Imagine you can predict the future. How would you answer the following:

Where is the transportation industry headed?

What will drive the change?

What opportunities will benefit the trucking and logistics industries most?

Answering these questions created thoughtful conversations among fleet executives at the 2019 Truckload Carriers Association annual conference in March. The consensus among those discussions – the industry is evolving quickly with technology paving the way.

According to the Commercial Carrier Journal, four major themes predicting the next directions for the industry emerged at the conference: enhancing transportation apps, growing logistics, embracing technology, and meeting customer needs.

FreightRover started considering industry shifts two years ago at its 2017 launch. The challenge in starting a transportation technology company wasn’t just to predict the future of the industry, but to help create it. While we didn’t have a crystal ball, our instincts were correct with our CarrierHQ platform aligning to each of the four key areas fleet executives predict the industry is heading next.

Enhancing Transportation Apps

Driver apps aren’t new. Many large fleets have created home-grown driver apps or purchased out-of-the-box options for years. However, many apps available to small fleets remain limited in scope. CarrierHQ’s app takes a more comprehensive approach:

  • Mobile marketplace – drivers can access fuel, medical, and equipment savings within the same place.
  • Driver settlements – CarrierHQ offers full pay visibility including establishing deductions, electing pay frequency, and viewing net earnings.
  • Factoring portal – fleets factoring with FreightRover’s affiliate partner Rover180 can access receivables information and upload invoice paperwork using their camera phone.
  • Private load board – asset-based carriers and 3PLs can post freight to drivers through CarrierHQ’s load board. Drivers can self-select freight and provide load updates through the app.

Growing Logistics

With more than $700M awarded in independent contractor misclassification lawsuits in the past 10 years, asset-based fleets are understandably concerned about leveraging the capacity of owner-operators. However, in a catch22, they also don’t want to introduce a third-party into their customer relationship to access additional capacity. CarrierHQ serves as an important tool for any fleet’s employment classification risk mitigation strategy. FreightRover partnered with Legalinc to offer business formation services inside CarrierHQ. Independent contractors follow a step-by-step process to obtain their DOT authority and establish a Limited Liability Corporation (LLC). In doing this, asset-based fleets can expand their brokerage operations to leverage independent contractor capacity and maintain the direct relationship with their customer, without assuming driver misclassification risks.

Embracing Technology

In the trucking industry, 97% of for-hire fleets comprise 20 trucks or less. With such fragmentation, widespread use of new transportation technologies historically has a long adoption curve. No shortage exists of new company entrants working to solve transportation’s biggest challenges. At the Transportation Carriers Association conference, Greg Hirsch, senior vice president of Daseke, described these companies as providing new voices to help the industry evolve and attract the next generation of drivers.

Many of the new technologies in transportation specialize in creating efficiencies and controlling costs. FreightRover developed CarrierHQ with the same goals in mind. Fleets can purchase four insurance policy types through the platform. FreightRover has reduced the antiquated multi-week process of obtaining insurance quotes and binding to less than 48 hours through a mobile device. Fleet owners or individual drivers answer a series of questions to generate a real-time quote among multiple insurance companies. A policy is chosen and the insurance certificate delivered digitally. With CarrierHQ’s insurance offering, fleets and independent contractors don’t owe any money up front, instead paying through weekly or monthly settlement deductions. The no up-front investment in insurance and pay-as-you-go model also removes a barrier historically preventing many independent contractors from obtaining their own authorities.

Meeting Customer Needs

As customers demand faster deliveries, shipper service requirements keep increasing. Carrier on-time pick-up and delivery is more important than ever. CarrierHQ’s private load board feature meets these increasing demands by connecting to truck telematic devices and driver cell phones to capture freight tracking data. Fleets grant shippers data access to create streamlined cargo visibility.

CarrierHQ also allows the technology to be custom branded. Fleets and 3PLs benefit by white labeling the platform to create and attract capacity using the service offerings of the mobile marketplace. White labeling existing technology expedites deployment, preserves IT resources, and provides a marketing boost.

Capacity remains one of the biggest challenges facing the industry. Trucking currently sits short 50,000 drivers, a number projected to triple by 2025. Sign-on bonuses and increased marketing spend typically only create turnover among fleets and the existing driver pool. These tactics generally fail to attract new drivers to the industry. Outside of significant legislation changes or economic factors like work conditions and compensation, technology provides one of the best opportunities to stem the driver shortage. CarrierHQ tackles this issue three ways: 1) low-cost business formation services; 2) reducing the need for up-front insurance capital, which averages $3,000-plus per truck for small fleets; and 3) providing mobile access to fleet service discounts for the top cost areas of fuel, equipment, and medical. By reducing these barriers to entry and growth, CarrierHQ opens the doors for more new drivers to join the industry.

