This story appears in the August/September 2013 issue of iTECH, published in the Oct. 14 print edition of Transport Topics.
I’m an Excel spreadsheet girl,” said Patricia Newkirk, owner of Troublefree Transportation in Butler, Mo., “so literally at the end of every quarter, I was taking every single trip envelope and putting my miles by state into an Excel spreadsheet. I had to enter all of the data manually. It took me hours and hours at the end of every quarter to do my fuel tax.”
Welcome to the world of small trucking companies. Chores that are routinely automated at companies with large fleets often are handled manually when only a handful of trucks are in play.
Yet not all small carriers are willing to stay confined within the spreadsheet mode of business management. The technology provided by a transportation management system can bring valuable efficiency boosts to carriers of any size, as Newkirk discovered.
She learned about an affordable TMS from the National Association of Small Trucking Companies. Headquartered in Gallatin, Tenn., NASTC offers members a discount on its application, MYSTC (Managing Your Small Trucking Company).
“I could bill my invoices in there, it would run miles, it would figure my driver payroll and it would do my fuel tax,” Newkirk said. “I was amazed at all the time it would save me. I honestly wasn’t looking for a software solution, because I figured I could not afford it. When I looked at the time savings, and the fact that I could get the software through NASTC for such a low price, I knew it would be a good deal for us. As far as I’m concerned, it’s a no-brainer.”
Versions of this story are occurring nationwide, because in the trucking industry, small can be big. According to the U.S. Department of Transportation, 97% of the country’s 440,000 for-hire truck fleets have fewer than 20 trucks. So in terms of the number of companies hauling freight, small carriers rule. There are more than 425,000 fleets that run fewer than 20 trucks, compared with about 13,000 that utilize 20 trucks or more.
A company with 10 trucks faces many of the same challenges as the company with hundreds of trucks. In both cases, they have to find the loads, dispatch the drivers, deliver the freight, invoice the customers, calculate fuel taxes paid by state and pay the drivers. By automating these processes, TMS technology can powerfully support efforts to increase productivity and revenue, regardless of fleet size.
The big issue for small carriers is cost. Systems from the major TMS providers cost about $40,000 annually for the basic package, and the price tag heads north quickly from there.
Carriers that use high-end systems commonly license the TMS software and host it on their own servers, which means incurring additional costs. Hardware must be purchased and maintained, and IT staff must be hired to manage the application.
In contrast, TMS marketed to small carriers are offered in the Software-as-a-Service model, which means they operate in the cloud. Carriers access the application through a Web browser and an Internet connection.
Price structures for Web-based TMS software vary, but in some cases the cost is as low as $1,000 annually for a fleet of 10 trucks, a stark contrast to $40,000 for a full-scale TMS installation.
Managers of small fleets have a habit of using spreadsheets in many ways, not only for tracking fuel-tax figures. Dickman Farms operates out of Auburn, N.Y., as a for-hire carrier in the offseason when its trucks aren’t busy with the company’s greenhouse and garden center business. In that capacity, it runs five tractor-trailers, two straight trucks and a dump truck. In an effort to manage the business more efficiently, Dickman Farms turned to the Prophesy OnDemand system from ProphesySeries Software of Bloomfield, Conn.
“The No. 1 advantage I’ve gotten from Prophesy has been the ability to keep track of what my trucks are doing,” said Bruce Custer, Dickman Farms’ safety and compliance officer. “Previously, I was using spreadsheets or just writing notes about where each truck was and when they were going to be empty. That was a nightmare.”
At Riegel Transportation Inc., a carrier based in West Babylon, N.Y., TMS technology from Carrier Logistics Inc. of Tarrytown, N.Y., has made customer service much more efficient. “CLI’s FACTS system gives us quick and easy access to customer data,” RTI owner Brian Riegel said. “When customers call in, we just put their phone number in and all of their history pops up. Then we can put their information right into dispatch. In the past, we were rifling through 500 different cards to find the customer’s card and then handing that to dispatch.”
Another benefit of Web-based applications is the ability to conduct business from anywhere. C&R Transport, a flatbed, long-haul carrier in Bartlesville, Okla., with six trucks, uses the ITS Dispatch system from Internet Truckstop of New Plymouth, Idaho. ITS Dispatch is owned by ITS Canada, headquartered in Newmarket, Ontario, and the software is operated and managed under a licensing agreement with Internet Truckstop.
“Given that it’s Web-based, I can access the system from anywhere,” C&R Transport owner Rick Stephens said. “All I have to have is an Internet connection. When you’re a small company, vacations don’t really exist, unless you can manage your business remotely. I can do the payroll online. We pay our drivers electronically, mail them copies of their pay stubs, and we’re done. I can be anywhere and still handle my business.”
The gains in efficiency that come from automation are highly appreciated by CTW Transportation Services Inc., a carrier based in North Kansas City, Mo. CTW uses a system from Tailored Logistics Solutions of Burr Ridge, Ill.
“One of the big advantages for us from the TLS system is the way it helps work flow,” said Bob Vutich, CTW Transportation Services accounting manager. “We enter a load and dispatch it, and once it’s delivered, we invoice for it. All of this happens smoothly. It’s a very easy process, and it makes us much more efficient.”
PG Logistics, a carrier based in Willingboro, N.J., and another convert from spreadsheets to TMS technology, uses the GetloadedOps system from Getloaded of Midlothian, Va.
