Trucking Industry Overview - Trends
Affected IRM: X.XX.X
"This document is not an official pronouncement of the law or the position of the Service and cannot be used, or cited, or relied upon as such."
A. Role of Information Technology
The technology and information revolution has greatly improved the accuracy of shipping data and the speed with which this information can be shared. These innovations, in turn, are allowing information to reduce the amount of on-hand inventory needed for operations.
Like railroads, motor carriers are using technology to transmit timely reliable information to assure the prompt movement of their goods. Just in-time service cannot occur unless the pertinent shipping information is just ahead of the load.
Unlike railroads, motor carriers are exploring a wider variety of technologies. Several factors influence this trend.
First, there are far more motor carriers than railroads. As of August 2002, 585,677 interstate motor carriers are registered with the USDOT's Office of Motor Carriers.
Second, motor carriers do not operate over a fixed route system. Customer demand requires trucks to travel to a diverse array of sites. As a result, this industry's technology choices have tended to link commercial vehicles with their corporate and customer structures through satellite and cellular communications.
As early as 1998, trucking companies contracted with communication companies to install GPS tracking units on their tractors. Each tractor had a radio frequency identification (RFID) tag, a computer with a keyboard in the cab, and a satellite antenna with a GPS on the back of the cab. The GPS tracking units not only track the location of equipment (customer orders), but also are used to communicate with drivers to give directions, instant messaging, send paperwork, and guide them around roadwork or areas of trouble. GPS tracking units also aid in placing the closest truck to the next nearest customer which reduced response time and hence increased customer and driver satisfaction.
In 2000 the U.S. government removed Selective Availability (SA) from the Global Positioning System (GPS). Since SA removal increases GPS receiver accuracy to within 20 meters, it allowed new GPS applications to emerge.
During the year 2000, the largest trucking companies embarked on an information technology binge to reduce their operating costs which were increasing, but the main reason for this change was to gain a competitive edge.
Strategic information systems were the focus of the largest trucking companies.
In 2001, trucking companies embarked on a mission to increase their web site orders.
Logistics companies were spun off to build customer friendly web sites that would enable customer transactions to be completely paperless. Ultimately the new web site would enable customers to enter their order, check the what, when, where of that order, as well as schedule and proof of delivery. Companies with these web sites gained a major advantage over their competitors. The effect of these customer web sites was two fold. The price of doing business was reduced and the simplicity, convenience and satisfaction for the customer were improved immensely through information technology.
The simplicity factor of information technology had additional effects. Fewer personnel were needed to complete the order process as a whole, because the web site answered customer questions, while management could now concentrate on streamlining other aspects of the organization. Drivers were less likely to get lost or put on non-billable miles (loss of drivers' income). Since the drivers' telecommunications system was on-board, stopping in route to call the office for information was almost eliminated.
One problem of driver retention in the industry as a whole was addressed by providing e-mail through satellite communications, so the driver could stay in touch with his or her family while on the road. Technology addressed this one quality of life issue for the drivers and their families which of course positively affected the driver retention problem.
With thousands of drivers, any company with this technology gained a competitive hiring advantage.
Other problems such as load scheduling were solved by IT. With thousands of load assignments per day, along with all the possible combinations of drivers and loads it was an immense human task to assign the loads to the right truck/tractor. New IT Load Scheduling Systems were created to access thousands of loads per second and to assign the loads to trucks that are at different locations each day.
In 2001 through US Dot's Intelligent Transportation System and other initiatives, tag and reader technologies have been developed and deployed. By 2005, deployments are expected to cover the Nation.
One of the new technologies is the "Prepass" Electronic Preclearance System.
The Department of Transportation (DOT) in many states uses PrePass, on the interstate highway network. The PrePass system allows motor carriers with good safety records, the opportunity to comply electronically with state size, weight and safety requirements, while bypassing the weigh station at highway speed. Electronic Preclearance provides several advantages including improved highway safety, reduced emissions, less fuel consumption, and happier drivers. Motor carrier participation in PrePass is voluntary and only those with proven safety records can participate. As of March 2001, nearly 20% of all trucks that passed Illinois interstate weigh scales possessed PrePass transponders. Of these vehicles, almost 66% were given a green light to bypass.
The PrePass system works as follows:
- As a truck approaches a DOT weigh station, an in-cab transponder identifies the vehicle to a computer in the weigh station.