To learn more about FreightRover’s CarrierHQ and how it could benefit your business, request a quick demo at https://www.freightrover.com/demo-request/

82% of surveyed freight payors rarely discuss best practices in freight payment outside of their organization and 55% have no budget to improve. Why? Most often IT investments go toward revenue generating activities leaving carrier payments as a “we’ve got bigger priorities” or “we’ve always done it this way” type of process. However, if the hidden costs behind carrier payments were widely known, creating a better process would become as urgent as any project up for consideration.

Hidden Costs

With the average carrier invoice costing upwards of $4 to process, duplicate payments accounting for 0.5-1.5% of additional freight spend, and a monthly savings of 2-4% possible by catching invoice errors, several sizeable extra costs lurk inside of carrier payments.

These monetary costs are in addition to the cost of not being considered a “shipper of choice” because of poor carrier payment practices. The number of shippers/3PLs paying carriers in 30+ days has grown to 47%, an increase of 9% since 2011. As pay terms have increased, capacity has decreased with a current shortage of 40,000+ drivers (and growing) and carrier utilization hovering between 98-103%. Additionally, 97% of the industry comprises carriers with 20 trucks or less, many with liquidity as a key business challenge.

Shippers/3PLs extending pay terms to hold onto cash are quickly finding themselves on a “do not call” list for carriers. Carriers are 1) contracting at higher rates to account for delayed payments and/or 2) selecting who gets their trucks with consideration for days to pay. Who can blame carriers when after two years of begging for freight, they now find themselves in the land of plenty.

Rocky vs. Apollo

I once heard the transportation industry described as a constant boxing match. When the market is soft, shippers strike with quick uppercuts to carriers through rate decreases and service expectations. When the market heats up, carriers jab back through rate increases and capacity controls. The constant back and forth leaves both sides worn out and against the ropes.

Far too often, managing transportation seems to be a zero-sum game between shippers and carriers. But there are new ways for both sides to win – without pricing or capacity punches – that can start in the often-overlooked area of payment processing.

A New Dog in the Fight

Powerful, but often unrealized, gains for both sides come through cash management tailored for individual business needs. FreightRover’s PayEngine is an online technology platform allowing shippers/3PLs to:

  • Capitalize on zero-cost extended pay terms
  • Shed the tedious carrier payment process without losing control of what gets paid
  • Create a carrier-centric quick pay program for its transportation providers

PayEngine was designed with both shippers and carriers in mind by addressing three common goals – increased revenue, decreased cost, and improved quality. The platform addresses common wish list items tied to improving inefficient pay processes:

  • Process invoices quicker and cheaper
  • Better align accounts receivable and payable
  • Free cash to avoid interest fees
  • Create more time for invoice auditing
  • Scale for business growth without increasing headcount
  • Receive detailed payables reporting
  • Create a competitive advantage for controlling rates and capacity
  • Focus less on back office and more on core business operations

PayEngine simplifies the payment process for both shippers and carriers. With FreightRover’s PayEngine, shippers/3PLs have one payee and one annual 1099 to issue, not thousands. No more per load pay term carrier negotiations. Carriers set their pay terms inside PayEngine and receive direct deposits in as quick as 24-hours after load completion.

With its white-labeled solution, PayEngine provides customized pay portals with on-demand payment data, invoices, and aging reports for shippers and carriers. Designed for the tech savvy and tech averse, PayEngine can connect to a TMS or function through a simple spreadsheet upload. Unlike other solutions, shippers maintain control of what gets paid, but PayEngine does the paying.

Simplified – shippers receive more time to pay, carriers get paid quicker, and PayEngine does the payment work.

The Knockout Punch

Among the many battles that happen in transportation daily moving goods from point A to B, carrier payment doesn’t need to be one of them. If you aren’t sure how much your current carrier pay process is impacting the bottom line, conduct an internal assessment of the following:

  • What is our internal cost to process invoices?
  • What is the cost of processing errors?
  • In the last five years, how has our transportation spend aligned with extended pay terms?
  • Do we deliver on the pay terms we’ve committed to our transportation providers?
  • Are the finance and operations teams aligned in managing transportation spend? Are cash on hand and ample capacity in conflict?

If the findings surprise you, consider stepping into the ring to make carrier pay improvements a priority for your organization. To learn more, visit https://www.freightrover.com/pay/.

Sources:

“2015 American Shipper Transportation Benchmark Study,” American Shipper

“Freight Payment & Auditing Services: Cash is King,” Inbound Logistics

“Don’t Dismiss Small Trucking Companies Just Yet,” FleetOwner

“New Report Says National Shortage of Truck Drivers to Reach 50,000 This Year,” ATA