February 2013, Auto Rental News - Feature
Photo from ©iStockphoto.com/ Joe_Potato
An auto rental company looking for a carrier to transport its latest shipment of cars can connect with a driver or dispatcher through online load boards.
With auto rental companies constantly buying and selling cars,
they have an ongoing need to ship vehicles from the seller’s location to the rental office. When the cars they need aren’t available locally, shipping can be a challenge since rental companies might not have relationships with auto transportation companies outside their general area — or an understanding of an appropriate price for the service.
Jason DeLorenzo, fleet manager of NextCar and Rent A Wreck of America in Laurel, Md., was looking for a wider network of car transporters as well as ways to save on transportation costs.
“Traditionally, we try to buy as close to home as possible, but sometimes it’s hard to buy close to home because the inventory is just not there or because what we need is far away,” DeLorenzo says. “In the past, if we bought something in Florida, we’d either try to network with local transporters and ask if anyone is going our way, and maybe make some calls, but even then we still didn’t know if we are getting a competitive rate. Then we started using brokers.”
While brokers solved the problem of finding transporters, after a while DeLorenzo felt he was paying too much.
“I had a feeling there was something out there the brokers were posting loads on,” he says. He began asking questions and searching the Internet until he found his solution: load boards.
What Are Load Boards?
Simply put, load boards are systems that match those who have cars they want moved (“shippers”) with those who can move them (“carriers”). The concept is similar to eBay’s system of bringing buyers and sellers together in an online marketplace.
An auto rental company looking for a carrier to transport its latest shipment of cars can connect with a driver or dispatcher looking to fill an empty truck in a timely, cost-effective way by using a load board. Because thousands of carriers connect to load boards it can be easier to find a carrier even if the location is far away, meaning managers no longer need to make multiple phone calls to find a long-distance carrier.
(Click to enlarge.) CarrierRates, another load board, has been around since 2005 and provides online load tracking, bidding and other features.
John Skelton, founder of Seattle-based CarrierRates, released his auto shipping technology in 2005 after working more than three decades in the auto shipping industry. CarrierRates is a no-phones-required system in which shippers, such as car rental companies, post loads and then carriers can bid on them. Shipping costs are lowered by the bid process, and the broker’s fee is eliminated. The system also provides online load tracking.
Skelton developed CarrierRates because he believes prices were too high for transport. “Some business owners or employees never pay attention to pricing,” he says. “That is a common practice — the employees will take the road of least resistance without any thought of the expense to the business.”
CarrierRates has hundreds of carriers on its website that represent tens of thousands of trucks, Skelton says. Some are one-truck owner-operators, while others have more than 2,000 trucks.
uShip.com is a load board that launched in 2004 and has 325,000 registered transporters.
Another load board, Austin-based uShip.com, which launched in 2004, has 325,000 registered transporters.
“Load boards have been around a decade or more,” says Dean Xeros, vice president for sales and general manager of motors and relocation at uShip.com. “The idea was to connect shippers and brokers with carriers and allow them to negotiate a price.”
Shipping a Vehicle
With load boards, a shipper can send an order out for bid and get a response the same day, all through an automated process.
Shippers can post a description of the load — how many cars, what kind, where they need them shipped and when — and wait for bids to come in from multiple carriers. Or they can enter the price they’re willing to pay to have the load shipped, and see if a carrier will take the load at that price.
Load boards have grown to the point where there are hundreds of thousands of transactions happening.
“[Using a load board] has been quite easy,” DeLorenzo says. “We have been buying cars from much farther away than we have in the past — as far as Denver or Dallas — which we haven’t done before. By posting the load on the board, it gives us access to a lot more transporters.”
The cost of using a load board is often less than the cost of using a broker, and some provide free options. Certain load boards charge a per-transaction fee, while others collect a flat monthly fee. CarrierRates offers “blocks” of postings at various rates, starting at $240. The cost of using a load board can be recovered by the money saved over a number of loads.
