With truck capacity experiencing wide swings in availability, and shippers struggling to get product to market in a time of highly uncertain demand, it has never been more important to make optimal use of the space that’s actually available.
So goes the ideal — but in practice, the industry is subject to substantial amounts of underused over-the-road capacity. The culprit is deadheading: the running of empty trucks on one leg of a round trip. Estimates put the amount as high as 40% of all moves.
The problem is most acute these days in the truckload sector, both for private and dedicated fleets, which aren’t set up to accommodate multiple shippers on the same route. What’s more, they’re under intense pressure to meet rising customer expectations for next- or same-day delivery, giving them precious little time to solicit suitable freight that just happens to be going in the opposite direction.
Obviously, truckers want to get the most from their equipment, and zero income is derived from an empty trailer. But it can be brutally difficult to match supply with demand in a given shipping lane. Often the key lies in the ability to communicate with multiple shippers, so as to coordinate their separate route plans. At the same time, carriers must meet their contractual obligations for a headhaul, before they can even begin search for a load on the backhaul.
Land O’Lakes Inc., the large agribusiness and food cooperative, was determined to solve the problem of excess empty miles. It operates in an industry that survives on perilously thin margins, and any effort to cut waste out of the supply chain is crucial to a positive bottom line.
Push for Optimization
The company was experiencing high degrees of variability in trucking capacity. At the same time, it was looking for ways to optimize the extended supply chain — and a reduction in deadheading could go a long way toward achieving that goal.
Land O’Lakes sought help from FourKites Inc., provider of a supply-chain visibility software platform. Launched in 2019, the engagement aimed to analyze the shipper’s historic lane patterns, with an eye toward boosting asset utilization and eliminating empty miles.
The tool that Land O’Lakes deployed was FourKites’ Lane Connect, an application that enables users to evaluate their internal freight networks for round-trip opportunities, and partner with other shippers to share capacity on overlapping lanes.
It’s an exercise that’s too complex to be accomplished with spreadsheets and old-line manual processes. Lane Connect employs a machine-learning algorithm that assigns a score of one to 10 to potential partners. In something akin to an online dating app, the parties can then come together with the possibility of collaborating on a given lane, reserving the option of accepting or declining any invitation.
When the decision to collaborate is made, the tool’s algorithm scores all of the potential lanes that the parties have in common, and identifies the best opportunities. By participating in this “match” service, companies lessen the need to secure high-priced capacity in a volatile market.
In addition to using Lane Connect to shrink its empty miles, Land O’Lakes drew on FourKites’ real-time visibility platform to accurately predict arrival times for more than 200,000 shipments per year — representing between 90% and 95% of its total loads.
In just one example of the way in which the company was able to reduce deadheading, it teamed up with a major grocery wholesaler, whose private fleet was available to pick up regional backhauls between Ohio and Tennessee. That one partnership yielded transportation-cost savings for Land O’Lakes of between 20% and 25%, while reducing the wholesaler’s empty hauls by 502 miles per trip, twice a week.
“Lane Connect is giving us the invaluable ability to collaborate with other grocery manufacturers and food retailers who share common lanes,” says Yone Dewberry, chief supply chain officer at Land O’Lakes. “That translates into higher utilization and better cost management, and helps ensure that we’re collaborating with carriers to keep trucks moving.”
Opportunities for collaboration abound. Since adopting Lane Connect, Land O’Lakes has been able to share capacity with multiple grocery manufacturers and food retailers, including major ones like the Coca-Cola Company.
In a time of high customer expectations of service, companies like Land O’Lakes strive to be designated “shippers of choice” by carriers, who can afford to be picky when capacity is tight. By participating in an initiative to reduce empty miles, shippers contribute to carrier profitability.
“By collaborating with other shippers, we are helping carriers keep their trucks moving,” says Dewberry. “For us, it’s been a big plus, a big blessing to work with those carriers, so that they consider us one of their shippers of choice.”
As evidence of its success toward that objective, Land O’Lakes is currently experiencing a tender-acceptance rate of more than 95%. And it expects to boost that number by another couple of percentage points, through the use of Lane Connect and FourKites’ other collaboration and visibility offerings.
Efforts to reduce deadhead miles are sprouting up throughout the industry. Last year, the Trading Partner Alliance, made up of the Food Marketing Institute and Grocery Manufacturers Association, announced an initiative to reduce the miles driven by empty trucks by between 3% and 7%, through improved utilization of both private and dedicated fleets. But individual companies with the size and clout of Land O’Lakes can make their mark as well, with the help of technology tools that offer sophisticated analytics and the opportunity for collaboration between shippers.
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