5 Factors that Impact Carrier Lane Pricing

carrier-lane-yard-management

Ever wonder how your carriers come up with their lane pricing? Here’s a quick primer on some of the key factors that go into these decisions.

Also referred to as a “freight lane,” a carrier lane is simply a route that’s routinely served by a specific carrier. By establishing lanes to operate in, carriers, independent operators, and large trucking operations can run more efficiently and effectively (versus trying to serve “everyone everywhere”).

Many less-than-truckload (LTL) carriers operate within a fixed region of the country where they have established lanes, while national LTL carriers operate both within defined regions and via long-haul lanes that carry freight through those regions. Finally, independent operators manage both full and partial truckloads within their established lanes.

5 Points to Remember

Here are five determining factors that carriers use when developing their lane pricing:

  • Current freight volume. Much like any industry that fluctuates according to supply and demand, freight usually costs more to move when everyone is vying for space on trucks. When that demand wanes, lane pricing usually retreats along with it. “Rates are elevated right now and the supply-demand dynamic suggests they will remain so for some time,” Freightwaves “Carriers are rejecting loads at a high rate and volumes are flowing at historic levels. Carriers have options and they are exercising them in search of margins.”
  • Fuel costs. As fuel prices go up, carriers typically adjust their costs to offset their own increased cost in this realm. When fuel costs go down, the savings are often passed along to the shipper via a fuel cost component that carriers build into their own pricing models. These fluctuations can directly impact carrier lane pricing.
  • Head-hauls, backhauls, and deadhead miles. When truck drivers are competing to reduce empty miles, rates will be lower. When shippers are competing to find capacity, rates will be higher. Key factors that carriers look at include the chances of getting reloaded after delivery; and the load-to-truck ratio at the pickup and delivery locations. They also factor in deadhead miles or the number of “empty” miles that have to be driven between pickup and delivery locations (for the next load).
  • Driver pay and labor availability. These two go hand-in-hand: when there are ample drivers to choose from, and when those drivers aren’t commanding higher wages, carrier lane pricing tends to remain steady. However, when driver shortages begin to drive up wages, those increases are usually reflected in higher transportation costs for shippers. Coming off a year when labor availability was an issue for most organizations—and then moving right into the 2020 pandemic (which took a different toll on workforce availability)—this point remains a major hurdle for carriers and trucking companies.
  • Government regulations. Hours of service (HOS) rules, the electronic logging device (ELD) mandate, and other government regulations can all directly impact carrier lane pricing. For example, the HOS rules—which have since been integrated into carriers’ business models—had an initial impact by reducing the number of hours that a driver could be behind the wheel before stopping for a break. That meant no more waiting out in the yard for two hours for a dock door to open up (during which time the driver’s hours could run out). By deploying digital yard management systems (YMS) like PINC, companies have been able to eliminate these detention issues and keep drivers safe and operating (and subsequently, transportation costs affordable).

Keep these points in mind as you plan out your next load, knowing that most of the issues can be worked around if you attack them well in advance (versus waiting until it’s too late to do anything about it). Talk to your carriers about your options and use your YMS and transportation management system (TMS) to come up with a plan to provides the best value at the right price.

PINC and project44 partner to deliver the next generation of yard automation and predictability

pinc-project44-yard-transportation-management

The world’s number one enterprise yard management system and the leader in supply chain visibility combine forces to provide highly efficient automation and real-time visibility to manage in-transit and on-site shipments.

UNION CITY, Calif. – Aug. 25, 2020 — PINC, the number one digital yard™ management solution provider, today announced a partnership with project44®, the global leader in supply chain visibility for shippers and logistics service providers.

The new partnership aims to empower industry-leading shippers and carriers with end to end real-time shipment visibility and yard management automation capabilities for an enhanced supply chain experience.

Distribution centers, warehouses, and manufacturing plants are looking to improve gate velocity, optimize driver turnaround times, and reduce costs while becoming Shippers-of-Choice. project44’s shipment and ETA data in concert with PINC Yard Management System‘s real-time asset and load data will accelerate the check-in process and provide customers with actionable dynamic load scheduling visibility. Organizations will also gain real-time insights into critical yard asset and load lifecycle transitions through project44’s Advanced Visibility Platform™.

