Just a few years ago, Roadrunner Freight was struggling financially following a securities fraud scandal. Today, the less-than-truckload carrier calls itself “transportation’s greatest comeback story.”
How did the company do it? Using technology and data.
Tomasz Jamroz, head of technology, operations and linehaul, explains that the new leadership decided they weren’t going to just keep doing things the way they had been.
“We kind of drew a line in the sand [and said] let’s go toward being data-driven. Let’s make decisions based on data and use technology to make things better versus anecdotal evidence and legacy-based knowledge.
“In today’s DNA, if you really want to grow and really want to be good, you need to become a very good friend with technology, with integration, with partners, with changing your processes,” Jamroz explains.
Roadrunner is just one of a new generation of trucking and logistics companies that are using data, telematics, artificial intelligence, and machine learning to move freight faster, more efficiently, and with better visibility all around.
Roadrunner recently implemented its updated proprietary Load Plan 2.0, speeding up its network across 130 major lanes. The company is using the machine-learning algorithm it developed to optimize its less-than-truckload network. It has announced transit time improvements four times over the past 18 months.
In addition to transit time reductions, Roadrunner’s new driver app, Haul Now, was released in December, providing real-time data about shipment location. The new app launch follows technology improvements in dock automation, internal data analysis, and customer reporting.
One of the biggest changes, Jamroz says: “We hired a bunch of very smart engineers, and they are the ones that make the decisions,” supported by data, not by executive egos, politics, or the mentality that “we’ve always done it that way.”
Logistics Tech Investment
“Everybody is figuring out that they need to invest in technology,” says Michael Senftleber, chief technology officer for Arrive Logistics, a multimodal transportation and technology company headquartered in Austin, Texas.
“It’s how you invest in technology that’s going to make the difference,” he says. “I think a lot of people are going to get marginal returns because they're trying to do the same thing they’ve always done — ‘Oh, we need some of that technology. Let’s increase the IT department’s budget by 10%.’”
Last September, Arrive Logistics introduced ArriveNow to increase productivity and efficiency for its shippers, carriers, and employees. The cloud-based technology platform uses machine-learning models and human expertise to solve complex transportation challenges.
“We believe the best solutions are driven by data, powered by technology and delivered by people,” Senftleber says.
In 2022, Arrive was projected to manage more than $2.4 billion in logistics transactions. According to Senftleber, 90% of all freight moving through its system includes some significant form of automation, and 60% of those shipments come directly through digital integration with shippers.
The ArriveNow platform consists of a proprietary transportation management system for Arrive employees that automates tasks such as load matching; a freight management portal that lets carriers find, bid on and book loads instantly; and a shipper component that provides instant pricing for over 500 shippers through integrations.
Senftleber explains that ArriveNow was developed by what is essentially an entire software technology company within Arrive, staffed with veterans from the technology and software industry.
“But we're doing it in tandem with the [logistics] business, who actually know what they're doing and what the industry needs and how we can be more efficient,” he says.
The Evolution of Freight Digitization
The digitization of freight had its early beginnings in DAT’s and Truckstop.com’s electronic load boards in the mid-1990s. In the early 2000s, those two companies continued to improve their technology, but it was around 2016 when the terms “Uber for Trucking” and “the Uberization of Trucking” started to be bandied about. Startups offering load-matching apps and digital brokerages, such as Convoy, Trucker Path, Loadsmart, Transfix, and Doft, were joined in 2017 by Uber itself getting in on the trend with the launch of Uber Freight.
Large third-party logistics companies such as C.H. Robinson developed technology to serve their customers. Large fleets such as Schneider and J.B. Hunt did, as well.
For the next several years, there was a lot of investment money going into these technologies.
Grant Goodale, co-founder and carrier experience officer of Convoy, explains that the first wave of tech-enabled brokerages was about giving brokers the data they needed to operate more efficiently. But Convoy believed the process could be “made more efficient if we can use computers to talk to each other instead of people and emails and fax machines and a lot of the sort of old-school tech that freight brokers were still using, and shippers and carriers as well.”
