Combating capacity crunch with ELDs
A faster-growing United States economy and resulting higher freight demand are expected to keep tightening time constraints throughout 2018, especially for certain types of freight and in certain lanes.
When the electronic logging device (ELD) mandate came into effect late last year, pundits warned of an impending capacity crunch, and drivers were expected to exit the industry in droves due to their inability, or unwillingness, to comply with the new regulations. A capacity issue is unfolding, but truck drivers exiting the industry are not the culprits. Instead, the ELD mandate has forced time constraints in shipping lanes and squeezed truckload capacity—a result that many shippers, brokers, and carriers were not anticipating. The ELD regulations have extended certain lanes, increasing transit time from same-day to two-day lanes, for example, as drivers are forced to limit drive time to avoid potential hours-of-service (HOS) violations and are no longer able to beat the system with creative timekeeping.
A faster-growing United States economy and resulting higher freight demand are expected to keep tightening time constraints throughout 2018, especially for certain types of freight and in certain lanes. To remain competitive shippers will need to continue to re-optimize distribution networks, re-evaluate their carrier partners and carrier selection process, and rethink bids and pricing well into 2019.
With increasing customer expectations around on-time and faster delivery and the explosion of last-mile delivery demands due to skyrocketing ecommerce growth, shippers are indeed under the gun to increase the efficiency of their supply chain. Unfortunately, the constricting time restraints and shipping lane extensions propelled by the ELD mandate are driving costs up and customer satisfaction down as shippers struggle to determine how to best optimize their distribution networks—and how to get ELDs working for them, not against.
The high cost of low visibility
As capacity pressures heighten, the financial, operational and safety costs of poor fleet visibility are magnified, and things like unreported delays or missed appointments can cause a costly ripple effect. For example, if a retailer expects a regular Tuesday 8:00 a.m. delivery, it may hire a temporary unloading crew every Tuesday morning. But without real-time visibility into driver location and status, the retailer is operating blindly and incurring unnecessary costs if delays occur. The crew must be paid extra to stay late if the shipment does not arrive on time, or paid for minimum hours even if the truck doesn’t arrive that day—plus, the retailer must bring the crew back when the shipment is finally delivered. Customer service also suffers, since without early visibility into the shipment delay, the retailer is unable to adequately plan for the lack of inventory on store shelves.
Freight visibility is the lynchpin of supply chain transportation efficiency and, ultimately, competitive success and growth. A 2016 study of supply chain visibility found that 54 percent of 3PLs said they either lost business, or were unsure if they lost business, due to poor visibility capabilities. Today, as the ELD mandate drives increased transit time and capacity strain, forward-thinking shippers, carriers and 3PLs are using ELDs to their advantage, leveraging real-time visibility data to improve operational efficiency and inform strategic supply chain decisions.
ELDs: The gift of predictability
Leaving dated track-and-trace methods in the dust, ELDs help to offer real-time visibility, generating predictable ETAs and driving operational costs down by enabling notifications at the store or dock. Overtime fees, detention charges and chargebacks can also all be reduced. Status checks such as arrivals and departures at pick up and destination locations and in-transit updates backed by concrete GPS-based positioning ensure a level of predictability that removes the costly element of surprise from operational planning efforts.
Getting from data to intelligence
As the capacity crunch intensifies, industry players must find creative solutions to drive cost savings, increase operational efficiency and boost fleet capacity. Savvy organizations are implementing intelligent telematics and compliance solutions to optimize ELD data. Sharing this data strategically across the distribution ecosystem—with the customer service team, warehouse, stores, suppliers and carriers—enables shippers to derive efficiencies and cost savings on both the inbound and outbound side, while improving the customer experience to foster stronger loyalty.
On the trucking front, ELD data can help carriers reduce fuel costs by monitoring how much and how often drivers spend idling. Visibility into vehicle diagnostics helps carriers better plan routine maintenance and address any issues in a timely and cost-effective fashion. On a fundamental level, ELD data provides a record of truth, a clear record of vehicle status and driver actions, in case of accidents or customer complaints.
Some shippers are expanding the ELD data set to include measurable elements such as temperature and door sensors to accurately monitor cargo environment conditions during transport. In addition to ensuring freight is transported within the right temperature range to avoid freight claims, shippers can analyze the data to determine the impact of transit time and temperature on the product shelf life in order to optimize supply chain operations.
ELD data integrated with a sophisticated telematics solution can help boost supply chain efficiency. For example, shippers can conduct a detailed analysis of detention times by location, day of the week, or time of day. By sharing this data with key players, shippers can work strategically with those customers and carriers to try to drive detention times down.
Smart organizations know the value in leveraging data and analytics for continuous improvement. It’s now critical to keep re-evaluating supply chain processes and strategies—how to make quicker turnarounds, how to plan intelligently around dock deliveries or how to improve driver retention, for instance. And ELD data can be the key to driving profits in the face of emerging time constraints in shipping lanes, increasing freight demand and driver shortage.
Brian Hodgson is senior vice president of product strategy at Descartes.