- A PrePass computer located in the weigh station verifies truck credentials. Within seconds the truck is automatically weighed and credentialed at highway speeds.
- A green light on the drivers' dash and audible signal give the go-ahead to bypass the weigh station. If weight or credentials can not be verified, a red light and audible signal instruct the driver to pull into the weigh station for verification.
- A compliance antenna on the highway provides validation of PrePass equipped trucks.
In December 2002, U.S. and Canadian Customs began the Free and Safe Trade (FAST) program which promises to revolutionize the processing of transborder trade. In September 2003, U.S and Mexican Customs began FAST initiative.
- The Fast initiative seeks to expedite the clearance of transborder shipments of compliant partners by reducing Customs information requirements, dedicating lanes at major crossings to FAST participants, using common technology, and physically examining cargo transported by these low-risk clients with minimal frequency.
- The program is a catalyst for both Customs administrations to participate in the enhanced technologies by using transponders, which would make it easier to clear low risk shipments, and would mitigate the cost of program participation for FAST partners.
FAST Cargo Release Methods
The two present cargo release methods for FAST shipments are the National Customs Automated Prototype (NCAP) and the Pre-Arrival Processing System (PAPS).
- FAST is the first completely paperless cargo release mechanism put into place for Customs and Border Protection. This paperless processing is achieved through electronic data transmissions and transponder technology. FAST is highly automated and allows for the expedited release of highly compliant cargo from major importers, reducing congestion at our borders.
- The Pre-Arrival Processing System (PAPS) is a Customs Automated Commercial System (ACS) border cargo release mechanism that utilizes barcode technology to expedite the release of commercial shipments while processing each shipment through Border Cargo Selectivity (BCS) and the Automated Targeting System. (ATS).
Effective January 5, 2004 the Department of Homeland Security requires that the Customs & Border Patrol (CBP) must receive, by way of a CBP-approved electronic data interchange system, information pertaining to cargo, before it is either brought into or sent from the United States by any mode of commercial transportation. The electronic manifest must be received at least 30 minutes before a truck attempts to enter the United States. The information will be compared with law enforcement and commercial databases to target potentially dangerous shipments that need to be inspected. Mislabeled cargo or a shipper's record of past violations might cause cargo to be labeled high risk.
The next step in Information Technology is expected to turn the entire day to day operations of trucking into a "no touch" process from beginning to end. This step will take companies closer to being defined as a "digital firm".
Intermodal is not a mode of transportation. It is a process or a way of offering freight services by two or more modes, e.g. ship to railroad, railroad to truck and etc., so that the efficiencies of each participating carrier are maximized. As a result, customers receive more efficient service. Carriers profit from business opportunities, which would not exist under their more traditional service structures.
Although the first commercial application of rail/truck intermodal service occurred in the 1950s, the service did not become a dynamic industry until the 1980s. Three events are key to this evolution.
- In 1980, railroads and motor carriers were partially deregulated from Federal economic controls.
For the first time, trucking companies were given the right to enter into microwave technologies rather than the railroads' single microwave tag and reader system.
This diversity of technologies also is a function of the higher competitive pressures motor carriers face. In today's environment, carriers are competing vigorously on the levels of service they provide including the ability to trace shipment location and pickup/delivery times. However, tag and reader technology is being explored for industry use for non-commercial purposes.
In addition to needing to talk to its customers and suppliers, truckers need to talk to their regulators - the state entities, who require operating permits, assess tolls, impose taxes, and enforce safety requirements such as shipment weights.
- In the early 1980s, the Interstate Commerce Commission, now the Surface Transportation Board, issued a series of decisions exempting rail/truck intermodal service from all Federal economic controls. These decisions did not affect how modes offered their own services.
DOT's administrative safety controls over intermodal service remained in place. Carriers were freer to experiment with intermodal services. Therefore, rail and truck freight carriers used the intermodal industry to create the innovative performance standards and service options that would later help transform their own modes.
In the mid 1980s, the railroads created double stack train service. Instead of moving a single container or trailer per rail car, two containers were placed on a car, one on top the other. This innovation allowed the railroads to transport twice the freight with modest increases in motive power and minimal increases in operating expense.
While a truck container or trailer on a railroad car is the oldest and most popular image of this industry, it really is just one segment.
Air/truck service, whether for small package express or full size cargo, truck/water, rail/water, and pipeline/truck combinations deliver intermodal freight transport services as well.