October 3, 2022
Delivery trucks are driving billions of miles completely empty

Trucks traveling empty have both financial and environmental costs.

John Lamb | photodisc | Getty Images

Road freight industry is a major problem.

Every day, thousands of trucks drive miles on freeways and highways completely empty—and the distance they drive with zero cargo onboard adds up to several billions of miles each year.

After a truck delivers its load, it may have no luggage to carry for the return leg of its journey and drive back empty.

“I don’t think it’s widely known,” said industry veteran Martin Wilmore, when asked if the public was aware of the problem in a phone call with CNBC. “There are all kinds of obstacles [to solving it], If it was easy, it would have been done years ago.”

The problem of empty trucks in Europe has gotten worse, with vehicles with zero cargo driving an increasing proportion of mileage.

In the European Union, trucks covered a so-called “deadhead” distance of about 34 billion kilometers (21 billion miles) in 2021, according to European Commission data. This is equivalent to more than one fifth (21.2%) of the total distance covered by road freight in the block last year, up 20% in 2020,

a complicated business

By its nature, the road freight industry is complex: manufacturers or retailers who need to transport goods are numerous, shipping varying amounts of cargo to multiple destinations, sometimes doing so. Depends on multiple carriers.

Trucking companies ideally require one customer (or customers) for outbound travel and the other for return. Vehicles run empty when there are no two customers. But, as well as requiring shipments for the return trip, they also need a truck that matches their load, which has equipment such as refrigeration, or a fork-lift attached vehicle.

“There are a lot of factors involved in finding the next compatible load,” JP Wiggins, co-founder of transportation management software firm 3GTMS, told CNBC via email.

“Is the equipment compatible, does the driver need to go home, does the driver have mandatory sleep breaks?” He added.

digital transportation

Willmore said, “We’ve seen fuel prices go through the roof … everything is affecting the cost of service for our customers. And the essence of our business is … removing waste from the supply chain.” Used to be.”

The price of shipping via road freight in Europe reached an “all-time high” according to an index published by International Road Transport Association In a report last month. European contract freight rates rose 6.1 points in the second quarter of the year compared to the first quarter, while rates rose 13.1 points year-on-year.

As well as saving money, shippers also want to reduce their environmental impact, with a Digihall retail client aiming to get 100,000 trucks off the road by 2026. One way to do this is to be more flexible in collection times plus or minus 24 hours, which increases the chances of being paired with a returning truck, Willmore said.

But it also needs a fundamental change. “We still see a kind of disconnect, where you have business leaders that are really focused around sustainability… but then you get local operators, or, you know, transportation offices that are doing something different. are,” he said.

“We need to change. As an industry, we’ve got an obligation to do something different,” Willmore said.

America reduces empty miles

Meanwhile, in the US, the distances driven by empty trucks have become less than 20.6% in 2020 According to the American Transportation Research Institute, 14.8% in 2021. “Under pressure from rising fuel prices, the carrier achieved the lowest deadhead mileage in years,” it said in August report good,

But driving trucks without a load is still a problem, especially since costs are rising: US domestic freight rates rose 28% in July (in all modes of transportation, including road and air), at a potential peak. reached.

According to Rob Porter, an executive at cargo technology company LoadSmart, “Empty miles mean less revenue for the carrier. This means increased costs because an empty truck on the road still consumes fuel, yet needs a driver.” occurs, and still requires regular maintenance.” , in an email to CNBC.

“If the carrier isn’t making money, that means the carrier is losing money — and a lot of it,” he said.

supply chain transparency

This is a problem that even LoadSmart is trying to tackle. A year ago, it launched a platform called Flatbed Messenger, which combines empty trucks into a partnership with essential shippers to transport goods. the home Depot. This means the retailer can share the excess capacity in its trucks with others.

LoadSmart said, “Fleets dedicated to a single customer often suffer from too many empty miles. The flatbed messenger feeds the truck’s location, its price and its destination into an algorithm that matches the information from the shipment, which both shippers and carriers alike. benefits.” One online release,

As of August 30, the platform means 1.9 million fewer miles have been driven by empty trucks, LoadSmart’s Porter told CNBC by email. LoadSmart raised $200 million in February in a funding round led by SoftBank, valuing the company at $1.3 billion.

“our hope” [the] The future is that we – and others in our industry – are able to not only reduce the empty mile, but to remove mistrust between parties, create visibility into supply and demand, and develop a transparency that is deeply rooted. can address supply chain inefficiencies,” Porter said.

But, according to Wiggins on 3GTMS, this requires a certain amount of data sharing by competitors. “We may need government help because cooperating rivals is often like having cats,” he said.

— CNBC’s Frank Holland contributed to this report.

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