The economic fallout from the COVID-19 pandemic is squeezing the trucking industry. Logistics businesses are seeing large drops in rates and with the economic recovery expected to take several years, it’s unlikely these pressures are going away anytime soon.
The issues are widespread, too. Logistics companies with small fleets of six or fewer trucks account for more than nine in ten carriers in the world. Spot rates were already in decline, falling from $2.32 in June 2018 to $1.87 in January 2020, a 20 percent reduction over 18 months. With shrinking margins and reduced demand from the economic fallout, only the trucking companies that can adapt will survive.
These circumstances put smaller trucking companies at a greater disadvantage, as they often lack access to the tools and resources that can help them compete with larger companies and bounce back from disruptions. This is where technology can help.
The research firm, Gartner, produces a yearly list of disruptive technology trends, and one that is seeing an increase in relevance is “Democratizing Technology” — the process of making technology accessible and affordable to all users.
While this may sound like a catchy buzzword, it has real and profound implications for logistics and trucking companies. This applies to the supply chain ecosystem across the board, and in our case, we see the real value right now for the trucking community. In this article, we break down the current challenges facing small trucking companies and how the democratization of technology can empower them to solve these challenges.
Reduced Freight Demand is Causing Significant Issues for Logistics Businesses with High Fixed and Variable Costs
Trucking businesses are particularly vulnerable to changes in consumer demand. Less spending means less restocking—that means less freight and a shrinking logistics marketplace with increased competition.
Trucking companies already have high costs: Vehicle purchasing and leasing expenditure, driver payroll, fuel, maintenance and office costs mean logistics businesses are already operating on thin margins. With less business and revenue overall, smaller trucking companies are even more negatively impacts by these high costs and changes in demand. Although there are some steps they can tack to reduce logistics costs, those are medium- to long-term solutions.
PPP and EIDL Money Provides Liquidity that Can Be Invested into Trucking Technology
The U.S. government’s Payroll Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) have provided a vital lifeline to trucking businesses. Although these can help to solve short-term cashflow needs, logistics companies need to invest now in technology that can support their long-term survival. Although there are restrictions on how emergency loans can be spent, the money that’s freed up makes trucking technology investment possible.
Investing in technology helps you to streamline logistics processes and save on your hidden costs. Previously, this type of technology was limited to large, high-profit trucking businesses. The rise of supply chain management platforms democratizes that technology and makes it available to every trucking business, large or small.
Balance Immediate Business Survival Against Longer-Term Logistics Success
The democratization of technology is not a cure-all. You still have to meet your commitments to your drivers, your employees and your creditors. But, it’s definitely a good idea to look beyond immediate needs. If you have the money, then investing in logistics technology now prepares you better for the future. It will position you ahead of your trucking competitors, so when the market rises again, you can take a bigger slice of the pie.
There are several direct ways that investing in technology now can help you to secure the future.
Logistics Technology Helps Protect Drivers Against COVID-19 Risks
Trucking is a high-touch business. Transferring paperwork, freight handoff, key exchanges and more all increase the risk of your drivers contracting the illness. The trucking industry has long suffered from a shortage of drivers, and additional pandemic risks make that a bigger problem, especially for long-haul freight.
Fortunately, technology can increase the safety of your drivers in several ways.
“For truck drivers, one of the primary ways to safeguard themselves is by actively sanitizing their surroundings – including all the high-touch points on their trucks, like door handles and latches. But with technology becoming increasingly mainstream around trucking operations, there are solutions that enable truckers to reduce their overall touch-points to a minimum – drastically diminishing their possibility to contract the virus.”
Freight Waves, Fleet technology helps truckers ‘socially distance’ on the job.
Digital Lists Remove the Problems of Physical Document Sharing
Drivers, warehouse employees and other logistics personnel must go through multiple steps to take on or hand off freight. Instead of sharing paper lists which could spread the virus through touch, everyone involved can use their own devices to collaborate and check things off electronically. This will maintain central records and automatically updating everyone else’s digital checklists.
This approach can be used for multiple documents like driver inspection reports, freight manifests and other shared documents.
Truck Sensors Reduce the Risk of Contact with Others
Typically, a driver would walk around their truck, visually inspecting it for mechanical issues or other problems. This has a couple of downsides: Drivers could easily miss something they can’t see and being outside the truck in a loading bay with other people increases the risk of contracting COVID-19.
Logistic companies can avoid both of these issues through smart sensor technology. These IoT devices will monitor all the key characteristics of the truck and can allow for monitoring of the vehicle entirely from within the driver’s cab.
Sanitization Reminders and Checks Help to Keep Logistics Environments Safe
The organized chaos of a loading dock means employees may overlook sanitation requirements. Technology can create an audit trail for specific areas and items and when they were last sanitized. This can be combined with other technology, like location tracking, to see when a truck is about to arrive and to get hygiene procedures in place.
Logistics Technology Gives Trucking Businesses Greater Control
Protecting drivers is only half the issue with COVID-19, the other vital considerations for trucking companies are cost reduction and logistics optimization.
We’ve discussed logistics cost reduction before, and how technology can help you eliminate waste and keep expenses down. Centralizing reporting and building accurate AI models will let you model future capacity, demand and revenue.
“Companies with the technology to help them forecast future cash flow and anticipated volumes ‘are the ones likely to inspire more confidence at the banks,’ Rofman said. ‘If you can’t get reasonable projections to the banks, it really puts you behind your competition.’”
The time to invest in logistics technology is now. You’ll be keeping your drivers safe and preparing your trucking business for a post-COVID-19 future.
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