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How to Maximize Trailer Utilization and Reduce Dormancy

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Contents

Executive Summary 5

Introduction 6

Purpose 6

Trucking Industry Background 6

Trucking Industry Challenges 6

ProvenBenefitsofTrailerManagementSystems 7

HistoryofTrailerManagementAdoption 7

DivergentGoalsofCustomersandCarriers 8

Industry Challenges in Detail 9

InefficientTrailerUtilization 9

Excessive Trailer Pool Size 9

Current Practices 9

Built-In Bias “Pads” the Size of Trailer Pools 10

LackofAccurate,TimelyInformation 10

Obstacles to Manual Data Collection 10

Data Reliability 11

PoorDriverProductivityandSafety 12

Low Driver Morale and High Turnover 12

IncreasedTheft 12

PoorBack-OfficeandFieldStaffEfficiency 13

Trailer Tracking as a Solution to Industry Challenges 13

Improved Trailer Utilization 13

Optimal Trailer Pool Size 14

Accurate,TimelyInformation 14

ImprovedDriverProductivityandSafety 15

Improved Driver Morale and Retention 15

ReducedLossesfromTheft 15

ImprovedBack-OfficeandFieldStaffEfficiency 17

TheImpactonTrailerRentalstoCarriers 17

How to Evaluate Trailer Management Providers 18

Conclusion 20

ContactInformation 20

References 21

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AdoPtion of untethered trAiler mAnAgement systems

provides a competitive advantage to carriers and vendors that rent trailers.

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Executive SummaryAsbusinessesoperatinginthecapital-intensive,low-profit-margintruckingindustry,carriersbenefitfinanciallybyadoptingwirelessuntetheredtrailermanagementsystems.Withoutuntetheredsystemsinplace,carriersfacethefollowingchallenges:lackofaccurate,timelyinformationabouttheirtrailers(includinglackofcargovisibilitywhentrailerssitidleorintransit on rail cars); poor trailer utilization; excessive trailer inventories; inability to charge customersaccuratelyfortrailerdetention;losttrailers;anincreaseincargotheftandassociatedcosts;reduceddriverandback-officeproductivity;increaseddriverfrustrationandturnover;wastedresources;andpoorcustomerservice.

Thenumberofinstalleduntetheredtrailermanagementsystemshasgrownrapidly—from100,000unitsin2003toover415,000unitsbythecloseof2006and600,000unitsexpectedbytheendof2009.Associatedrevenuesareexpandingaswell.Thisrapidadoptionofuntethered trailer management systems is a response to widespread awareness that these systemsofferthefollowingbenefits:

Consequently,adoptionofuntetheredtrailermanagementsystemsprovidesacompetitiveadvantagetocarriersandvendorsthatrenttrailers.Concernsaboutinvestmentsinuntethered management systems can be addressed by evaluating untethered system providers using the followingcriteria:adequacyofcustomerserviceresources;financialstability;abilitytoprovideadjunctprofessionalservices(suchassystemintegrationandtailoring);trackrecord;truckingindustryknowledgeandcommitment;technicalexpertiseinwirelessinformationtechnologies,hardware,software,andinformationtechnology(IT);systemrobustness;networkserviceavailability and assurance; and a willingness to act as a trusted partner by employing suitable processesandtechnologies.

• Accurateandtimelyinformation (includingincreasedknowledgeofwhen and where trailers are dropped and unloaded)

• Reductionintheneedforphysicalcountsoftrailersinayard

• Improved trailer utilization

• Improvedtrailerpoolsizingforeachcustomer

• Reductioninthesizeoftrailerfleets (capitalcosts)

• Improved driver productivity andsafety

• Improved driver morale and retention

• Quickerdetectionandrecoveryofstolen trailers and loads

• Reduction in costs associated withtheft

• Increased dispatcher productivity

• Increased ability to generate accurate reportstodeterminedetentionfees

• Improved planning

• Improved customer service

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IntroductionPurpose

Thiswhitepaperexplorestheapplicationofwirelessuntetheredtrailermanagementsystemswithinthetruckingindustry.Afteridentifyingkeypracticesandindustrychallengesfacedby carriers,thepaperidentifiesthebenefitsobtainablebyinstallinguntetheredsystems.

