Many small- to mid-sized U.S. carriers struggle to source loads, streamline business processes and capitalize on new business opportunities — despite an ever-growing demand for truckload capacity.
Without direct access to shippers, small carriers often rely on freight brokers or serve under larger carrier networks, resulting in a 15-25% loss of potential revenue.
Profitability has suffered other blows in recent years, including empty miles up to 20%, driver turnover exceeding 100% and increased market fragmentation — where most dedicated shipper contracts go to 1% of carriers.
While tools like transportation management systems (TMS), load boards and back-office systems are not new to the trucking industry, they pose a new frontier to small carriers who are more familiar with spreadsheets and whiteboards than advanced technologies and artificial intelligence.
Today, we see a democratization of trucking technology, where A.I. is making trucking more efficient, businesses healthier and drivers happier. We now have the unprecedented ability to gather operational information of hundreds of thousands of drivers and fleets to customize a solution for a carrier’s specific needs. By addressing the entire business process in one place instead of multiple applications for individual functions, today’s connected TMS environment supports even the smallest carrier’s strategic planning, freight sourcing, procurement, performance management and freight payment and auditing.
The Power of Data
The more data that’s collected from connected TMS users, the greater the opportunity for optimization, savings, profitability and growth. Data can tell carriers which loads match best within their driver network, which roads are most congested and which locations create excessive delays. This intel extends beyond simple data points within the shipper-carrier ecosystem, and incorporates insights like:
Data alone is not actionable. For the connected TMS to be truly valuable, it must digest the data points and return concrete recommendations that draw a straight line to operational efficiency and profitability. This is where TMS solutions of the past evolve into those optimized for the future — and the technology is no longer reserved for the largest carriers.
With 99% of truckload carriers being small- to mid-sized businesses, true industry disruption will be reached when even the smallest carriers can:
Expect to see small carriers embrace the TMS solutions formerly reserved for mega-carriers: Gartner projects that $1.94 billion will be spent on TMS technology by 2022, and software as a service (SaaS) will account for 65% of the TMS market.
Ryan Camacho is director of business development at Axele.
Timely, incisive articles delivered directly to your inbox.