Digital logistics improving load factor, but driver shortage, e-logs trouble vehicle transport industry
Interviews with car hauler companies, dispatch technology providers and auction facility operators agree that the nation’s car hauler industry in 2019 is in good shape overall.
Still, interviewees say the industry’s playing catchup to address a shortage of car-hauler capacity. They cite electronic driver logbook requirements, rising costs for casualty, liability, worker’s compensation insurance and the nature of the car-hauling vocation. Industry representatives said these issues have caused transport companies and drivers to leave the business.
Fortunately, innovators are using technology, data analysis and smartphone convenience to organize what many have described as a “fragmented” industry.
The American Trucking Associations that last year’s driver shortage hit a high of 60,800, up from 50,700 in 2017, an increase of nearly 20%, Transport Topics reported this summer. Most of the reported shortage is for over-the-road transport drivers, but the car hauling industry has seen its lack of qualified drivers too in recent years, said Guy Young, general manager for the Auto Haulers Association of America.
Young said car-hauler drivers have requirements and duties placed on the them that most truck drivers do not. Unlike most other trucking jobs, car-hauler drivers are also responsible for handling the vehicle loading and unloading of their transport. The way vehicles often are staged at auction or port marshaling yards requires drivers to drive those lots searching for the cars they’re to load and transport, which burns time they could be on the road — and erodes their compensation.
For the last mile, the final delivery, the situation has dealers, auctions and individuals waiting for their car or cars to arrive.
Transport driver blues
Electronic logbook requirements, the nature of the car-hauling job, and competition (and recruitment) from other trucking opportunities — or other industries — have seen drivers leave the business.
Groups like the Auto Haulers Association look for green pastures.
“Well, I mean, the driver is key,” Guy said. “Getting enough qualified people to drive affects the car-hauling industry more than it does general trucking.”
As with many industries, the car transport business struggles with an aging workforce and other occupations whose attractiveness — especially to younger men and women — often eclipses vehicle transport, said David Larson, chief commercial officer at JMN Logistics and Transportation.
“Being a car hauler is a very difficult job. It’s dirty. You’re outside in the rain or snow or when it’s 100 degrees, and you pull up to a lot and then have to find your cars, gather then together and spend the next couple of hours loading them.
“We have a truck shortage and a driver shortage. Certain companies are willing to put the money into buying more trucks. We can’t necessarily go out and create more drivers,” Larson said. “We’re working on solving these issues, but the two things that attract drivers are pay and being paid relative to rate. I can control the truck as a driver, but I cannot control the pain because I can’t control the rate.”
For such reasons, said John Robertson, executive vice president of business development for ShipYourCarNow, the car-hauler driver population is down.
“At the end of the day, it’s still the problem we’ve had for years in our industry, a shortage of trucks for the 39 million vehicles that will move this year,” Robertson said. He said many larger transport companies focus primarily on new-car hauling and, thus, are not available for the secondary market, for fleet companies and others needing to move 20 to 100 cars or for smaller loads.
The trickle effect
Compounding carrier and driver supply are e-logbook requirements. “Quite frankly, a lot of smaller carriers couldn’t make it without flexing the rules and so couldn’t make it work for them financially,” Robertson said.
“And on the one hand, I mean, the rule adds to the safety of the market, and the higher-end guys following the rules are left,” Robertson added.
Many vehicles are transported by one-and two-vehicle haulers. Some dealers may prefer their purchases be driven to their lots. Guy said creative operators are converting a variety of vehicles to be certified as car haulers to get into the game.
Mark Anderson, president and chief executive officer for United Road, said veteran car haulers are in the minority these days.
“Savvy veterans who know how to get things done, are getting harder and harder to find,” Anderson said, “and they’re a treasured resource, and we are grateful.”
United Road makes 3 million deliveries each year throughout the U.S. and Canada, according to its website.
E-log accountability, which limits driver’s time behind the wheel, has extended delivery times 20% to 25%, these transport professional point out.
“Delivery times are being set back, so we have to set the customer’s expectation a little bit. You know, the price per car has gone up a bit, somewhere in the neighborhood of 10 to 20%, depending on the shipping lane,” said Chris Steele, president of ASAP Transport Solutions. The company’s largest customers are online auction site ACV Auctions, and DriveTime.
