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Technology Boom Is Changing Last-Mile Delivery And Opening New Opportunities For Parcel Carriers

While much of today’s trucking news surrounds over-the-road and intermodal deliveries and how they are changing under the onset of technology and transport efficiency, one area that’s received little attention is the boom in last mile delivery services.

The fact is, e-commerce is changing the way last-mile deliveries are managed. As data miners look at past trends on delivery data by shipment size, they are finding that a large portion of deliveries are happening by way of small shipments on less-than-truckload carrier vehicles.

Many smaller trucking companies are now offering same-day service in a number of metropolitan markets. These deliveries – sometimes referred to as ‘the final mile’ – are rising thanks to an increase of e-commerce and multi-channel marketing techniques available now only because of internet marketing.

The boom in e-commerce has hugely increased the need for final-mile deliveries. They’ve also caused both headaches and new opportunities for companies throughout the supply chain, whether it be for well-known couriers like UPS and FedEx or regional delivery fleets and big LTL providers, who are adding last-mile operations to their transportation portfolios.

Developments in e-commerce and the ability for shippers to find transport options at scale has created a tidal wave of demand for these final mile operators. And there are two types of motor carriers who are filling the need.

As smaller players try to increase their appeal in a more competitive market, “white-glove” services are being looked to in order to provide that competitive edge, which could involve not just delivering the shipment, but also offering assembly, setup and installation services.

At one end – for small packages shipped in niche markets – small carriers are even looking into drone and robot technology, an area once reserved for the big players. On the other side of the spectrum there’s an increasing need for larger items at lower amounts. When an LTL truck can fill the void, shippers need to rely on the smaller, LTL outfits to get the job done.

So, what’s behind the boom? Quite frankly, technology is making the complex requirements of last-mile delivery much more profitable, so why not enter the fray?

How Drones and Automation Are Changing the Game

Remember that one time now-so-long-ago when Amazon founder and CEO Jeff Bezos made a bold prediction? He once said that drones delivering packages to your door could one day be as common as the mail truck pulling up in front of your house.

Last December, Amazon beta tested something called Prime Air Service in England, where packages weighting 5 pounds or less were dropped to a customer’s door step within 30 minutes.

Still, we’re a long way from drone delivery, but more large operators are beginning to test the model. No longer is Amazon the only player looking at drone delivery as a way of getting that final mile package to your door. Now UPS is also testing drones for commercial package delivery.

In February, UPS partnered with a third-party company to incorporate drone delivery into their day-to-day operations. The drones are designed to launch from a ground-based vehicle – in this case an electric-drive car – and autonomously deliver the package to a customer’s doorstep before returning back to the vehicle. The vehicle operator isn’t out of a job either, since they still need to drive it from destination to destination.

UPS admits this is different from anything they’ve done to-date, but that it also has excellent implications for deliveries to rural locations where package cars may need to travel many, many miles just to make one delivery to a house in the middle of nowhere. In this scenario, the package car can sit stationary somewhere in town while the drone travels the extra miles to make the delivery.

Even Daimler is getting in on the action by designing an electric-driven concept van that launches drones from the roof loaded and launched without the operator having to get involved at all. The drone takes off, makes the delivery and returns to the vehicle completely autonomously.

Since drones weigh less, are more powerful and offer better levels of reliability than they used to, their payload-to-weight ratio and energy consumption allows them to better fill this niche needs without eliminating truck driver jobs.

Last-Mile Robot Deliveries

A company called Starship Technologies has designed a six-wheeled robot that can make short deliveries within a particular radius from the company’s headquarters. These robots can also operate in tandem with – or be launched from – traditional delivery vehicles.

Daimler has also gotten into the robotics delivery game. Early tests of their new robotic technologies involve delivering groceries or takeout food. Daimler has provided the traditional delivery vehicles for Starship’s budding technology, developing what they dub the “Robovan.” Much like the UPS example, this configuration allows the van to approach, then a robot exits the van and makes the delivery before continuing on.

A racking system back at fleet HQ loads 400 packages over a nine-hour shift. Compare that to prior loading and delivery methods – 180 packages over an 8-hour shift, and you can see where the 100% efficiency increase makes a huge difference.

What we could see, decades down the road, if all of these technologies come together are semi-autonomous electric vehicles deploying drones and robots to complete final mile deliveries.

The Sea-Change in Consumer Buying Habits

Sure, we’ve been talking a lot about small to mid-size regional last-mile fleets utilizing advanced technologies to get packages delivered in innovative ways, but a larger conversation surrounds how larger item delivery and customer service advances will change the game at the other end of the spectrum.

