twins will come to know (yes, that’s 6), life is about choices, and we all have a choice to handle the problems within Intermodal now or wait until these problems worsen.
Our industry has long been considered the last frontier of trucking innovation. A good part of the business is still done by fax, handshakes and phone calls. Even Uber Freight decided the entire industry was “too parochial” to shake-up. I don’t agree, and I also don’t feel Uber, or others, will remain out of the picture for too long.
The continued regulatory changes in recent years, including driver hours of service and ELD’s, lends credence to the common belief that the Intermodal Industry will only get stronger as regulations tighten, cost of trucks increase, and OTR and Regional capacity cannot keep pace. If you don’t believe me, just take a look at JB Hunt and what they’ve accomplished in the last 10 years within Intermodal. We need an Intermodal culture where innovation is common and not self-serving, where taking risk and challenging status quo is acceptable. Being comfortable with the uncomfortable is where advancements will occur.
So, you say, “We do have Technology!”
Around 2014, many IMCs developed their own apps to track truckers and load progress. This provided many benefits such as load tracking and had an end goal to streamline communication. However, the carriers and drivers saw no benefits; why did everyone expect Intermodal carriers that service multiple brokers to force compliance with their drivers? If these companies took time to consider doing a design discovery prior to development, the acceptance would have been remarkable!
I am sure many believe that drivers will not allow “tracking”. There is a lot of evidence that those the days are gone. App usage is becoming a common expectation of Carriers because, when built with their needs in mind, they see how they can personally gain efficiencies. In the past the inherent mistrust between Carriers and IMCs meant that carriers remained in a black box, all while IMCs were scrambling to provide shippers more data.
For all these reasons we believe the obvious answer is an agnostic app that considers all stakeholders, aggregates data, and brings actionable metrics to the future of Intermodal.
Capacity Struggles are not going away
2014 was a peak in a historically unprecedented crisis of capacity across U.S. trucking. I am amazed at how little strategic energy is placed in actually trying to work toward long term solutions. With only 7,600 carriers who have a UIIA agreement (which allows them to haul Intermodal) a potential solution is to try to grow incremental capacity by attracting some of 850,000 carriers in the United States. The existing 7,600 carriers just continue to cannibalize each other by hiring drivers away from other Intermodal carriers instead of solving the systemic problem.
Two methods of growing Intermodal Capacity:
#1 — Attract incremental capacity by reaching a small portion of the roughly 850K carriers that do not haul Intermodal freight today. A high majority of carriers are small mom and pop carriers with less than 5 trucks. They want home time, ease of finding freight, and wish they could find more local loads. Intermodal freight is a solution for many, we just need to reach and educate those users.
#2 — Use data and collaborate- it is estimated that 45% of miles in Intermodal are empty miles. Going back to my dispatcher days using “Truck Stops” routing technology (which I know dates me), I doubt anyone will disagree that its always smarter to use the empty asset on the road then to send another asset.
According to the Association of American Railroads, there are 27 million drayage loads every year, which is roughly 4 billion miles. With about 50% of miles driven as empty, that means that there are around 2 billion empty miles each year.
Collaboration is going to be key, but this isn’t going to be easy. The historical mindset deeply rooted in this industry is that, “having the box is gold”, and this is only proliferated by giving carriers the ability to leverage container detention to their advantage. However, isn’t the best use of any trailer or container asset to get more turns? Should all carriers be able to see available assets to minimize empty miles?
With only 50% of miles being optimized and loaded, even if DrayNow only increases 5–10% of loaded miles, that means that 5%- 10% less drivers are needed. It also means that at least 100 million miles less are wasted, and that 14 million gallons of fuel saved, and 247 million pounds of CO2 emissions not released into the atmosphere.
Less empty miles mean better paying loads for drivers. An open marketplace app lets drivers see all freight in their local area and allows them to choose the loads that make the most sense for their schedule and preferences.
We need to stop the outdated “purchasing” model and start collaborating on driving network efficiency. There is a different way to attract carriers and to change how truckers view intermodal.
Intermodal’s path forward
I have a tendency to question legacy systems within Intermodal, which is the short story for the creation of DrayNow. We are in the midst of an amazing opportunity to dramatically improve Intermodal trucking. To remain relevant for shippers we all need to change, and legacy thinking mindsets impede the technological progress. After all, 25 years ago FedEx developed online tracking tools, but still today Intermodal IMC’s call or email carriers to obtain status updates, and these carriers simply call their drivers to find out!
Let’s figure out a new path. We can leverage technology to bring transparency, aggregate the data, and capture all events and documents in real time. We have to realize change is needed and the tools are available. We set out on a journey in 2015 to bring commonsense technology to Intermodal Drayage. Is it time for industry to move forward?
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