“So, there is a challenge in the logistics space today from an automotive standpoint, and that is driven by several factors, including a material shortage of drivers across the country, which is getting worse,” said Naji Haddad, assistant vice president and general manager for Manheim Logistics.
“Brokers, whether asset-based or not, are challenged with finding the right drivers and keeping them. Also, then when you do find drivers, to incentivize the driver, you have to pay up instantly,” Haddad said.
“And, sometimes smaller operators cannot pay that rate, so the business isn’t competitive from a human capital standpoint, but also monetarily,” Haddad said. “Insurance rates are about 19% of the cost for a carrier, which frankly has put seen many carriers leave the business in the last few years.”
Defragmenting the market
These days, transport companies, brokers and dispatch providers are cooperating to fill loads going out and returning, so every mile pays.
Digital dispatch and load board tools are making that easier.
Others see a unified carrier network working more closely together to ease the market fragmentation.
“I believe if we go to a contracted carrier network on a broad scale, it will minimize our need for a fragmented network, meaning if you have 600 trucks in your fleet and we can contract for three years at a mutually agreeable price point, that would lock down capacity for the next three years,” said Haddad.
Disruptive technologies such as digital dealer-to-dealer auction tools, consumer-to-dealer transaction websites, and other nontraditional sourcing tools have added greater need for smaller mixed loads.
Bek Abdullayev, chief executive officer for Super Dispatch, said the company is helping consolidate fragmentation, so every carrier travels loaded, coming and going, and uses digital paperwork and record-keeping.
Abdullayev started Super Dispatch in 2013 as an electronic bill of lading app for car haulers. The company recently announced a one-stop-shop platform for effective communication between car transport carriers, brokers and shippers, said a company press release. With this new platform, shippers and carriers can post, price, offer, accept, track, inspect, invoice and pay for loads.
“When we entered this market, it was highly fragmented, and the technology that existed was fragmented as well, and didn’t talk to each other,” Abdullayev said. “If you think about what it takes to move a single vehicle, it takes multiple manual transactions, a lot paperwork, a broker and a dispatcher to coordinate a single loop. There is no visibility this way into where cars were in route, and this manual process is extremely inefficient. Ultimately it increases the cost of transportation.”
Super Dispatch will move 3 million vehicles this year, using 1,200 contracted carriers using the tool.
Improving load factor
For Young of the Auto Haulers Association, transport load factor remains a concern. Of the approximately 17 million new cars to be produced and shipped this year, 70% will be pickup trucks, crossovers and SUVs, which create carrier stacking challenges.
The need to ship more substantial, longer and heavier vehicles creates new transportation concerns. Carrier capacity is often limited to eight larger vehicles today instead of the 10 when most vehicles moved were sedans. Smaller loads mean fewer cars moved, burdening truck and driver supplies.
Like Super Dispatch, the CarsArrive Network is bringing sanity and economics to car hauling, mainly as they help improve carrier load factor.
“That helps me finish building out my empty spots that gets me to my next load. We are always trying to improve load factor for our carriers, and we want to build mobile technologies that encourages that kind of behavior,” said Michael Briggs, president and chief executive officer for CarsArrive Network Inc., a subsidiary of KAR and ADESA.
Briggs said the automated CarsArrive Network runs hands-off, building loads and providing required documentation, so carriers go out loaded. “Just last night there was no one in the building yet 700 cars went out,” he said.
Started in 2000, the CarsArrive Network now moves 300,000 vehicles a month, Briggs said.
The last mile
Briggs said the marketing of home-delivery, e.g., Carvana, and its popularization through television is driving consumer and industry focus on the last mile — the final leg of the delivery cycle.
“People are trending toward this last-mile delivery or car to the customer’s door, and CarsArrive’s is focused on that,” Briggs said.
To help with its “last mile” solution, JMN Logistics just announced a nearly $3 million investment in 16 new automotive transport trucks, it said in a company press release. The purchase is the company’s most significant single capital investment into its fleet to date. Deliveries of the assets have begun and plan to be completed by year-end.
“This is an exciting time for JMN, as we are expanding our fleet to keep up with demand. Plus, it is always exciting to hand over the keys to these beautiful new rigs to our valued drivers, “ CCO Larson said in the release. “As an asset medium based company, it is great to know that we can allocate revenues re-investing into our fleet and drivers.”
All said and done, Larson said in an interview the final mile will always be delivered on a truck.
“I’m not sure what technology is coming down the pike that’s going to change that,” Larson said.