“I was already using the Getloaded load board, and I received an e-mail about trying GetloadedOps,” PG Logistics owner Sandra Hunter said. “I did the trial run, and I saw that it could be very useful in comparison to the way I was managing things, because I had been flipping from spreadsheet to spreadsheet. I can run the business much more efficiently now with everything consolidated into one place.”
Bill Ashburn, ProphesySeries Software senior vice president and general manager, pointed out that gains in efficiency also burnish a carrier’s image. “OnDemand helps small trucking companies outclass their competition,” Ashburn said, “because if you’re operating more efficiently, you look more professional.”
According to TLS President Brian Ellis, TMS technology empowers small carriers to transform the way they do business. “For example, instead of using a copier, use a scanner,” he said. “Scan the document. Get it into the application. It’s easier to handle, easier to get out to your customer. Our system enables efficiencies like this.”
Small carriers that rely heavily on load boards may find particular advantages in the GetloadedOps and ITS Dispatch systems, because each TMS offers integration features with the respective load boards.
Butch Sarma, Getloaded product manager, explained that after choosing a load, users can simply click on a button to create the dispatch. “All of the load details will automatically populate the fields in the dispatch form in GetloadedOps,” Sarma said. “You save labor and avoid data-entry errors.”
Similarly, ITS Dispatch is fully integrated with the Internet Truckstop load board, according to ITS Canada President Raye Ackerman.
“Whatever you need to do, you can do within one application,” he said. “If you find a load, you can pull a lot of those load details right down into ITS Dispatch, which saves you the data entry down the road.”
Web-based TMS brings other advantages, and one is that the software vendors share product updates at no additional cost. “SaaS avoids the cost of hardware and the cost of paying for upgrades,” said Ken Weinberg, CLI vice president and co-founder. “With SaaS, there is no obsolescence, because the software is continuously being updated at no cost to the user.”
Another benefit is protection against the loss of data if a disaster strikes the company headquarters. Web-based systems are hosted on servers that are highly protected from natural disasters, and the measures taken to back up data in case of server failure provide several layers of redundancy. A tornado or flood can destroy a company’s offices, but with laptop in hand and an Internet connection, management still can access the data and run the business.
Vendors that offer Web-based subscription TMS software keep the price down by allowing carriers to buy only what they need. In some cases, the software doesn’t offer an accounting program and instead provides links to popular small-business accounting tools, such as QuickBooks.
“Prophesy software is modular in design,” Ashburn said. “You pay for only the pieces that you’re going to be using. I have customers who call me and say, ‘I don’t need a full TMS yet, I just need something that does my fuel taxes.’ What happens a lot of the time is that customers start with our fuel-tax system, get comfortable with it, and then they’re ready to go to the next big need or requirement, which might be dispatch.”
ITS Dispatch offers various features as add-ons, Ackerman said, because “we don’t want to make them pay for something they don’t need. About 50% of our customers sign on for the base package without any add-ons. The basic package is more than enough for them.”
The software from the leading providers of high-end TMS applications is more expensive because it’s designed to deliver a depth and breadth of functionality that goes far beyond the scope of the simplest Web-based subscription applications. High-end TMS programs can help managers analyze the business in ways that would be impossible otherwise.
Carriers of every size want data about operations and profitability, such as which lanes are making the most profit and which are losing money; how much profit is being lost to deadhead, out-of-route miles and detention; and how much revenue is being generated each day. Large fleets cannothope to track these metrics without sophisticated analytics. In contrast, a carrier with five trucks can monitor all of this without complicated software tools.
As carriers grow, their technology needs change, and they may outgrow their systems. “GetloadedOps is designed to support the small carriers who don’t need the additional bells and whistles,” Sarma said. “Once you get to 25 trucks or so, you’re going to want to look for something else. At that point, your revenues are high enough that you can afford the next level of technology.”
But switching systems can be a pain. Data transfer is not necessarily simple, and there’s always a steep learning curve for staff when they encounter a new software environment. Some of the TMS providers that target small fleets have an answer. They grow with you.
CLI’s FACTS system is “fully scalable,” says Weinberg, who pointed out that “the same system is installed at FedEx UK as it is in a small regional carrier.” ProphesySeries Software offers a portfolio of TMS products. Prophesy OnDemand is joined by Prophesy Dispatch and Prophesy Transport.
“If you start with one solution and your requirements grow, you can move to the next level,” Ashburn said. “Prophesy Dispatch is an on-premise solution for midsize companies that is delivered on a CD, installed on your server and run locally. Prophesy Transport is our enterprise TMS system that competes with tier-1 dispatch solutions such as McLeod and TMW.”
Growth may be the goal of many small carriers, yet the first task is to make the business thrive at its current size. TMS technology clearly has a role to play here, but the price must be right.
“The key to getting technology into a truck in a small trucking company is to make the technology extremely straightforward and affordable,” NASTC President David Owen said. “They don’t need a lot of gingerbread. They don’t need to know the engine RPMs every 10 seconds or how many hard brakes are occurring. They don’t need to know within a foot of where their truck is. They need to know about where their truck is.”
According to Owen, NASTC members often don’t even look at most of the systems from the major technology providers because of the high cost. “But if you can get the cost down and ensure that the technology is focused on full truckload and longhaul, there are a lot of small trucking companies out there who will be interested.”