Innovation, Diversification and Retentionby Jana Ritter - Published: 5/07/2013
According to TMW Systems' first annual Transportation & Logistics Study – North America For-Hire Truckload Carrier Benchmarking Survey released today, truckload carriers continue to innovate to remain profitable. The main areas of innovation strategies are found to be through service diversification and driver retention.
For instance, truckload carriers that are diversifying their businesses are adding new higher margin services, including brokerage, logistics, LTL to TL consolidation, dedicated services and intermodal services. Those looking to expand are exploring dedicated services first (27%), followed by brokerage services (21%). The majority of them are working on an accelerated schedule, within a one-year time frame.
The survey also revealed the most important factor in retaining drivers, is driver miles. Turnover and utilization are directly tied to driver pay miles, as it was found that turnover rates closely follow driver revenue miles per week. Companies whose drivers log the most hours have the lowest turnover rates, indicating the higher the utilization, the lower the turnover. Trucks sitting empty not only impact financial performance but also have a devastating effect on driver morale and overall retention. While home time is also an important priority for today's truck drivers, it is quantitatively clear that drivers need a certain amount of time away from home to be consistently productive.
Truckload carriers indicate that government regulations, driver constraints and increasing costs of equipment and labor are among the factors keeping Operating Ratios (OR) high. Seventy-one percent of survey respondents report 94% or higher OR, whereas the industry's best performers achieve an OR of less than 90%. Survey results uncovered a strong correlation (~75%) between utilization and OR, so it's clear why this issue consistently rises to the top of fleet priorities.
“With increasing regulations, driver constraints and rising costs of equipment and labor, truckload companies are struggling to stay profitable,” said David Wangler, TMW Systems president. “Companies that are increasing profit margins are diversifying and using technology to drive optimization. Metrics-based management is critical to staying competitive. Progressive truckload carriers have already invested in and deployed these technologies to improve asset utilization and are reporting positive results.”
TMW's 2013 Transportation & Logistics Study represents the industry's most unique performance scorecard for North America truckload carriers, and captures and analyzes key trends, challenges and opportunities facing for-hire carriers. It was developed from a benchmarking survey conducted online from October 24 through November 16, 2012. Business leaders from more than 60 national transportation firms provided TMW Systems with detailed financial and operational metrics and opinions on the industry's leading issues right now. This inaugural survey focuses on one segment of the transportation market, over-the-road long haul truckload carriers.