Around 2015, Convoy was one of many startups leading a follow-on wave of technology.
“We saw an explosion of freight technology companies over the intervening years between 2015 and now, which is really exciting to see,” he says.
COVID-19 & Logistics Digitization
That follow-on wave hit a speed bump during the COVID-19 pandemic.
“We thought we’d have this big boom in 2019,” says Brent Hutto, chief relationship officer with Truckstop.com. The pandemic, however, put a slowdown on carriers moving into some form of automation.
“Just about every player that didn’t have their own system just pumped the brakes really hard,” Hutto says. Freight demand was so high that carriers and brokers wanted “to make hay while the sun shines.”
Ed Stockman, CEO of freight-tech startup Newtrul, tells a similar tale. Newtrul developed a proprietary, digital freight-matching platform that integrates with freight brokers to share available loads with carriers digitally in real time. The company had just completed a lot of its integrations in early 2020.
“And then COVID happened. And all of a sudden, trucking companies who we were pursuing, they didn't need us anymore,” he says.
Suddenly, motor carriers were in the driver’s seat as shippers scrambled for capacity.
“You were seeing three or four times your typical rates on lane. So they didn't need Newtrul. They didn't need to go to a marketplace that brought other clients together. They would just raise their hand and say, ‘I got a truck and I want 10 grand,’ and they would get it.”
Both Hutto and Stockman say things have been getting back on track.
“You see customers starting to put money they made in the pandemic into automation to improve their efficiency,” Hutto says. “There’s tremendous investment by [third-party logistics providers], because if they don’t, they won’t keep their shipper customers — because shippers are demanding more automation because of what they experienced during the pandemic” with supply-chain issues.
“Shippers are saying [to carriers and brokers], ‘You need to be more efficient,’” Hutto explains. “Automation is a way to do that.”
More efficient also means faster.
“The best freight on Truckstop moves in 60 seconds or less,” he says. “If you don’t have access to it, you lose it. You don’t get the opportunity.”
A top-50 broker in Truckstop’s network recently told Hutto that his top three customers only want to communicate via automation.
“They want an automated response to an RFP electronically, and if you can’t respond back quickly, you don’t win the business,” he says.
On top of that, Hutto also is seeing a trend toward demand for automation in contract freight, not just the traditional spot market.
“What I’ve been hearing in the last year from fleets is, ‘How can you help create more automation in contract freight that historically was not allowed to be moved in any other circumstances than by contract carrier?’” he says. “The mindset of the shipper is changing quite a bit, because they had a lot of experience in the spot market during the pandemic. So they’re more comfortable with moving freight the best way possible.
“So you’re seeing contract and spot market move closer together, and automation sits in the middle,” he says.
Solving Waste and Inefficiency in Logistics
Logistics technology is all about eliminating waste, according to Convoy’s Goodale. Waste and inefficiency, of course, lead to higher costs for shippers and lower profits for carriers.
“We’re trying to solve waste and inefficiency problems in the $800 billion U.S. trucking industry,” Goodale says. “And we do that through the use of machine learning and automation to build a digital freight network, which efficiently connects shippers and truck drivers. Our goal is to reduce the cost and make more predictable, the transportation of shipping goods commercially in the United States.”
Newtrul co-founder Stockman has 14 years of freight brokering experience and explains the problem:
“The majority of operating costs at a brokerage comes from two things. One is finding the right truck. And then the second piece is communicating with that person who manages that truck. Do they prefer WhatsApp? Do they prefer Gchat? Do they prefer phone? Do they prefer texting? There’s a lot of different ways of communication. And there's a lot of different personas of trucking companies and truck drivers and dispatchers and load planners.”
Of course, that kind of inefficiency affects the motor carriers who are hauling the freight as well.
Roadrunner’s Jamroz, who joined the company from outside of the industry, says, “Stepping into the transportation business, I was surprised by how paper-heavy, how not-digitized the business is. And that is probably one of the greatest opportunities that exists.”
