James Welch, CEO of YRC Worldwide, one of the largest LTL carriers, discusses his views on technology, pricing and other issues and challenges facing the industry.
The importance of information technology to the transportation and logistics industries cannot be overstated, says Welch. “The information surrounding the shipment is just as important as the shipment itself.”
How to better apply resources on the tech side “is an issue we think and talk about a lot,” says Welch. “We are looking at things like our web site and whether it is interactive enough, potential applications of RFID, and handheld devices for drivers that would allow us to communicate more directly and optimize routes for maximum efficiency. When we talk to our customers and even to our employees, we are continually listening and trying to think about ways we can use technology to improve the whole supply chain process.”
Until recently YRC has not been as affected by the truck driver shortage as some other companies, says Welch. “Because we are an LTL operator, our drivers are either out and back during a single tour of duty or out for one rest period, so our turnover has historically been pretty low.” Recently, however, YRC has had to start working harder to recruit drivers, he says. “We have hired driver recruiters for the first time in our history, so that is a clear indication that the market is continuing to tighten. It appears that the younger generation doesn’t view truck driving as a job they want to do, so we are going to have to come up with different recruiting methods and different ways to reach out and touch people who could potentially want to get into this industry, such as former military. That’s something we didn’t have to think about before.”
On the issue of pricing, Welch notes that LTL trucking is a “today” industry that is still using yesterday’s pricing methods, setting rates and then giving huge discounts. “If you think about what we do, it’s selling space on a trailer,” he says. “We may have 15 to 18 shipments on a 28-foot trailer, but there are always customers that build skids that come up into a pyramid so you can’t load on top of them and that really limits efficiency and use of space. So, as an industry, we have to figure out a way to be adequately compensated for the space we are selling on a trailer, and a pricing system based on dimensions is one way to do that. Will than happen this year or next year? No, but ultimately I think dimensional pricing is where we will go.”
YRC is on the leading edge of this trend and is in the process of installing dimensioning equipment at 40 facilities. “The results have been very interesting,” he says. “It is amazing how many shippers mis-describe their freight, whether by accident or on purpose, so we see big opportunities to straighten up that pricing in a way that allows us to be adequately – not overly – compensated for the space we are selling.”