At the enterprise level, the data exchange between PINC and project44 will enable shippers to improve shipment velocity, enhance sustainability, reduce accessorial charges, and manage carrier contracts and transportation budgets more effectively.

“PINC enables enterprises to find and assign trailer assets and associated loads automatically through their life cycle, and optimize their movement between gates, yard, and docks,” said Matt Yearling, CEO of PINC. “Combining project44’s advanced visibility and predictive tracking and ETAs with our yard orchestration engine will enhance the shippers’ ability to meet on time in full (OTIF) requirements, maximize the productivity of warehouse labor and assets, achieve real-time visibility to available inventory, compete on providing an enhanced customer experience, while significantly reduce costs.”

“As businesses face the increasing demand for faster delivery, our partnership is here to fix the existing supply chain gaps, whether shipment is in transit, in the yard, or in the warehouse,” said Jett McCandless, CEO and Founder of project44. “With project44’s robust API integration capabilities and real-time ETA tracking, we are excited to drive additional value to mutual customers. By having real-time insights into inbound load ETA and shipment details, all players within the transportation ecosystem can increase operational efficiencies and exceed their customers’ expectations.”

On September 3rd, Matt Yearling and Jett McCandless will join Gartner’s VP, Bart De Muynck, and other thought leaders and industry experts on the panel discussion entitled “Re-evaluating The Supply Chain:  Transportation Execution Driven By Innovation in Uncertain Times”. The online event is hosted by UC Berkeley’s Sutardja Center For Entrepreneurship and Technology and will be moderated by Dr. Aleks Gollu. For more information, please visit: https://innox.berkeley.edu/event/9-3-re-evaluating-supply-chain/

About PINC:

PINC provides scalable software, hardware, and services that enable companies to identify, locate, and orchestrate inventory throughout the supply chain predictably and cost-effectively. The company’s cloud-based real-time tracking platform, powered by an Internet of Things (IoT) sensor network that includes passive RFID, GPS, computer vision, cellular, and other sensors, provides actionable insights and connected expert guidance that allow organizations to optimize their supply chain execution. Visit PINC at www.pinc.com.

About project44:

project44 is the world’s leading advanced visibility platform for shippers and logistics service providers. project44 connects, automates, and provides visibility into key transportation processes to accelerate insights and shorten the time it takes to turn those insights into actions. Leveraging the power of the project44 cloud-based platform, organizations increase operational efficiencies, reduce costs, improve shipping performance, and deliver an exceptional Amazon-like experience to their customers. Connected to thousands of carriers worldwide and having comprehensive coverage for all ELD and telematics devices on the market, project44 supports all transportation modes and shipping types, including Air, Parcel, Final-Mile, Less-than-Truckload, Volume Less-than-Truckload, Groupage, Truckload, Rail, Intermodal, and Ocean. project44 has placed second, behind only Amazon, on FreightWaves’ 2020 Freight Tech 25, a list of the most innovative companies across the freight industry, and received the 2020 SAP® Pinnacle Award as the Cloud Partner Integration of the Year. To learn more, visit https://www.project44.com/.

Media Contact:
Rafael Granato, Vice President of Marketing, PINC
press@pinc.com

Mariya Barnes, Director of Communications, project44
mbarnes@project44.com

7 Ways to Reduce Carrier Detention Fees and How Digital Yard Management Can Help

Yard management detention charges

If you’ve been paying higher and higher driver detention fees lately, you’re not alone. According to a new report from C.H. Robinson and Iowa State University, favored shippers are receiving better pricing and service. Those that don’t fall into the “shipper of choice” category are bearing the brunt of the driver detention and related fees.

In Do Favored Shippers Really Receive Better Pricing and Service? the report’s authors set out to better understand the voice of U.S. truckload carriers and quantitatively measure the effects of “favored shipper” characteristics on transportation costs. Through this process, they found that the top three characteristics impacting these costs include:

  1. Dwell time/asset utilization. Carriers most frequently commented on shipper and consignee dwell time and the influence shippers have on the carrier’s ability to utilize their drivers and assets (trucks and trailers), the report notes. Comments included concerns about shipper location (e.g., congestion and distance from the highway), drop trailer opportunities, appointment setting, and load/unload times.
  2. Contract terms and liability. All carriers mentioned liability concerns related to either the freight or the drivers who are on shipper/consignee property, according to the report. Payment terms, actual payment time, and detention (driver and trailer) were also commonly discussed.
  3. Driver experience. Several carriers mentioned concerns related to the driver’s experience at the shipper and consignee. These ranged from the check-in process—which can be facilitated by a digital  (YMS)—and parking, to driver lounges and restrooms. “In general, smaller carriers were more likely to discuss driver issues than larger carriers.”

