Transportation Consultant
at Albedo Logistics
As the US transportation industry emerges from the pandemic in an environment that continues to see drivers aging out of the industry or exiting the industry due to depressed financials as consumers over allocate spending the services, the focus on reducing the waste associated with freight transfers continues to gain momentum as companies realize the amount of lost capacity is sitting idle daily.
Numerous tech companies, transportation companies and even the US DOT have taken the initial steps of collecting data associated with the idle time, which is currently financially absorbed by shippers and indirectly passed onto the American consumers, with the goal of establishing health scores and partnerships across the industry to reduce waste.
Shippers and receivers, who are both the causes and the solutions to the idle time, have overtime become overwhelmed with the amount of freight attempting to move through their facilities, both dock doors and facility yards. As a result, the efficiency of drivers has yet to improve even in a world rich with technologies. Until recently, transportation capacity has been viewed by the industry as limitless although as capacity declines due to a declining driver base, the opportunity exists to unleash trapped capacity through investments in technology, infrastructure, and processes.
Shipper & receivers are the ones burdened with the investments and changes although their industry partners can help by quantifying the returns on investments in the form of reduced rates, improved on time deliveries, and even positive sustainability impacts.
At this point in time, the roughly 2.0 million shipping/receiving locations that approximately 20% of them create slow downs in the flow of goods yet they are overwhelmed with the issue continuing to pay rate penalties and dwell charges versus pursuing a path to greater efficiency.
The following is an overview of who is engaged in reducing inefficiencies and why it is important for shippers and receivers to be partners in implementing solutions.
Keep in mind that the US spends approximately $800B on Transportation annually and it’s possible that $100B -$150B is waste that is passed onto the US consumer.
Currently brokers and tech providers are collaborating to develop appointment standards although the questions remain.
How to engage the shipping and receiving community?
What is the financial benefit hook?
Problem Statement
Appointment Scheduling is a major point of friction for carriers, brokers, and shippers alike. Complex and nuanced appointment scheduling processes lead to inefficiencies when procuring and managing appointments across the freight industry. The SSC aims to simplify the integration of systems across the fragmented ecosystem that exists today. We anticipate a standard set of communication protocols will enable shippers and carriers to connect with each other’s’ systems more seamlessly, enabling efficient data sharing and greater efficiencies across the supply chain.
Benefit
Aligning as industry leaders on a set of standards will simplify the integration of systems across the fragmented ecosystem between shippers, carriers, and intermediaries. All such parties will benefit from simpler interfaces and integrations.
Objectives
The primary objectives of the SSC are to (1) define an API standard for sharing scheduling information, (2) eliminate manual processes by automating interactions where possible, (3) implement the standardized interfaces and integrations across core systems, and (4) advocate for the standard across the industry. The SSC aims to partner with shippers, carriers, brokers, and solutions providers to drive towards a standard. The purpose of this document is to start the conversation and to provide an overview of the key workflows that the scheduling API will need to support. The SSC will continue to refine documentation informed by feedback from the industry.
Key Theme
Given that existing TMS and Appointment Scheduling solutions, are the source of truth for appointment data and appointment restrictions, the SSC’s proposal is to simplify carrier-side appointment logic and nuance and empower the TMS’s and Appointment Scheduling Vendor’s to implement necessary rules and validations for appointment booking.
Summary
How to engage shippers???
Shipper engagement fluctuates depending on the conditions of the market. In a tight market, shippers will scramble for solutions as quickly as possible to make the pain go away, while in a loose market, “out of sight, out of mind” becomes the mantra. Poor dock management, or freight transition management with carrier partners tends to be accepted up until the point when tight capacity results in carriers choosing more efficient loads requiring the shipper to cover the load at premium costs in the spot market.
The shipper also struggles with internal financial accountabilities at the departmental level. Transportation is burdened with absorbing detention or premium freight costs on behalf of the inefficient warehousing operations. Even though both budgets may eventually align under one cost center, those creating the inefficiency have little accountability in correcting as their budgets look fine in the eyes of leadership.
Transportation on the other hand is tasks with proving their innocence, dealing with the pleas from carriers to not only improve their shipping operations efficiency but to also address the issues of the customer receiving locations, which are under the protection of the customer teams.
Shippers, specifically transportation teams want to improve yet they lack the financial insights into what the “dwell”, “slack” times and antiquated dock appointment scheduling practices are costing the organization. Without the financial details, developing a project with an acceptable return on investment is difficult and often does not get any attention since the company is awarding funding to projects with a more defined return on investment.
To engage shippers to improve freight transition management, the inefficiency premiums must be clearly outlined, additional costs from detention, and additional lane rate costs due to demonstrated inefficiency, with a commitment from the carriers that they will reward the shippers with lower rates if they improve the flow at not only their locations, but a customers delivery location. One example in my prior network was resulting in $300 per load lane rate premium due to very poor turn performance. When the cost benefits were able to be isolated, the facility was able to invest in a small drop yard and dock scheduling software that eventually brought the lane rates back in line with the market.
Shippers want to be part of the solution, although they need help with substantiating the benefits and developing the return-on-investment story, justification.
Benefits
Behavior Change
Time is truly money as drivers waiting for the next step in the process must be compensated for as the hours they could have been driving evaporate at alarming rates. Of the $800 B transportation industry, one could argue that $100B – $150B is waste as the industry waits for the goods transfer process to run its cycle. Those dollars eventually show up in the consumers on shelf price adding the pressures of inflation and quality of life.
Let’s estimate that the overhead cost of a truck is $75 per hour, and if the truck is driving at 55MPH it can earn $2.25 per mile roughly $123 per hour. The delta is approximately $50 per hour revenue before taxes although in most cases the truck is sitting for 25% of the allowable hours causing revenue to drop to $37.5 of which $12 is taxed leaving the company with out $25 of revenue before paying its management overhead.
How can ATRI research on dwell time support the industry’s focus on changing the current state?
In conclusion, the article underscores the critical need for systemic change within the US transportation industry, particularly in dock and yard management. The ongoing collaboration between various stakeholders—including technology providers, transportation companies, and government entities—aims to harness data-driven insights to refine operational processes, enhancing overall efficiency.
The establishment of the Scheduling Standards Consortium (SSC) and its efforts to standardize appointment scheduling protocols is a pivotal step towards reducing dwell times that contribute to the $100 – $150 billion of annual waste in the transportation sector. Such improvements not only promise substantial cost savings but also better align the interests of shippers and receivers with the broader economic and environmental goals.
Moving forward, the engagement and active participation of shippers in these initiatives will be crucial, as the financial and operational benefits derived could improve the landscape of freight transportation, fostering a more sustainable and economically viable industry.
Digital workflows across the supply chain.