trucking industry Background

Thetruckingindustryiscapitalintensive,anditoperatesonalowprofitmargin.Inaddition toback-officeexpenses,whichareincurredbyanytypeofbusiness,carriersincursignificantcapitalcostswhenpurchasingtractors(cabs)andcargotrailers.Mostcarriersownmoretrailersthantractors,anda3:1ratiooftrailerstotractorsisnotunusual.Sincemostcarriershavenetprofitmarginsrangingbetweenoneand3.5percent,theconceptoftrailermanagement—achievedthroughtrailertrackingsystems—offerssolidfinancialbenefits.1

Carrierscanbesegmentedintodistinctcategories,andeachusestrailersdifferently:

• less than truckload (ltl).Trailersinthesefleetsusuallycombineanumberofless-than-truckloadsizedloadsfordifferentcustomers,andthedriverspickupanddropoffeach oftheseloadsinmultiplelocations.Driversoftenmakeuseofcross-dockingfacilitiestodistributeandcollectthesesmallloadstoandfromothertrailers.

• Private.Privatecarriershaultheirownproductsandtrailersinsuchfleetsareusedinwaysthatsuittheirowners’interests.

• truckload.Althoughtrailersinthesefleetsmayservemanydifferentcustomersoveraperiodoftime(regionallyornationally),eachdiscretetruckloadofcargoiscarriedforasinglecustomeratatime,andtheentireloadisusuallytransportedfromonepointtoanother.

• tanker.Thesetrailershaulonetypeofproduct—suchasfuelorchemicals—andresemblethetruckloadcategoryinsomeways;however,theratiooftrailerstocabsislowerthaninthetruckloadcategory(therearenotasmanyfreetrailersforeachcab).

• Package.Trailersinthesefleetsresembletheless-than-truckloadcategoryinsomeways,butthenumberofpick-upanddrop-offlocationsismuchlarger.

trucking industry Challenges

Withoutuntetheredtrackingsystemsinplace,carrierstypicallyfacethefollowingchallenges:2 lackofcargovisibilitywhentrailerssitidleorintransitonrailcars,losttrailers,anincreaseincargotheft,reduceddriverproductivitywhilewaitingfororfindinganemptytrailer,increased driverfrustrationduetotimespenthuntingfortrailers,inabilitytochargecustomersaccuratelyfortrailerdetentionbecausecarrierscannotdeterminewhentrailersareloadedorunloaded,wasteofemployeeresourcestrackingdownlosttrailers,andtheneedtomanuallyupdatethelocationoftrailersonadailybasis.

Thesourceofmostofthesechallengesisalackofdetailedinformationaboutacarrier’strailers— inparticular,wheretheyarelocated,whethertheyareloadedorempty,andiftheyaresecure.Mostofthesechallengeshaveadirectimpactonproductivityandtheefficiencywithwhichthetrailersgeneraterevenue.

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Proven Benefits of Trailer Management Systems

Untetheredtrailermanagementsystemsprovidearemedyforthemanychallengesassociatedwithalackofspecific,timelyinformationabouttrailers.Therapidadoptionofuntetheredtrackingsystemsisaresponsetowidespreadawarenessthatthesesystemsofferproven benefitsincluding:

• Fasterdetectionandrecoveryofstolentrailersandloadsandareductionin associated insurance costs and other losses

• Increasednumberofloadspermonthcarriedbyeachtrailer

• Reductioninthesizeoftrailerfleetsofupto20%accordingtosomeestimates

• Reductioninthenumberofdispatchersandback-officeadministrativepersonnelneeded

• Reductionintheneedforphysicalcountsoftrailersinayard

• Increasedknowledgeofwhenandwheretrailersaredroppedandunloaded

• Increasedabilitytogenerateaccuratereportstodeterminedetentionfees.3

History of Trailer Management Adoption

Inthe1980s,beforewirelessuntetheredtrailertrackingsystemsweredeveloped,trackingwaslimitedtotetheredsolutions.Thesetetheredsolutionsconsistedofanin-cabterminal equippedwithaglobalpositioningsystem(GPS)receiverlinkedtoaserviceprovider’snetworkoperationscenter.Toprovideatetheringfunction,thein-cabterminalwaslinkedtothetrailer,wheresensorsprovidedbasicinformationaboutthetrailer’sstatus.Consequently,whenatrailerwasunhookedfromacab,thetrailertrackingfunctionwaslost.

By2003,serviceproviderswereofferingindependent,untetheredtrailermanagementsolutions.Nolongerreliantuponatetheredconnectiontoanin-cabterminal,theuntetheredsolutionsplacedallofthehardwareinsidethetraileritself.Equippedwithanindependentpowersource,GPS,andlinkstoanetworkoperationscenter,theseuntetheredsolutionsalsoprovideddataaboutthestatusofatrailer—includingwhetheritwasloadedorunloaded,connectedtothecabordisconnected,orhadopenorclosedcargodoors.

since there were more than 4 million trailers in the u.s. at

the close of 2006 (not including owners of single trailers),

trailer management systems are only beginning to have

an impact on the industry.

