It's hard enough to manage a private fleet these days, with fuel costs soaring and drivers in short supply. Now private fleet managers are being asked to take on an additional task: orchestrating complex transportation solutions involving company-owned fleets, third-party contract carriage, and for-hire carriers.
Called "collaborative logistics," these initiatives are designed to provide companies with the best overall mix of cost effectiveness and customer service. And they go well beyond the traditional search for backhauls, says Garry Petty, president and CEO of the National Private Truck Council (NPTC). Petty describes collaborative logistics as more of a matrix that integrates the various components of transportation into an integrated whole.
What does that mean for fleet managers? The short answer is additional responsibility. Under a collaborative logistics strategy, the fleet manager is responsible for developing the right mix, making the company's equipment and service requirements clear to third parties, and monitoring the performance of contract and for-hire carriers to make sure they adhere to the private fleet's standards. "It's almost like fleet managers are symphony conductors, orchestrating the best transportation solution," notes Tom Moore, NPTC's vice president of public affairs.
The NPTC is doing a couple of things to help its members cope with the new demands. First, it has organized an educational session that will address some of the challenges involved. Titled "Collaborative Logistics and the Private Fleet— It's Not Just About Backhaul Anymore!," the program will be presented at the group's annual meeting, which takes place from April 29 to May 1 at the Indiana Convention Center in Indianapolis.
The NPTC is also launching a new service for members seeking outside partners for some of their transportation needs or looking to offer their own services to others. Called Member Match, it is essentially an online clearinghouse to help members match available capacity with other members' transportation requirements. Petty expects that private fleet managers will embrace the service because of the confidence they have in their peers' high standards for drivers, equipment, and customer service. And there should be ample capacity: The group's most recent benchmarking survey shows that fleets average about 25 percent of their miles running empty.
The fleet's growing reach
In fact, Petty says that kind of collaboration is already starting to happen. He estimates that 40 percent of NPTC members make use of dedicated contract carriage to some extent.
Dave Belter, group director of transportation management for Ryder, confirms that his company is seeing more requests for dedicated contract carriage and says it stands ready to meet those demands. "It all starts with logistics engineering," he says. "When we look at transportation management, we look across a customer's portfolio—his DCs, private fleet, contract carriage, maybe a combination of both."
Moore believes the new emphasis on outside service is partly a reflection of a changing business environment. "In the past, there used to be more competition," he says. "Now, there's more synergy. You walk into a fleet operation, and the dispatcher for the dedicated carrier sits next to the dispatcher for the private fleet. It is critical to their success that they blend in the different elements."
Still, that's not to suggest that private fleets are being phased out. Petty reports that as a result of a capacity crunch in the truckload sector in recent years (capacity did loosen up a bit last year), some companies that had been considering abandoning their private fleets have instead strengthened them. In many cases, he says, the crisis made them realize how heavily they rely on fast, dependable transportation service. "Getting product to market is as important to shareholder value as the product itself," he says.
All things to all people
Results of the group's most recent benchmarking survey bear Petty's observations out. In fact, a full 85 percent of the respondents to the NPTC's 2006 benchmarking survey say they expect their private fleets to handle more freight—not less—in coming years.
At the same time, it appears they're expanding their activities well beyond their traditional function of hauling outbound freight. The benchmarking survey indicates that while moving outbound freight remains the fleets' primary role, a majority of respondents also use their fleets for interplant movements and to move goods from plant to DC.
But they aren't necessarily doing it alone, says Olen Hunter, director of sales for Paccar Leasing Co., which operates 30,000 vehicles—primarily for private fleets—in the United States and Canada. Though he acknowledges that plenty of companies expanded their private fleets during the capacity crunch, he says the trend has started to taper off. "We're seeing a little bit of a change in the business right now while trucking tonnage is down," he says. With for-hire carriers willing to take on more business, he adds, private fleet managers are not making significant expansions to their fleets.
Hunter also notes that recent regulatory changes have given Paccar's business a boost. He points to new environmental rules affecting truck engines (which took effect in January) as an example."Our customers are saying they need to have truck fleets to serve internal or external functions, but they do not want to be in the business of hiring and training technicians, buying tools, or EPA compliance," he says. Belter sees another explanation as well.With a private fleet, he says, "you want to drive utilization to 85 percent if you can.Where you cannot get that, you can start to balance the cost and service tradeoff with a for-hire solution."
Belter notes that in some cases, these collaborative solutions go well beyond filling the transportation gaps to include areas like reverse logistics and even network design. He cites the case of a consumer products company that developed a solution that involved for-hire inbound transportation, a DC with a cross dock operation, and dedicated carriage for delivery to customers. The key to the arrangement was the establishment of the DC, he says."The enabling component was being able to establish a physical facility to flow product across."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."