How to free up our trucks
A Cost/Benefit Study on the Impact of Local Relays
A supply/demand imbalance for truck drivers is the major bottleneck in America’s supply chain.
Wondering why your Amazon Christmas orders aren’t going to arrive until after the holidays, why shelves seem to be empty, or why costs are going up right now?
Read the news and everyone seems to be talking about the biggest kink in America’s supply chain. There are not enough truckers to move America’s goods. The American Trucking Association reports that the industry is short a record of 80,000 drivers.
On a macro level, this supply/demand imbalance is widespread, driven not only by a supply shortage, but by a pandemic-fueled “demand shock” that has no end in sight.
Large carriers are doing whatever they can to hire drivers and keep up with demand, while allowing more time at home and dramatically increasing wages (some drivers are making up to as much as 6 figures). Yet, annualized turnover rates for large long haul carriers continue to exceed 90% according to the DOT.
In summary, we don’t have enough driver capacity to meet market demands and carriers are struggling to retain the capacity they do have.
There has to be a better way.
Carriers lose 40% of their available capacity every day because of inefficient coordination between drivers and warehouses.
Testifying in Congress, MIT’s David Correll, explained that long haul full truckload drivers spend an average of 6.5 hours every day driving out of their available 11 hour clocks.
He explains, “this chronic underutilization problem does not seem to be a function of what the drivers themselves do or don’t do, but rather an unfortunate consequence of our conventions for scheduling and processing the pickup and delivery appointments.”
Correll goes on to say that we may be able “overcome what many of us feel is a driver shortage” by adding just 18 minutes of driving time to every existing truck driver’s day.
All of this adds up to half a billion wasted hours and over $15 billion of lost profit opportunity across all of long haul trucking per year. That’s not even counting the $3 billion of fuel wasted per year due to truck’s idling, the increase in accidents associated with increased dwell times, or the millions of dollars companies spend recruiting new drivers who leave each year because wasted time at warehouses is associated with massive reductions in annual driver earnings.
In short, there is a massive opportunity to increase available capacity in the market and improve the experience for drivers if we can fix the inefficient coordination between drivers and warehouses.
Proposed solution: Local relays can free up a massive amount of wasted long haul driver capacity by simplifying driver/warehouse coordination.
A “local relay” is an operation where instead of driving into a city, waiting in traffic, waiting for a scheduled appointment, or waiting to be unloaded, a long haul driver can instead stage and pick up loads from a drop yard.
A local driver then “relays” the load to or from the warehouse. This is often more efficient because local drivers can deliver off-peak and don’t have to wait for appointments.
However, there are two primary objections when it comes to local relays:
- Local relays increase costs and add service risk to an already margin constrained trucking operation.
- Local relays don’t actually reduce wasted time in the system but instead inherit it.
In a two-month experiment, Baton demonstrated an ROI positive implementation of local relays as a way to dramatically increase the productivity of long haul drivers.
In the linked white paper, we outline the results of a two-month experiment carried out with one of the nation’s largest asset-based carriers. The goal of this experiment was to test out in a controlled setting, using actual driver log data the degree to which local relays can free up long haul capacity. Secondarily, we analyzed the actual return on investment (incremental profitability vs cost) of using a local relay.
Summary of experiment:
Baton’s local-relay-as-a-service model freed up as much as 8 hours of productive driving time per load even on loads that are considered “efficient” by the industry — appointment-based drop and hook loads.
The experiment was carried out on over 120 loads delivered or picked up with 98% on-time service performance (0 min grace). With this freed up time, the long haul drivers who relayed loads to Baton drove enough incremental profit (increased miles per week) to cover the costs of the relay in the most strict use case (drop and hook).
Our thoughts:
We believe that local relays are an effective way to increase the nation’s driver capacity while enabling a better experience for drivers and reducing astronomically-high turnover rates. The reality, however, is that not everyone has the scale to establish a relay. It takes capital and a high amount of consistent load volume to justify the fixed real estate and local driver costs needed to make a relay model work.
Our mission is to eliminate wasted time in trucking by democratizing local relays for all carriers in all major cities. Bottom line — more profits for carriers and happier drivers.
Check out the white paper here.