The basic uShip.com plan costs nothing for auto rental companies to use; there is a transactional fee that is paid by the transporter. If a shipper has more than basic needs, then they might upgrade their participation and pay fees of $3-$7 per shipment, “a relatively small number when looking at the overall cost of moving vehicle,” Xeros says. “They pay only when a carrier actually moves something.”
The fee structure that is best for a particular auto rental company depends on the number of transactions it makes. If volume is high, auto rental companies can save money using a load board compared with using a broker.
Brokers vs. Load Boards
“Brokers provide a needed function,” DeLorenzo says. “Sometimes it’s easier to use them because it saves me time rather than posting it myself, but if I want to save myself a few bucks, I use the load board.” He adds that the billing process can be easier with a broker.
“If I use a broker five times a month, they’ll send me one monthly bill,” he says. “If I’m using all load boards, I will use five guys and will pay five different guys five different checks. Brokers save time in managing the process.”
“Brokers are very popular in the shipping space,” Xeros says. “A number of auto rental companies employ a brokerage to find the carriers and negotiate a price. They help facilitate the transaction on behalf of their client.”
For auto rental companies looking to eliminate broker’s fees, load boards provide significant cost savings.
Loads Transported for Less
Not only do load boards eliminate broker’s fees, but the competitive bidding process itself helps drive prices down.
“If you have an auto rental company that uses one carrier, a trip can cost $700, but with three or four carriers bidding, now the cost is $550,” Xeros says. “Or, if an auto rental company can only spend $600, it can put that offer out.”
Xeros says the bidding process gives the shipper more options. “The amount of overhead allocated to managing your transportation gets reduced,” he says. “It was a highly inefficient process, and now the process is managed through one system and you can negotiate better transportation rates.”
DeLorenzo, who has been using CentralDispatch for about a year, has found that cost savings are about 30% when he uses the load board.
“Before, we didn’t consider buying cars from places like Denver, because using a broker would bring the transportation cost to $800 or $1,000 per car,” he says. “But using load boards, it’s 30% less. Once we realized that, we thought, OK, it’s no big deal to buy in Denver.”
DeLorenzo uses load boards whether he’s buying and transporting a single car or a dozen. He simply posts the load and waits for a carrier to accept.
“Price is always a factor,” DeLorenzo says. “I will post a price that I want to pay. CentralDispatch has a guide that shows what previous loads have gone for, so I have an idea of what I should be paying, or from general experience, I have an idea what it would cost.”
Once the post is made, DeLorenzo says he typically gets calls within minutes. “I know if my phone doesn’t ring for a couple hours, my price is probably too low or I’m just buying in a slightly obscure place, and it might take a day,” he says. “But most of the time, I’m getting multiple calls within 20 minutes.”
Occasionally a carrier will call to negotiate a slightly higher price. DeLorenzo will accept or reject these counteroffers based on what similar loads in similar locations cost.
Like DeLorenzo, Skelton notes that price savings from using load boards is about 33%.
Skelton recently ran a test load on his site for an auto dealer in New Jersey who wanted to transport cars from Florida. His previous quote was for $600 for a single vehicle load.
“When I put out the test load for him, the bid came back for a three-vehicle load for $1,300, and the first bid came back in one hour and 11 minutes,” Skelton says.
Validation Process and Flexibility
Both uShip.com and CarrierRates employ a registration process that aims at protecting users from fly-by-night transportation companies, such as requiring carriers to provide DOT and insurance certificates.
In addition, like eBay, uShip.com and CarrierRates use a rating system to monitor carriers’ performance.
“Every transport we have is feedback rated,” Xeros says. “You can also see what they have as far as insurance. The system creates transparency.”
On CarrierRates, new carriers that don’t yet have a rating can provide references to use as a starting point.
Payment for transport takes place between the shipper and the carrier, and load boards help arrange for several payment options, including cash on delivery, check or direct debit.
Load boards are flexible systems accessible to those with limited knowledge or veterans of vehicle transport, and they’re just as useful for low-volume shippers as high-volume shippers.
“The smaller companies have the tools and technology that before was only available to the big boys,” Xeros says. “It creates a more level playing field.”
See more features from the 2013 How-To Issue from Auto Rental News here.