Empty commuter trucks have both financial and environmental costs.
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The trucking industry has a big problem.
Every day, thousands of trucks travel along miles of completely empty highways and highways – and the distances they drive without cargo amounts to billions of miles a year.
After a truck has delivered, it may not have any cargo to carry for the return leg of the journey and drive back empty.
“I don’t think it’s widely known,” said industry veteran Martin Willmor, when asked if the public was aware of the issue in a phone call with CNBC. “There are all kinds of barriers [to solving it]. If it was… easy, it would have been done years ago,” he added.
The empty truck problem has worsened in Europe, with the proportion of kilometers driven by non-cargo vehicles increasing.
According to European Commission data, in the EU, trucks will have traveled about 34 billion kilometers (21 billion miles) in 2021. This equates to more than a fifth (21.2%) of the total distance traveled. moved by road transport in the block last year, increase from 20% in 2020.
A complicated business
In essence, the trucking industry is complex: manufacturers or retailers need to ship goods in an infinite number of locations, transport varying quantities of goods to many destinations, sometimes having to rely on multiple carriers for performance.
Ideally, transportation companies need one customer (or customer) for the outbound journey and another for the return trip. If they don’t have two customers, the car runs empty. However, just as they need a shipment for the return journey, they also need a truck suitable for their load, with equipment such as refrigeration or a vehicle with forks attached.
“There are a lot of factors involved in finding the next compatible payload,” JP Wiggins, co-founder of transportation management software company 3GTMS, told CNBC via email.
“Is the device compatible, does the driver need to go home, is the driver forced to sleep?” he added.
Digital Transport
Willmor, co-founder and CEO of UK-based DigiHaul, explains that reliance on similar processes could also be an issue, in order to address the empty truck problem.
“Supply Chain” [sector] He told CNBC in a phone call that one of the last industries to go digital. [or] He said: “
Willmor who launched DigiHaul after a long time working at DHL, some carriers still order delivery by phone or email. This means that information about what is being sent is not always kept centrally, making it harder to find shipments to fill trucks for the return leg.
He added that a UK retailer DigiHaul worked with the calculation that they had lorries running about 650,000 km empty over a six-week period in November and December 2021, a costly endeavor.
We need to change. As an industry, we have an obligation to do something different
Martin Willmor
Co-Founder and CEO, DigiHaul
“We’ve seen fuel prices skyrocket … everything is impacting our cost of servicing our customers,” Willmor said.
Freight prices in Europe hit an “all-time high” according to an index published by International trucking union in a report last month. European contract freight rates rose 6.1 points in the second quarter of the year, compared with the first quarter, with freight rates up 13.1 points year-on-year.
As well as saving money, shippers also want to minimize their environmental impact, with one DigiHaul retail customer aiming to put 100,000 trucks on the road by 2026. One way to do that is to do so. more flexibility in terms of collection times plus or minus 24 hours, says Willmor, which increases the chances of being paired with a returning truck.
But fundamental change is also needed, he added. “We still see a kind of disconnect, where you have business leaders who are really focused on sustainability… But then you have local operators, or, you know, the The transport office is doing something completely different,” he said.
Willmor added: “We need to change. As an industry, we have an obligation to do something different.
US reduces empty miles
Meanwhile, in the United States, the distance due to empty trucks decreased from 20.6% in 2020 to 14.8% by 2021, according to the American Transportation Research Institute. “Under pressure to increase fuel prices, carriers have achieved some of the lowest dead-mile mileage in years,” it stated in an August report.
But idling the truck is still a problem, especially when costs are increasing: U.S. domestic freight rates up 28% in the year to July (across all modes of transport including road and air), reaching its potential peak.
According to Robb Porter, chief executive officer of Loadsmart, a freight technology company, “empty mileage means less revenue,” in an email to CNBC.
“If the carrier isn’t making money, it means the carrier is losing money – and a lot,” he added.
Supply chain transparency
That is a problem that Loadsmart is also trying to solve. A year ago, it launched a platform called Flatbed Messenger to match empty trucks with shippers who needed to ship goods, in partnership with The Home Depot. This means that the retailer can share the spare capacity in its truck with others.
“A customer-specific fleets often struggle with many empty miles. Flatbed Messenger feeds the truck’s location, its price, and its destination into algorithms that match information to a shipment, carrying benefits for both shippers and carriers,” Loadsmart said in a statement online release.
In the year to August 30, the platform means less than 1.9 million miles were driven by empty trucks, Porter at Loadsmart told CNBC via email. Loadsmart raised $200 million in a funding round led by SoftBank in February, valued the company at $1.3 billion.
“Our hope of [the] the future is that we – and others in our industry – can not only reduce mileage, but also eliminate mistrust between parties, create visibility into supply and demand, and develop a transparent Transparency can address deep-seated supply chain inefficiencies,” says Porter.
However, that requires competitors to share certain data, according to Wiggins at 3GTMS. “We may need government help because getting competitors to collaborate is often like herding cattle,” he said.
– Frank Holland of CNBC contributed to this report.
