A new way to haul and improve performance with flexible dedicated capacity

Shippers, carriers and brokers all share a desire for consistency. The freight market has seen unstable market conditions in the last few years, making it difficult for stakeholders to find consistency and they are increasingly looking to dedicated freight as a means of ensuring predictable volume and capacity.

When shippers hear “dedicated,” they think of lower rates with superior service. Consistent service is critical for shippers that need to meet customer expectations for their products while minimizing on-time, in-full (OTIF) fines. The true cost to move freight can skyrocket when late fines are incurred as available capacity becomes scarce. 

Dedicated drivers are always available to move the shipper’s freight so there is no risk of tender rejection. Meanwhile, drivers gain familiarity with the shipper’s facilities and their expectations, improving service while lowering costs. 

Carriers value dedicated freight for the stability it offers to both their businesses and drivers. Knowing their assets and drivers are fully committed and profitable week after week allows owners to think strategically about growth. 

Offering drivers profitable freight and reliable schedules can reduce driver turnover — hiring-related costs can run nearly $5,000 per driver. Similarly, brokers value the ability to offer dedicated freight to their owner-operator audience, one that rarely has access to this type of freight. 

Private fleets are an in-house form of dedicated freight — the trucks and trailers are owned or leased by the company and the drivers are on the company’s payroll. Shippers are under pressure to maximize asset utilization given the costs and multiyear commitments of private fleets. 

Without a mechanism to coordinate freight with other shippers outside of its own network, a single shipper is often limited in terms of how much of its own volume it can devote to a private fleet. As a result, private fleets make up only a small portion of a shipper’s transportation plan. 

“In this industry, more than 90% of all freight moved is basically a one-way environment. Let’s say we have 50 accounts, none of those 50 accounts talk between each other. They’re all handling their own accounts, on their own time, so it’s nearly impossible to coordinate that freight and offer it to a driver,” said David Norman, co-founder and COO of Sage Freight, a broker and dedicated partner of Leaf Logistics and one of the first to pilot Flex Fleets.

Freight coordination platform Leaf Logistics solves this problem by matching freight across the transportation industry among shippers, brokers and carriers. With the launch of its newest product, Flex Fleets, Leaf is able to offer dedicated service for multiple shippers with a single fleet, but without the obligation of a multiyear contractual commitment. 

The product was built to bring the benefits of dedicated freight to shippers and carriers with the flexibility to meet changing business needs and market shifts. Leaf piloted Flex Fleets throughout 2022 and has expanded in markets across the United States over the past six months. With this launch, Flex Fleets will continue to scale to serve all major markets by year end.

Flex Fleets was built with data analytics tool Leaf Adapt — software that continuously analyzes shippers’ transportation data throughout the year and coordinates that freight into multi-shipper circuits across the transportation grid. Leaf Adapt identifies contracting patterns over time, and Leaf secures these long-term contracts for shippers and logistics service providers using Flex contracts. Leaf’s Flex committed contracting product is able to meet customers’ changing business needs throughout the year by adjusting contract length.

“Around 30% of trucks on the roads today are empty due to a lack of coordination across the industry and between shippers and carriers. As a result, overall service can be unreliable due to uncertain contract awards, budgets are unpredictable and hard to lock in, and carriers have a hard time predicting and realizing revenue,” said Mark Shaughnessy, an adviser at Leaf and former chief procurement officer at Coca-Cola. “Existing contracting practices leave carriers a 48-72-hour tendering window to try to get a return trip. That’s not a winnable game for carriers so it often means a lot of empty miles between their drop-off location and their next load.”

This outcome is rough on the driver, it’s rough on carrier asset utilization and it hurts profitability. And inefficiencies show up in shippers’ pricing — empty miles aren’t free.

Leaf looked at these pain points and asked the question, “Does it have to be this way?” According to Shaughnessy, Leaf believes that 90% of truckload freight can be coordinated and scheduled well in advance and can be executed through a much more standardized approach to contracting and executing. Thus, Leaf Flex Contracts was created and now Leaf has introduced Flex Fleets as an extension of the dedicated contracting product. 

“Now we’re seeing shippers eliminate that unreliability and provide carriers time to plan and eliminate empty miles on not just a single load, but on an ongoing basis and, as a result, shippers are saving up to 40% while stepping up in service to their customers,” Shaughnessy said. “At the same time, carriers are now realizing significant improvements in asset utilization and they’re becoming much more profitable. Lastly, drivers are realizing a much more stable set of routes and they’re staying home more often, so driver retention is improving as well.”

The logistics industry is one of the leading contributors to global carbon emissions. Reducing empty miles and improving asset utilization are two ways Leaf Logistics helps shippers reduce the carbon intensity of their freight transportation by removing the emissions associated with empty miles.

“Overall, we have multiple projects right now that are basically running with zero empty miles. And that just kind of shows what efficiencies Leaf is creating within the transportation network,” said Norman.

In the transportation industry, on-time performance fluctuates depending on market conditions and how much freight falls to last-minute spot coverage and can go as low as 60% on-time in some instances. Dedicated fleets offer a guarantee of high service and on-time performance. According to Norman, with the continuous dedicated round trips using Flex Fleets, Sage Freight has seen its carrier partners’ operations at 99.9% on time since partnering with Leaf. 

One of Sage’s carrier partners in particular started with one trailer on a round-trip dedicated loop. In less than 14 months the carrier has been able to grow its fleet to four to five trucks and now has all drivers in dedicated round-trip continuous movements.

“The drivers love the consistency and they don’t ever have to worry about missing pickups and deliveries. It works very, very efficiently and that’s hard to do in this business, especially as a third party like us. To be able to operate with that high efficiency, it is a huge competitive advantage,” Norman said.

Sage will continue to partner with Leaf and expects to see continued growth over the coming years because of this partnership. 

Shippers and carriers alike remain frustrated with the cycles of the industry and most everyone wishes that more of their business could behave like dedicated. Flex Fleets offer shippers and logistics service providers a path to bring certainty to a substantial part of their volume that’s currently suffering from market fluctuations. They can plug this volume into a multi-shipper Flex Fleet that provides them with the benefits of dedicated without long-term commitments.

To learn more about Leaf Logistics and Flex Fleets, visit leaflogistics.com.

The post A new way to haul and improve performance with flexible dedicated capacity appeared first on FreightWaves.

Source: freightwaves - A new way to haul and improve performance with flexible dedicated capacity
Editor: Britni Chisenall