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The Internet And The Smaller Fleet

January 16, 2001

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Mike Applegate, president of Sacramento, Calif.-based Applegate Drayage, is proving the Internet isn’t just for the big fleets.
A regional, shorthaul LTL carrier operating in Northern California and northern Nevada, Applegate’s 50-tractor fleet hauls primarily consumer goods for department stores such as J.C. Penney Co. and Ross Stores.
Applegate’s fleet may not be large by some standards, but that doesn’t limit his vision. He has partnered with a high-tech provider, He is also helping to find new markets for the technology within the trucking industry, offering productivity enhancements to vendors and even setting up his own “Small 10” group of regional carriers as a logistics co-op.
A leader in California trucking politics, Applegate is in line to be president of the California Trucking Assn. in 2001.
He got involved with the Internet venture as a result of his relationship with one of his technology vendors. “You have to be comfortable with technology; that’s made a big difference for us,” he said. “My Nextel rep became a Teletrac rep, and came into my office and presented @Road. When he explained the technology behind it and the price, I bought it. The cost then was $195 a unit. I ordered 40 of them for our fleet.” What makes the technology unique, Applegate says, is that is uses three different technologies: “It used GPS [global positioning system], which we all understand. Then it used the land-based communications so that your GPS system, the ‘brain’ out of the truck, could make a cellular phone call and then put the GPS data on a web site. There was no proprietary software required in your office. If you had access to the Internet, you had access to @Road’s web site and there was your data.” Nextel and @Road have now partnered to make @Road computing and GPS location products available to users of the Nextel national network.
The units cost about $300 per truck. Monthly service charges are $40 per truck. “From a cost-effectiveness standpoint, at $40, I’m only paying a little more than a dollar a day to be in the cab of the truck with one of my drivers — watching his speed, watching his idle time, how long he’s at each stop. It’s an incredible productivity gain,” he says.
Applegate says other GPS-based tracking systems can cost anywhere from $3,000 to $5,000 for hardware, another $20,000 to $25,000 for proprietary software and $100 to $150 a month per vehicle for the service.
One drawback to @Road is that since it is based on digital cellular technology, if a truck is out of the coverage area, it’s out of reach by the fleet.
“Once the driver is back within coverage, you can access the data from when he was out of the coverage area,” Applegate says. “You don’t lose anything, you just sometimes don’t have instantaneous access to a driver.” For some fleets, that obviously won’t work, Applegate acknowledges. He said a national truckload carrier decided against the technology because he needs constant access to vehicle status.
“I imagine somewhere across Texas he might lose [a truck] every once in a while — but not for more than a couple hours before the guy hits another digital system. For the regional trucker, I really believe this is the solution.”
Applegate says the @Road technology will also be adaptable to serve as an “electronic onboard recorder” as called for in the proposed driver hours-of-service regulation changes now on hold in Washington.
“I’ve got a report that tells me peak speed, the speed between stops, the length of each stop, how much idle time the truck has and where the guy has been. I can make sure the guy is on-route,” Applegate says.
“We’re developing under the banner ‘e-commerce’ because it’s happening electronically. But in reality, it’s not like we’re buying new trucks or new tires over the Internet. We buy our trucks and tires from our local dealers because of the service associated with that product. That’s essential. You can buy tires from anybody for the same price. You buy them from this guy because he takes better care of you.”
What they are discovering is that the way Internet technology is really being applied is not in the front end, but more utilizing it to do “back office” services that enhance productivity.
“For example,” he says, “in our shop we currently buy parts. The vendor puts a proprietary system in house with his software. When we use a part, we scan its bar code and the machine knows what parts we used that day. Every night the vendor dials in, sees what we used and replaces it.
“When I approached the vendor about this and about using @Road and the Internet to replace the proprietary system, they were very excited.”
He also uses the system as an electronic clipboard for freight bills. “It’s a lot faster — it saves a lot of steps” he says. “Maybe that human being who did data entry can do something in the shop, or some other safety-sensitive thing for the organization. It allows you to allocate your resources differently.”
Applegate also looked into using technology for buying and selling fuel.
“What we found, though, is that fuel suppliers would be more efficient if they had better knowledge of a fleet’s inventory,” he says. “They can do better transportation plannings. Every time we go in to various vendors — whether it be tire dealers or fuel suppliers or truck dealers — with a perspective of how we’re going to approach e-commerce for them, we come out with a totally different program.”
There’s nothing traditional in e-commerce, Applegate says: “You’re not going take a percentage of anyone’s transaction, because there’s not enough money in any of these transactions to take money out of. The productivity gains that come about because of this electronic device is where the margins are. What it does is reduce my expenses or my costs of doing business. That has value, and I’ll pay for that value.”
Applegate is also pursuing using @Road to move into better load planning through formation of a logistics co-op, much like the recently formed Big 6 logistics deal between M.S. Carriers, J.B. Hunt, Schneider National, U.S. Xpress, Covenant and Swift Transportation.
“Everybody’s doing it on a transcontinental basis,” he says. “We’re going to start on a regional basis. If you put 10 guys my size together, instead of having a small 50-truck fleet, you’ve got a huge 500-truck fleet and we’re all connected, again, through this system. It’s an Internet co-op.”
The difference between Applegate’s Small 10 and the Big 6? “We know who’s where. We’re dealing with a location-based technology. No one has that,” he says. “We all have Internet capability, cellular and GPS, but nobody’s put these three technologies together in the one package.”
This article first appeared in the December 2000 issue of Heavy Duty Trucking. For more information or to subscribe, go to the magazine site.

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