Opinion: The Gizmo You’ve Got to Have

By Daniel L. Whitten

taff Reporter

The perception that investments in the Internet are complex and costly for trucking businesses is only partly true. Once new gizmos become as run of the mill as the telephone, they are no longer exotic or intimidating. So, brace yourself. The Internet is already making the transition from the mysterious world of high tech to an everyday business tool.

Two problems for trucking warrant a look into the Internet’s potential. One, shippers are moving toward the Internet to help manage their transportation needs. Second, changes to driver hours-of-service regulations may force carriers and shippers to be more efficient in order to survive.

Web-based transportation management systems that are compatible with shipper systems and wireless technologies that provide Internet access to truckers on the road have particular promise for increasing freight transportation efficiency.

Being able to process a bill of lading, exchange funds or bid for shipping lanes online is likely to become critical to a carrier’s ability to compete for freight. Giving customers reliable information on the Web about time-critical shipments will be a factor in winning high-end jobs.

If the final hours-of-service rule resembles the Department of Transportation’s proposal, a more efficient trucking industry will be a necessity. Granted, it’s anyone’s guess when new regulations will be in place or what they will require. But make no mistake, forward-thinking logistics professionals and trucking companies are developing a strategy to thrive under tighter operating schedules.

One part of the strategy is better coordination between shippers and carriers. Trading partners will share access to online scheduling and planning tools. They will know when a truck will arrive and schedule loading dock traffic more accurately. In high-tech networks, trucks won’t waste as much time at loading docks. Shippers will have more of a stake in keeping trucks rolling.

No one is naïve enough to think that technology can take every missed turn out of driving a truck. A certain amount of wasted time is part of life.

Further, the reality of bringing all shippers and carriers within a supply chain into one happy online network is still years away.

Roger Lowther, USCO Logistics general manager of transportation services, said there will always be a market for low-tech trucking services because they tend to be less expensive.

But for carriers that see waste in their systems because of poor communication, trucks sent to the wrong place, uncertain schedules and too many empty miles, better access to tools for drivers and closer collaboration with shippers through the Web will help.

A study by Omni Consulting Group determined 12.3% of these types of inefficiency can be squeezed out of the logistics processes. That’s almost $12 billion saved out of the estimated $911 billion spent in the U.S. logistics industry.

Trucking companies are jumping on the Internet bandwagon in various ways. Some, like Yellow Freight, are not only using the Web to improve their own businesses, they also are trying to help define the way the Internet will be used by others.

Yellow’s Transportation.com marketplace is a place for users to exchange loads and buy and sell trucking-related products and services. The company is hoping to attract shippers and carriers to its exchange so that they can manage transportation transactions online.

Yellow President Bill Zollars has said he is willing to risk cannibalizing part of the trucking business, because sooner or later someone else is going to find a way to use the Internet to manage freight movements, and it might as well be him. Yellow’s annual price tag for technology is $65 million to $70 million, with two-thirds of that going into new systems, Zollars said.

By contrast, Marty Lawson, Consolidated Freightways’ vice president of e-commerce and marketing, says “transportation operations are burying themselves in e-commerce initiatives that are irrelevant, not practical or simply too expensive to bring to the marketplace.”

Lana Batts, former executive vice president of the now-defunct trucking exchange Transportal Network, sounds a similarly cautionary tone, noting that collaboration isn’t as simple as it’s made out to be by those who have a stake in making it happen.

But transportation planners warn that carriers should be prepared to invest in new Web-based products to help them work with trading partners and operate more efficiently if they want to compete for the most profitable loads in the future.

Schneider National President Donald Schneider said that DOT’s hours-of-service proposal would force him to turn down 20% to 25% of all the freight business he’s offered. If Schneider’s projections are accurate, carriers will not waste valuable driving time dealing with customers that hold trucks hostage at loading docks. Well-run carriers will turn down that which is unprofitable. And prudent investment in Internet-based services should help carriers figure out which lanes they are wasting their valuable time on.

By the same token, shippers will have data on carrier performance. That means premium shippers will chooses carriers that can meet their increasing demands. Shippers will help carriers they count on to carry valuable, time-sensitive cargo down the highway quickly.

The low-cost, low-tech guys will still be left waiting by the loading dock by shippers who don’t much care when their customers get their cargo.

Dan Whitten covers information technology and how the industry uses it for Transport Topics.