As UPS and FedEx feel the strain of the capacity crunch – a topic we’ve brought up before – smaller parcel operators have been filling the void, taking on business handling big, heavier items than would normally fit their automated loading and delivery systems.

What’s an example of this? Think omni-channel purchases. Imagine a consumer researching a washing machine online, then call a brick-and-mortar store to ask about the brand and brand pricing, then place the order for delivery. Rather than carry their own costs for fleets and truck drivers – unlike large players like Wal-Mart – most retailers prefer to outsource their deliveries through these omni-channels.

As a matter of fact, a recent survey found that people are more inclined to purchase large items online than ever before. In 2012, up to 38% of consumers were unwilling to purchase a large appliance online, whereas in 2016 that number had dropped by a huge amount, to a mere 12%. The fact is, more consumers are willing to purchase large appliances and other items for their home online than ever before which is changing the last-mile shipping landscape in a big way. But how?

Where Parcel Carriers Take Advantage

In the past, large items were delivered in one of two ways, either from the guy at the store you bought the large item from, or shipped on a truck via LTL.

The problem lies in where these items are being delivered. For LTL carriers – even if all they are pulling is a 33-foot pup, small by their standards – getting a Class 8 commercial motor vehicle in and out of residential neighborhoods isn’t easy. Whether it be overhanging tree branches or mailboxes, there’s a lot large big rigs have to deal with when they are attempting to make their way around residential neighborhoods for last-mile deliveries.

Also consider that these trucks are delivering heavy items being offloaded on trailers designed more for loading docks and street-side buildings than they are for side-streets and cul du sacs. Also, these deliverables may require a signature. Will someone be home when the big rig arrives?

This is where the little guys come in. Small parcel carriers are developing logistical options and investing in mid-size vehicles that allow them to get larger purchases to the customer faster and more efficiently, with less hassle on everyone’s part.

Larger companies are also finding success partnering with smaller parcel carriers to complete these shipments. After all, no one wants to lose business, especially if a new relationship between large and small carrier – one that benefits both financially – can be established.

This is especially true where items need to be set up or installed. This is where we go back to the “white glove” service discussion. There is greater value-add and customer satisfaction when a consumer buying a large item doesn’t only get it dropped at their doorstep, but also counts on someone coming into their home to help set it up.

Quite frankly, we’ve evolved from the ‘do-it-yourself’ to the ‘do-it-for-me’ crowd, and smaller carriers are stepping in to fill the void.

The fact is, e-commerce and the ability for consumers to shop online is reshaping trucking. Whether it be through the onset of drone delivery, robot-vehicle combination delivery, or new opportunities for small parcel carriers, seeing the trucking landscape evolve sure is exciting, isn’t it?

We certainly think so, and you can count on us at the QuickTSI blog to be right here reporting on it as soon as it happens.

What You Need To Know About Anti-Indemnity Laws Protecting Truck Drivers

Have you heard? New York became the most recent state to adopt anti-indemnity laws. These are laws that hold trucking companies responsible for damaged goods, regardless of who is at fault.

New York Assemblywoman Donna Lupardo stated that “the way trucking contracts are written; companies are often faced with burdensome liabilities when damage to goods is not their fault.”

Most trucking associations are in favor of anti-indemnification efforts. But what, in the end, does this all mean?

A Historical Perspective

Traditionally, a fleet and shipper used a contract to put their understandings and business agreements into clear and understandable terms. Still, as part of the contract negotiation process, one side inevitably tries to shift the risk of responsibility to the other party.

What one thing almost everyone involved with these negotiations can agree on is that the indemnity provision is a contentious issue. This provision essentially obligates one party to assume responsibility of any damage or claim arising from the contract, regardless of fault.

While some agreements only kick in when damages are caused by the indemnifying party, often these are far-reaching contracts that obligate the motor carrier to bear responsibility even when they may not be at fault.

Here is one example:

  • A shipper requires that a motor carrier indemnify them for any and all claims related to injury, death or damage arising out of the performance of the agreement.

This statement is so overly broad that no matter what happens, the motor carrier will be responsible for damages even if it bears no degree of fault for the claim.

Still, some contracts soften this a bit, creating an exception in cases where the shipper is “solely” at fault. Think this is fair? Look at is this way: The shipper only accepts liability if it is the ONLY party at fault. So, if the motor carrier is at fault by even 1 percent, they bear 100 percent of the responsibility.

States Get Involved

Therefore New York state has stepped in. State legislatures around the country have begun to recognize the problems that arise from inequitable arrangements brought on by unfair indemnity agreements.

At the point of this publication, at least 16 states have passed some sort of legislation designed to help level the playing field for all parties involved.

