Trucks at Work

Data without friction

Here’s an interesting concept to contemplate: “frictionless data,” whereby information moves seamlessly within a trucking firm as well as between carriers and drivers, customers, and various partners.

While the term “frictionless data” might sound a little bizarre, it’s what Tom McLeod, the founder and CEO of McLeod Software thinks is necessary for trucking to next the net great leap in efficiency – to truly become what he calls a “Connected Enterprise.”

This is a theme McLeod (seen at left) plans to expand on during his company’s 2014 User Conference being held just on the outskirts of Washington D.C. this week – a belief that there must be almost “automatic” mechanisms in place that collect and then communicate information proactively to every employee, customer, and partner.

“It is essential to push the right information to the right person at the right time, rather than force them to go search for it,” McLeod said in a statement ahead of the firm’s user conference opening.

“Companies need automated workflow to help them automate business processes without boundaries, including those processes that extend beyond their own company,” he stressed.

“This concept of workflow enabled business processes that can cross these many boundaries means transportation companies can move to the paradigm of management by exception, and use business process automation to handle the routine elements of both their internal and external business processes,” McLeod emphasized.

He also believes that “Connected Enterprises” can more effectively take advantage of “Big Data” at their disposal by turning it into something “truly useful” called “Big Insight.” [A theme sounded by others in the trucking space as well, which you can read more about here and here.]

One example can be found in an inaugural truckload carrier benchmarking survey McLeod conducted with research firm Katz, Sapper & Miller (KSM).

That survey collected approximately 130 data elements for calendar year 2013 from 42 large, medium and small carriers operating over 16,000 trucks in total, with 83% of them company assets and 17% owner-operators.

Grouped together, those companies hauled more than three million loads, ran over 1.6 billion miles, and generated close to $3.9 billion in total revenue, noted Tim Almack, partner-in-charge of KSM’s Transportation Services Group.

The key piece of this “data mining” exercise is comparing the operating metrics – especially in terms of fuel economy – between large and small trucking firms; data refined by sorting with respect to carrier size, electronic on-board recorder (EOBR) use and fleet type.

Here are a few findings to chew on:

  • Large carriers, defined as having more than 500 trucks, posted the best operating ratio (OR) with an average of 92 versus 94 for medium carriers (101–500 trucks) and 95 for small carriers (100 trucks or less).
  • Small carriers reported average fuel mileage per gallon of 5.7, compared to 5.9 MPG for medium carriers and 6.0 MPG for large carriers.
  • Small carriers reported the highest net fuel cost per mile, with an average of 64 cents per mile, while the figure for both medium and large carriers is 59 cents per mile.
  • A “pronounced gap” exists in customer base composition between small and medium carriers on one side and large carriers on the other. Small and medium carriers reported that 75% of their revenue comes from their top 20 customers, while the figure for large carriers was 49%.
  • Large carriers in the McLeod/KSM sample are not achieving a higher ratio of trucks to non-driver and non-shop personnel as compared to medium and small carriers as the numbers for the ratio of trucks to non-driver and non-shop personnel are 4.9, 4.8 and 5.1 for large, medium and small carriers respectively.
  • Flatbed operators require significantly fewer people at 6.4 compared to 4.6 and 3.7 for dry van and refrigerated operations, respectively. This may be driven by the fact that flatbed fleets had a higher percentage of owner-operators compared to dry van and reefer fleets.
  • In terms of dispatched miles per truck, vans led the way with 110,076, followed by reefers with 97,404 and flatbeds at 89,319.
  • Figures for dispatched miles per truck varied depending on EOBR usage – but not the way many think. For carriers with EOBRs in all trucks, dispatched miles totaled 111,441, which dropped to 91,078 for carriers without EOBRs in every truck – thus a 22% positive variance favoring EOBRs.
  • McLeod noted that by removing the two largest fleets using EOBRs in every truck from the sample, the figure changes roughly from 111,000 to 100,000, yet still offering an asset utilization advantage to EOBRs of 10%.

That exemplifies just some of the information that can be compiled and then put to use via moving to a more “Connected Enterprise” structure in trucking, McLeod noted.

“[They] set the stage to drive improvement,” he stressed. “They create an environment where ideas such as continuous improvement programs and goal setting flourish.”

It’ll be interesting to see what other ideas along such “connected” lines bubble up at McLeod’s user conference over the next few days. Stay tuned.

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