Why Tapping Unused Capacity Is Key to Surviving Tough Years

2018 was a banner year for many in the trucking industry. The overall economy was booming, trucking rates went through the roof, and a lot of companies had a very profitable year. Then came a much more sobering 2019.

Rates have been dropping steadily month over month, while trucking companies are declaring bankruptcies at an alarming rate. Those that remain are still feeling the sting in what one owner-operator talking to Business Insider recently called “a bloodbath.”

Consider some recent headlines from FreightWaves:

For those who’ve been in the industry for a while, this is a painful episode of deja vu. It’s a volatile industry. In good times, when business is booming, the trucking industry rushes to invest in new equipment to meet the surge in market demand. And when the inevitable downturn arrives, we see a spate of layoffs, bankruptcies and depressed business performance across the board.

For a long time, this has just been “the way it is.” The industry has floated along with market currents like a rudimentary sailboat – one without a backup motor, radio, GPS or life preservers. When the wind is at the trucking industry’s back, it’s nothing but smooth sailing. But when the storm clouds blow in, a lot of companies end up on the shoals or underwater.

At FourKites, we’ve spent a lot of time thinking and strategizing about this with our community of global shippers (300 and counting) and carrier partners. We’re convinced there’s a better way to manage through the industry’s all-too-familiar rollercoaster cycles.

The answer is to unlock the hidden capacity in the market and increase the utilization of those existing assets.

Today, there is just too much waste and under-utilization. No one argues this. I’ve written previously about “deadhead,” which is industry slang for when trucks are driving empty on the roadways instead of hauling freight. Some estimates of the number of trucks driving empty are as high as 40 percent! No company in its right mind would invest in new equipment if 40 percent of its existing equipment was sitting idle – but this is precisely how the trucking industry has operated for decades.

Tapping the industry’s hidden capacity is key to better absorbing the shockwaves of industry downturns. The benefits are obvious and plentiful; by identifying and leveraging unused capacity, you can offset costs by filling return trips, increase driver utilization (and safety by reducing empty trailers on the roads), streamline operations, and increase service levels.

Matching freight to available capacity isn’t a new concept, but traditional matching technologies and load boards fell short of expectations. They failed to proactively forecast truck availability, and ignored whether matches could feasibly be executed based on real-time conditions, such as delays at stops, traffic congestion and disruptive weather events.

Fortunately, we now have the visibility platform, network and predictive analytics to identify – in real-time – trailers with capacity and shipments awaiting transport. That kind of visibility and collaboration empowers shippers, carriers, 3PLs, broker and drivers alike to better manage through the industry’s squalls, reducing the cost of shipping goods and improving the industry’s net efficiency in the process.

We call it Predictive Capacity Management, and in the next few weeks I’ll be writing more about how we’ve been working closely across the FourKites ecosystem to create a breakthrough new feature that taps the industry’s huge reservoir of unused capacity. Going forward, the industry has a very real opportunity to collaborate in its efforts to better weather the cyclical ups-and-downs that have plagued it for so long.

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