These states include:

  • Illinois
  • Indiana
  • Kansas
  • Maryland
  • Missouri
  • Nebraska
  • New Mexico
  • North Carolina
  • North Dakota
  • South Carolina
  • Tennessee
  • Texas
  • Virginia
  • West Virginia
  • Wyoming
  • Alaska
  • Washington

As you can see from the breadth of states who have passed these measures, this is largely a bi-partisan issue.

And while the language varies widely, some states make it quite clear that indemnity provisions in contracts that allow an indemnified party to escape responsibility for damages resulting from its own negligence are strictly prohibited.

The Last Word

What’s the moral of the story here? Trucking Companies should carefully consider which state’s law they want to apply to their transportation contract. Parties entering a transportation agreement would be wise to utilize a statute that allows them to craft a favorable indemnification term.

Today, one way companies do this is through utilizing a global trade management software. A visionary fleet will take a software investment and utilize it to give themselves a strategic advantage.

Global trade management software allows you to tap into the potential of the digital age and craft contracts that won’t leave you on the wrong end of an agreement. Trucking Companies now offer software packages that allow them to request contracts built on their own terms.

The fact is, this isn’t a problem that’s going away any time. So how does your fleet plan to address indemnification terms that aren’t in your bottom line’s best interest?

Listen Trucking Companies – Say Goodbye To Paper

It’s no secret that for many years now, trucking companies have been increasingly turning away from running their operations using paper. Whether it be to increase efficiencies, streamline processes or take advantage of advanced new software solutions, fleets are increasingly moving their operations from the physical world to the digital world.

There are several areas where better document capture without using paper can work wonders for your organization. Whether you are looking at it from a productivity, billing or delivery perspective, eliminating paper saves both time and money.

Apps and Digital Technology

Workflow apps allow enterprising motor carriers to turn physical documents into digital forms that their operators can fill out using an in-cab mobile device, smartphone or tablet. Truck drivers can do anything from capture signatures to scan barcodes or take pictures.

It also depends on what type of work a motor carrier is doing. The burden of paperwork is not uniform across the board. In truckload, for instance, expect loads and trips to languish under the weight of documentation.

LTL fleets may look at it differently. The difficulty for LTL providers lies in ensuring the paper flow matches the freight flow. When a fleet eliminates paper, they allow for digital information – which travels instantly – to be able to keep up with what’s actually going on in the yard and the cab.

Of course, the data that allows for eliminating the paper trail still needs to be tracked. Essential business functions need to be stored and managed. While fleets find themselves eliminating file cabinets, they increasingly find servers are needed in their place.

Some fleets are turning to onboard computing platforms that log and keep track of engine performance, driver performance and other factors such as hours of service. All this information is then transmitted back to home office for analysis.

Still, this doesn’t mean that paper is going to disappear altogether from trucking. Even fleets who have made major strides in going paperless still must use paper when needed. Fleets transporting hazardous or otherwise valuable or dangerous cargo must often utilize special documents – a paradigm that is unlikely to go anywhere anytime soon.

Impact on Drivers and Back-Office Workers

Fleets in this situation can still utilize these new wonders of technology. Hazardous cargo fleets may still need paper, but they can also better scan and transmit it. Everything from freight bills to safety documents and payables can be managed and transmitted electronically, regardless of whether it originated on a piece of paper or not.

Other examples can be seen in bills of lading, proof of delivery, fuel receipts and so much more. The documents can be turned in by the truck driver and then scanned and index into back office databases. Imagine reducing days-to-bill from around 7 or 8 days to 3 or 4 days. You’ll also spend far less time on postage, printer ink and paper costs in the long run.

While truck drivers still must collect data, and transmit information in the paperless trucking world, these technologies have still made various aspects of their lives far easier. The goal, whether a trucker is using a smartphone to log time or using a scanning kiosk back at home base, is to make their life easier.

Consider that your truck drivers are both your customer service representatives and in-house technology experts. Utilize technologies that help to ease the burden of responsibility, rather than create more.

As technology proliferates and government reporting requirements continue to grow, trucking industry players will need to find a way to manage the transition from paperless to digital. How that evolution plays out remains to be seen.

What Trucking Companies Should Do To Solve The Technician Crunch

We’ve been spending a lot of time talking about the truck driver shortage, but what about the technician shortage? The fact remains, trucking needs to do a lot more to fill its truck shops with qualified technicians.

According to the Department of Labor, between 2014 and 2024, the country will need an estimated 76,900 bus and truck mechanics and diesel engine technicians. This need is expected to cover both growth and replacement.

But before you tell yourself the technician you are looking for doesn’t exist, consider that annual graduates from private and public schools should number around 10,000. You should be able to make up that number. So where are all the technicians?