Stockman says it’s not surprising that it’s so difficult for humans to find the right freight match without this type of technology.
“Daily, over 100,000 different shippers and freight brokers are looking for trucks, and over 4 million semi-trucks are looking for shipments. It’s not a surprise that with over 400 billion permutations, it’s incredibly difficult to find the right vendor/supplier,” he says. “We often hear about driver shortages as the main cause for capacity issues, but I’d argue there is a utilization problem that can be solved with the right technology.”
Solving waste and inefficiency issues would go a long way toward resolving a lot of drivers’ chief complaints.
Brett Suma left Knight, where he worked with drivers, to start Loadsmith. Officially it’s a brokerage, but it calls itself a third-party capacity-as-a-service logistics platform for shippers and carriers.
Suma contends that asset utilization and driver satisfaction are the two biggest things at any trucking company.
“In most trucking companies, customer experience is the third most important thing — behind asset utilization and drivers and driver satisfaction. In a trucking company, what they have to sell is capacity. Really what they sell is their driver recruiting, attraction, development, retainment systems, and safety systems.”
In reality, he says, if you’re doing well with utilization and drivers, you’re likely also serving your customers well.
“The connective tissue that makes all of that work is smart network design,” Sumo says. “If you really look into how the most profitable trucking companies work, it's a network design model. That leads to the high utilization rates and it leads to the driver satisfaction, repetitiveness, those things also lead to great freight execution.”
What Makes Advances in Logistics Technology Possible?
What has enabled this new generation of logistics technology? The growth of cloud computing and distributed resources, telematics, electronic logging devices, application programming interfaces, artificial intelligence and machine learning.
For instance, EKA Solutions was one of the early companies to take advantage of the cloud to connect brokers, shippers, and carriers in one “ecosystem” with its Omni-TMS platform. It promised to break down the silos that existed in traditional transportation management systems where shippers, carriers, and brokers had limited communication and limited visibility across the transportation chain.
Omni-TMS was designed to deliver information in an interactive and intuitive graphical form – right at the time of decision-making, such as pricing information. The TMS integrates user data with outside data sources, such as DAT’s spot freight market data or telematics and electronic logging systems, to offer smart route-planning tools, real-time order tracking, price negotiation tools, real-time interfaces with ELDs and telematics systems, etc.
In 2018, Loadsmith’s Suma says he saw “transformational technologies coming online that could transform the work that drivers do. Really what we're talking about is asset connectivity. Whether you're talking to trucks or trailers, asset connectivity and full visibility, that's something that we had not had for a long time in the industry.”
Roadrunner’s Jamroz explains that machine learning and artificial intelligence are not new concepts; they date back to the 1950s. But several developments have enabled its practical use in recent years:
- “One is unlimited access to computing power because those algorithms are very, very energy hungry,” he says.
- “The second thing is access to data. We have absolute unlimited amounts of data that you can have access to.
- “Three, cloud computing means you have very cheap [data] storage. Now you can store all this crazy amount of data available from everywhere and it doesn’t cost too much.”
As Arrive’s Senftleber explains, “Humans are really good at working with other humans. Computers are really good at taking millions of rows of data and finding patterns and making sense of it.”
APIs are increasingly enabling integrations that are bringing in the data the computer mind needs.
For Seattle-based Rollzi, a new tech-enabled carrier, APIs are key to its proprietary technology. This tech powers a single-lane relay strategy where multiple drivers combine to deliver loads, increasing truck utilization for carriers and efficiency for shippers.
CEO and co-founder Damien Hutchins, who previously was with Convoy, explains the idea to start a different kind of motor carrier came to him when he was in the brokerage business.
“The goal for me was, how can I run a trucking company and change the cost structure to be a little bit more efficient? And I realized, there's a lot of time wasted with drivers sleeping.”
His answer was a single-lane relay strategy.
“The idea is basically that a load could move, say 1,000 miles but be handed off to new drivers and new trucks every 250 miles. So, if you have loads moving in both directions, you continue this sort of handoff or relay of the load, and the load gets to where it needs to go without sleeping. So it gets there in half the time. But drivers all get to return to their home terminals every night.”
