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Logistical Lowdown- compliments of your True Blue Logistics Crew

How Under Utilized Trailers Impact Lane Pricing

Posted by Aaron Keller on 4/13/18 1:52 PM
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As the Vice President of Sales at Keller Trucking, and the person who approves the rates for all of our truckload freight, I find it interesting how the use of dropped trailers at customers' facilities has increased over the years; and that shippers expect carriers to view the use of dropped trailers as just a cost of doing business.

The truth is that carriers prefer not to drop trailers, but we have to due to restricted shipping and receiving hours or the customers' lack of resources to unload and load efficiently. 

In today's market, a typical 53' van trailer can average as much as $28,000. Keeping your total costs at a minimum by utilizing that trailer as much as possible during its 5-year life span is of great importance.

I understand there are advantages for the carrier in having a trailer spotted at a shipper, such as the driver can drop & hook their trailer, thus saving valuable time instead of sitting at a dock for 2 hours or more.

Saving time at the dock is a great thing if that spotted trailer is getting utilized 4 to 5 times per week. However, more and more we are seeing shippers wanting spotted trailers to use as "mobile warehouses;" where they can load them as production allows, which sometimes can take 2 to 3 days, or up to a week. Therefore, the utilization of that trailer now drops to 1 to 2 times per week which increases our costs on that piece of equipment significantly.

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These are costs that can be difficult to recoup from your customer in a per mile rate; and many shippers are reluctant to pay a trailer relocation fee for the carrier to drop off and pick up the trailer, if and when the carrier discontinues to operate the traffic lane or lanes.

As an example, let's look at a typical 376 mile traffic lane we operate at Keller Trucking from Ohio to Pennsylvania where dropped trailers are required at the consignee. If this lane moves 1 time per week with 1 spotted trailer, our trailer cost can be as high as $140 per load (this includes, insurance, maintenance, and an underutilized trailer). If this 1 spotted trailer can be utilized 4 times per week, then our trailer costs go as low as $50 per load.

The impact on a shipper for under utilizing this trailer is reflected in a higher rate per mile, thus increasing their overall transportation costs. As the costs for the carrier community increase with items such as driver pay, and increased insurance and equipment expenses, it's up to both the carrier and shipper to come together and understand how to develop solutions to help keep each other's costs at a minimum to ensure a mutually beneficial partnership. This has never been so true as it is in the current freight environment where truckload capacity is now at a minimum.

With the ELD mandate in full effect, truckload carriers, and most importantly, the drivers, need to keep moving in order to maximize their daily miles. The shipping community can really help themselves and their partnerships with carriers by ensuring that dropped trailers are being utilized at least 3 times per week, per trailer. Efficiently utilizing the drop trailer, which includes having trailers loaded and ready to be picked up when scheduled, will help offset the carriers' costs for underutilized equipment. 

Lastly, if a shipper can get away without having a spotted trailer for loads that have low volume and can be loaded in under 2 hours, then it makes a lot of sense to live load the trailer for both the carrier and the shipper to help keep the costs down for both.

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Topics: Transportation