The Case of the Missing Technicians

With 10,000+ medium and heavy truck technicians graduating each year, one must ask, where are all these qualified workers going? Should trucking be doing more? The short answer is yes.

There are three main reasons why graduates aren’t ending up in fleet shops:

  1. The schools aren’t teaching what the industry needs the graduates to know. Fleets should be involved with what local schools are teaching their graduates.
  2. Many trucking companies don’t have mentor programs in place for new techs. It is unrealistic to expect a brand new technician to be super productive as soon as they start.
  3. Other industries are stealing potential new recruits. Without strong recruiting efforts, industries like wind power generation and oil and gas are scooping up qualified graduates.

So in the end, the real question is this: Is there really a technician shortage or is the industry simply not doing enough to catch those who are graduating today.

Recruiting a Generation

Today’s trucking industry faces a challenge in how it recruits young people. Although trucking has not failed to innovate, there is a difference in thinking between the generation of today and yesterday’s generations.

The old way of doing things taught us that the only thing that matters is what people are paid, but Millennials are disproving that. Younger generations want more than money, they want meaning.

They want to feel like they are part of the family, they want to feel needed. When they do well they want to be recognized for a job well done. They don’t want participation trophies; they want real recognition.

It’s a Good Career

Another area the trucking industry could improve upon is how well they promote being a technician as a desirable career. Most of today’s youth think that they have to go to college and get an expensive degree to have a satisfying career, but that isn’t always the case.

Many a director or vice president got their start on the shop floor. These are people that are passionate about trucking and have worked in the trenches. It’s a career that eschews the typical career ladder.

There are also a number of different positions and fields you can move into from starting out as a technician. The career offers flexibility that others cannot offer.

Work to Do

The problems facing trucking companies and their drive to find qualified technicians are entrenched. They run deep. We now live in an environment where there are no more shop classes in high school. Young people aren’t learning basic hands-on skills.

Perhaps the local business communities within those regions need to be more active if they had industry advisory committees putting resources into developing new programs and making outreach.

It’s not just about finding the right people; it’s about making sure the right programs are in place to ensure they are taught what the industry needs them to know. You can put more students in a classroom, but they need to be more than just a warm body, they need to be capable.

Impact of Commercial Truck Drivers Shortage

It’s no secret that there is a shortage of qualified truck drivers in the United States. Truck drivers are retiring, drivers are choosing local driving positions over being on the road for long periods of time, and stricter regulations are taking many truck drivers out of the running for jobs.

Economic Impact

With fewer drivers to move loads from manufacturers to stores, businesses are having to wait longer for the shipments they need. This causes frustration for the stores, the manufacturers and the customers. This frustration is expected to increase as we enter the holiday shopping season.

Another issue is that trucking companies are having to raise the rates they charge for hauling goods. The increase in shipping costs is passed on to the customers who purchase the goods. According to a report by DAT Solutions, a company that analyzes and provides data to the transportation industry, the rate per mile that companies charge to haul freight has increased about eight percent from August 2014 to August 2015. It is now at about $1.80 per mile for long-term contracts between manufacturers and shippers.

Some trucking companies are going out of business because they cannot afford to pay the drivers as much as it takes to keep them from leaving for better opportunities. Changes in the hours-of-service regulations have meant that trucking companies must hire more drivers to move the same amount of freight. Smaller companies who are unable to increase freight prices often have trouble keeping up with the costs of driver pay and benefits, forcing them to close their doors altogether.

What Trucking Companies are Doing

Although there are some causes of the truck driver shortage that are out of the hands of companies, most companies are taking steps to keep the drivers they have and attract new ones.

Pay increases are at the top of the list. Drivers know that the shortage of qualified drivers on the road makes them more valuable. They are also likely to switch companies when they see that they can get thousands of dollars in the form of a sign-on bonus.

Truck drivers are also looking for more time at home, and companies are generally obliging. More companies are offering drivers the ability to be at home several times each month. Some companies are even offering their drivers home time every week.

Partially due to the shortage of qualified drivers, the American Trucking Association is actively facilitating military veterans who are interested in becoming truck drivers in meeting their goals. In fact, the ATA committed to hiring at least 100,000 veterans between the end of 2014 and the end of 2016.

There are so many factors that affect the driver shortage in the United States that there are no easy solutions. It’s likely that drivers will keep retiring, with fewer qualified applicants to take their places. This likely means that the prices of goods will go up to compensate for the necessary increases in driver pay and benefits. The good news is that high pay is likely to attract more people who may not have previously considered truck driving as a career option, and the shortage will likely be reduced in time.

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