On top of that, he says, he can slip-seat the trucks so they can do the same thing with a different driver overnight. “Now we're getting double the utilization out of the tractor,” he says.
But all this wouldn’t be possible without the technology to connect the drivers efficiently, to figure out which driver should pick up which trailer, and so on.
Rollzi’s telematics system, fleet management system, and electronic logging devices — all use APIs to flow the data into one database.
“You name it, weather, traffic, fuel data, all this data we have coming into the same database, so we can see in real-time the truck data, the driver data, the location data, the business information,” he says.
All that data combined allows Rollzi to manage its relays and make changes on the fly as needed.
Machine learning is also involved in the Rollzi system. Drivers use an app that learns from each stop and adjusts ETAs and future route planning accordingly.
APIs are so important to this new world of logistics technology, that Convoy, J.B. Hunt Transport, and Uber Freight recently teamed up in an effort to develop a formal set of appointment-scheduling API standards.
‘This is a People Business'
At one time, some people believed “Uber for freight” technology would put brokerages out of business. But technology can’t replace relationships between fleets, brokers, and shippers. It can, however, be used to improve them.
Arrive’s Senftleber says there are many opportunities to make the industry more efficient with technology and automation. “But this is a people business and, at the end of the day, there’s stuff in one warehouse or facility and a real-life person and a real-life truck has to pick that up and move it.”
He calls Arrive’s strategy a copilot model, “because it's the rep, whether it’s a shipper rep or a carrier rep, that owns the relationship with that customer, that carrier. The technology is really just there to make everything go smoother, to remove manual processes that are always error-prone, take longer or are inefficient — but also provide both the shipper and the carrier with connections and ways to do business — however, it is they want to do business. So whether it's through EDI or through APIs or through a portal or through a phone call and an e-mail, all of those interfaces on both the shipper side and the carrier side exist, and we embrace all of them.”
In an interview with HDT shortly after XPO Logistics spun off its tech-enabled brokerage business as RXO, CEO Drew Wilkerson said technology was the No. 1 reason for the company’s success. Over the previous eight years, he said, then-XPO’s brokerage business had a compound annual growth rate of over 27%, compared to overall growth in the brokerage industry of 9% CAGR.
“Our technology helps customers get product to the end consumer faster, and it also helps them save money,” Wilkerson said. “We've got access to a lot of data — we've got over $3 billion worth of data annually from our truck brokerage team. We’ve got $4 billion of freight under management from our managed transportation team. So having the data is step one.
“Step two is knowing how to use the data so that you can help [customers] route their freight in the most efficient manner. You can look at creating multi-stop runs for them. You can look at creating milk runs, dedicated capacity, where they need trailer pools. What mode of transportation should the customer be using? What day of the week should they ship something? All of that is stuff that our technology helps enable them to do.”
But even though “technology is at the heart of what we’re doing at RXO,” he said, it’s also about relationships.
“We’ve got really good relationships with our customers,” he says. “If you look at our brokerage team, the top 20 customers have been with them for 13 years, on average. Last year, they grew their volume with those top 20 customers by nearly 30%. So, customers aren’t just coming back to us and saying, ‘Hey, we want you to hold on to what we have.’ They're saying, ‘We understand that you've got the best service in the market, you’ve got great technology, you're helping us be more efficient, we want you to hold more of our freight.’”
Or, as Truckstop’s Hutto says, “Technology is a conduit to make it happen more efficiently, faster, at higher volume.”
While the concept of freight aggregation debuted about five years ago, Newtrul’s Stockman says this technology is still in its infancy, and only about 5% of today’s loads are booked digitally. But that will change.
“I think over the next five to 10 years, more and more companies will embrace technology,” says Arrive’s Senftleber. “Not as just that person you call up when your laptop is broken, but as a strategic partner to be able to solve problems, and maybe in novel ways.”
This article appeared in the March 2023 issue of Heavy Duty Trucking.
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