Truckload carriers continue to innovate to remain profitable, particularly through service diversification and driver retention, according to a new study by trucking software giant TMW Systems.
TMW’s first annual Transportation & Logistics Study – North America For-Hire Truckload Carrier Benchmarking Survey found that truckload carriers are diversifying their businesses by adding new higher margin services, including brokerage, logistics, LTL to TL consolidation, dedicated services and intermodal services.
Those looking to expand are exploring dedicated services first (27%), followed by brokerage services (21%). The majority of them are working on an accelerated schedule, within a one-year time frame.
Beyond diversification, the survey found that asset utilization is a key to driver turnover and to operating ratios.
The survey revealed the most important factor in retaining drivers was driver miles. Turnover rates closely follow driver revenue miles per week. Companies whose drivers log the most hours have the lowest turnover rates, indicating the higher the utilization, the lower the turnover.
Trucks sitting empty not only impact financial performance but also have a devastating effect on driver morale and overall retention.
While home time is important, it is quantitatively clear that drivers need that time away from home to be consistently productive, TMW concludes.
Operating Ratio & Asset Utilization
Government regulations, driver constraints and increasing costs of equipment and labor are among the factors keeping operating ratios high. Seventy-one percent of survey respondents report 94% or higher operating ratios, yet the industry’s best performers achieve less than 90%.
Survey results uncovered a strong correlation (about 75%) between utilization and operating ratio, so it's not a surprise that survey respondents also predict the biggest challenge over the next one to two years will be maximizing asset utilization (24%).
The average utilization (revenue miles per seated truck per week) is 2,230. No company with fewer than 2,000 revenue miles per truck per week achieved better than 97% OR.