Trucking industry market ebbs and flows are expected. Costs associated with operating a truck are also to be anticipated. During these times, partnering with a third-party logistics (3PL) provider can be very helpful for smaller fleet owners.
How Carriers Can Easily Combat Frequent Obstacles in the Industry
Third-party logistics providers help carriers effectively reduce deadhead miles, accelerate their payment cycles, improve their factoring, and lower fuel expenses. Working with a 3PL that offers a wide range of loads can significantly reduce dead miles, thereby maximizing their earnings. Partnering with a reputable 3PL can provide carriers with access to a diverse pool of loads, enabling them to better manage their deadheading.
1. Deadhead Miles
Truck drivers all understand this universal concept – driving without freight means losing money. This issue ranks high among the most frequent complaints from carriers in the supply chain field. Numerous factors that contribute to this problem are beyond the carriers’ control, such as labor, cost of the truck, and maintenance. However, one big factor carriers can control is dead miles.
Third-party logistics providers can help carriers minimize deadhead miles, which is key to maximizing profitability. To address this challenge effectively, small carriers can benefit greatly from partnering with a reliable 3PL that manages a vast network of available loads, which results in more volume and opportunities for closing the gap between where they made their last delivery and where they’ll pick up their next load.
According to a study conducted in 2021 by the American Transportation Research Institute, an average truck driver in the United States covers approximately 100,000 miles per year, of which around 20% are deadhead miles. This statistic emphasizes the financial impact of inefficient routing and underutilized truck capacity.
Minimizing dead miles is crucial for truck drivers to optimize their financial returns. While various factors affecting carriers’ profitability are beyond their control, carriers do have options when it comes to finding ways to reduce deadheading, factoring, and fuel costs.
2. Factoring
A small carrier can get into catastrophic trouble if they’re factoring their money, because they’re basically giving what would be profit away. Partnering with a 3PL with a carrier’s interest in mind means helping them to get the best loads and rates, especially when the market gets quiet.
Another crucial advantage of partnering with a 3PL is the ability to get paid quicker and enhance the factoring process. Third-party logistics providers often have established relationships with shippers, which enables them to negotiate faster payment terms for carriers.
Carriers can benefit from quicker payment cycles that bring a steady cash flow to cover operational expenses, fuel costs, and driver wages. Some 3PLs even offer factoring services that are less expensive than a bank’s fees, allowing carriers to receive immediate payment for their delivered loads and eliminating the need to wait for payment from the shipper. This streamlined process not only helps carriers improve their financial stability but also reduces administrative tasks associated with invoicing and collections.
3. Fuel
Fuel costs continue to be a daunting pain point for carriers, especially with the unpredictable fluctuations in oil prices. But, partnering with a 3PL is an easy way to reduce fuel expenses through optimized routing and load consolidation. A reputable 3PL has access to advanced technology and data analytics, allowing them to plan efficient routes that minimize unnecessary detours and empty miles.
Through maximizing load utilization and minimizing deadhead miles, drivers can significantly reduce fuel consumption and, in turn, lower their overall fuel costs. This not only translates into financial savings but also contributes to a greener and more sustainable transportation industry.
Working with a trusted 3PL helps carriers increase profitability and operational efficiency by reducing deadhead miles, accelerating payment cycles, improving factoring options, and lowering fuel costs.
With a straightforward approach and the right partnership, carriers can overcome hurdles, thrive in their business, and build a brighter future for themselves and their drivers.
Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/.