Using shipment data and econometric modeling, Iowa State University’s researchers quantitatively measured the effects of these characteristics on transportation costs. With a 2-hour dwell time at origin increasing the freight rate for every load shipped by an average of $9.83 (along with any detention charges), that cost multiplied across many loads can add up quickly.

7 Steps to Take Now

To keep carrier dwell time to a minimum and reduce the related charges, C.H. Robinson and Iowa State University tell shippers to start using these strategies:

  • Leverage live load flexibility. Freight may be ready early for pickup. If a dock door is open and the shipper can proactively communicate this to their live load provider, they can obtain a truck before a scheduled appointment. “Live loading provides the flexibility to deal with fluctuations in demand,” the report’s authors state. “It enables coordination between manufacturing, shipping, and the carrier to accommodate freight when manufacturing is ahead of schedule, or when shipping falls behind.” Using your YMS, you can designate a dock door (or a percent of time for multiple doors) for live load activity or combined drop trailer/live load freight. This strategy enables the shipper or consignee to dramatically reduce the amount of time the driver is on their property.
  • Pre-stage freight on shipping dock. Proactively prepare for carrier arrivals so they can get in and out faster. This is another process that your digital YMS can handle for you.
  • Offer appointments for loading and unloading. Put an appointment or notification scheduling process in place to maximize the use of dock doors and people and to increase efficiency. “Stay as close to designated times as possible,” the report’s authors advise. “Also monitor the receivers’ facility characteristics and what the carrier encounters on the delivery end.”
  • Palletize freight. Palletized freight can be loaded and unloaded faster than loose boxes and pieces.
  • Maintain adequate staff for loading and unloading. “A cascading effect quickly occurs on dwell time when dock staff is insufficient to handle scheduled appointments,” the report notes. “Shippers should ensure that adequate staff is on hand at all times.”
  • For large facilities, provide a good map or directions to the appropriate dock door. To reduce frustration and enable faster loading/unloading times, provide carriers with a map and directions to the appropriate dock door or their shipment.
  • Use drop trailers. Shippers can load drop trailers according to their timing and schedules. “The carrier arrives, hooks up the trailer, and goes, with a minimum of wait time,” the report states, “This is easily the best solution in high-volume facilities.”

Re-Evaluating The Supply Chain: Transportation Execution Driven By Innovation In Uncertain Times.

Transportation Innovation PINC

REGISTER HERE

As markets demand not only efficiency but agility and adaptability from supply chains in our current reality, supply chain executives have been heavily investing in automated execution and real-time visibility technologies to continue moving inventory and delivering on customer expectations.

The Logistics Industry in the U.S. represents approximately 10% of the GDP or close to 2 trillion dollars. However, data shows that the most significant activity comes from trucking. Trucking moves 71% of all the freight in America, and nearly 6% of all the full-time jobs in the country are in the trucking industry.

That translates into an $800B industry moving about 25 million trailers and containers and delivering close to a billion loads in any given year.

With billions of moving parts, and impacted by the convergence of a global pandemic and economic downturn, the trucking industry is in the process of shaking off these negative impacts with the help of innovative technologies.

In this roundtable, we will have innovators and industry veterans discussing the following questions:

  • How has the role of the supply-chain evolved in the current pandemic?
  • What are the key transportation and trucking challenges?
  • How is the industry innovating, how should the industry innovate?
  • How can academia and industry be better partners?
  • What business benefits should organizations expect from their investments in innovation?
  • What lies ahead?

Panelists will include stakeholders from various segments, including

The session will be moderated by Aleks Gollu who is a SCET lecturer and Industry Fellow at UC Berkeley and founder of PINC.


REGISTER HERE