Maintaining Healthy Profit Margins Through Technology and Creative Processes
We recently had the opportunity to participate in a panel discussion at the 81st Truckload Carriers Association (TCA) Annual Conference. Justin Sachs, director of operational excellence at Schneider Transportation Management was joined by MercuryGate’s Todd Bucher, vice president of fleet and carrier management and Mike Voelk, account executive, for a lively conversation on some of the challenges that carriers are facing, and how technology can help address some of those challenges.
For the many carriers attending the TCA conference, operating on thin profit margins is a way of life. The discussion at TCA focused on several big market forces that are impacting the industry: surging freight demand, the growing driver shortage, and rising fuel costs. Interwoven throughout the conversation was how carriers can use technology to better manage these ongoing challenges.
According to an audience poll that kicked off the TCA session, carriers still see the driver shortage as the market force creating the biggest impact in the industry. And, while the growing driver shortage has been a hot topic for some time now, it remains to be seen which programs, innovations, and incentives can turn the tide.
Tackling the driver shortage issue needs to be addressed at both the industry level and within individual organizations. Many organizations, for example, are instituting better pay for their drivers. Additionally, across the industry there is discussion around lowering the interstate truck driving age from 21 to 18.
Many organizations are also looking at improvements to their onboarding and training programs. It was just a few months ago that WalMart announced an increase in their truck drivers’ wages to almost $90 thousand a year in an effort to retain more of their drivers and attract new ones. And, other major carriers are following suit.
Higher salaries could certainly help create a more enticing job description for truck drivers, but as discussed at TCA that’s only one factor in the ongoing need to recruit and retain drivers. As the driver workforce continues to age, and fewer new recruits are on the horizon to replace retiring drivers, the question remains: what are you doing to attract the right drivers? And, how can technology help you to use your drivers more efficiently?
Schneider’s Justin Sachs stresses that organizations need to be more innovative in order to make drivers want to stay with a company long-term. Technology is a critical component in managing more complex freight movements. The discussion at TCA urged carriers to also remember the importance of the human element when it comes to addressing the driver shortage.
Understanding what your drivers want and maintaining open communication about their needs can go a long way in keeping drivers happy – and ultimately improving retention. For example, If a carrier receives 100 calls from a driver, it’s important to examine what the calls are for. If 50 percent of the calls are related to their loads and transactions, the right technology can help provide drivers with the transactional information they need.
Technology can then empower your drivers to have access to key information they require for making deliveries. At the same time, as technology can help cut down on transactional calls, carriers should encourage open conversations with their drivers to focus on more personal issues.
Tackling fluctuating freight volumes is another ongoing issue that carriers face. Discussion at the panel session centered around really understanding your market and paying close attention to customers’ behavior. Once again, technology is key in better managing the surges and fluctuations that can occur with freight demand. The right tools can help you collect and analyze a wide range of data to better prepare you.
A transportation management system with built-in optimization tools can enable you to look at your recent data and model “what if” scenarios for potential changes. These scenarios might include a rise in fuel costs or an increase in freight volumes. Using your data and modeling these “what if” situations can provide a clearer picture of how these factors will impact your overall fleet.
In order to better understand fluctuations in freight volume, the TCA panelists also recommended using the rate index to study different markets. Just because there is freight surging in one market doesn’t necessarily mean that’s the case in all markets. It’s also important to understand what’s happening seasonally as well as in the overall economy. By knowing when to enter a new market and having a plan for it, you can also prevent potentially frustrating situations for your drivers.