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Theuntetheredtrailermanagementmarketisexpandingrapidly.Fromaninstalledbaseof100,000unitsin2003,4thetotalreached415,000unitsattheendof2006andisexpectedtoreach600,000unitsbytheendof2009.5 Since there were more than 4 million trailers6 in the U.S.atthecloseof2006(notincludingownersofsingletrailers),trailertrackingsystemsareonlybeginningtohaveanimpactontheindustry.

Divergent Goals of Customers and Carriers

Inthetruckingindustry,thedivergentgoalsofcustomersandcarriersareachiefsourceoffriction.Carrierswishtomaximizeprofitsbykeepingthelargestpossiblepercentageoftrailers fullofcargoandmovingovertheroad.Theycannotmaximizeprofitsifdriverssitidleatshipmentlocationswhiletrailersareunloadedorloaded(a“liveload”scenario).Thedetentionfeeschargedforthiswaitingperioddonotequalthelostincomethatwouldhavebeengeneratedbyhaulingcargo.Consequently,forcarriers,an“ideal”scenarioisoneinwhichthedriver(1)pullsintoacustomerfacilitytomakeadeliverywithatrailerfullyloadedwithcargo,(2)unhookstheoriginaltrailer,(3)immediatelyhooksupanewtrailerthatisalreadyloadedwithcargo,and(4)pullsoutofthefacilitytomakethenextdelivery.

Customerswishtominimizeoverallshippingcosts.Whiletheymaysharethecarriers’favorable assessmentoftheidealscenario(describedabove),customerssometimesunintentionallyincreasecarriercosts.Forexample,acustomerwillreceiveashipmentofrawmaterialsthatmustbere-distributedtoseveralseparatedestinations.Ifthecustomerleavesthematerials intheoriginaltrailerinsteadofunloadingthecargointoanearbywarehouseuntilothertrailersarrivetohaulitaway,thecustomeris—inessence—usingthetrailerasawarehouse.Thishelpsthecustomertoeliminatethecostofunloadingthetrailer,butitharmsthecarrierbecauseitpreventsthecarrierfromusingthetrailertomaximizeitsprofitbyhaulingadditionalcargo.

increase in untethered trailer monitoring units

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Industry Challenges in DetailInefficient Trailer Utilization

Trailerutilizationisameasurementthathelpstodeterminehowefficientlytrailersarebeingusedtogenerateprofitsforcarriers.Utilizationcanbemeasureddailyoroveralongerperiod oftime,butitusuallyincorporatesthetotaldollarsearnedannuallybythetrailersinafleetdividedbytheoriginalcostoftheequipment.Sincetrailersearnmaximumrevenuewhentheyarebeingusedtohaulfreight,carriersnaturallywishtoincreasethistypeofutilization.Similarly,carrierswishtoquantifytheamountoftimethattrailersaredetainedbyeachcustomersothattheycanlevyaccuratedetentionfeesasasecond-bestwaytogeneraterevenue.Finally,carrierswishtoquantifytheamountoftimethattrailersaresittingidle andunused.

Oneofthemostimportantchallengestocarriersisachievingthemostprofitableutilizationprofilefortheirtrailers.Itisimpossible,however,toimproveutilizationandtodeterminethefleet’sreturnoninvestment(ROI)withoutaccurateinformationabouthowthetrailersarebeingusedbyeverycustomer.TrailerutilizationisanimportantfactorindeterminingwhetherinventoryisgeneratingasufficientROI.AninadequateROImeansthataparticulartrailerortrailerpoolisonlycoveringitsoperatingexpenses—notcontributingtoprofitability.So,intheabsenceofdetailedinformationprovidedbyuntetheredtrailertrackingsystems,carrierscannotaccuratelyassesstheirROI.

Excessive Trailer Pool Size

Current Practices

Carrierstypicallymakeavailabletocustomersapooloftrailerstofacilitateasmoothflowofshipmentsinandoutofayard.Onegoalistoreducethenumberofinstanceswhendriverswastetimewaitingforcargotobeloadedorunloaded(theliveloadscenario).Instead,drivers candropoffonetrailerandpickupanother—whetherfullorempty—asdescribedpreviously intheidealscenario.Thisallowscustomerstomakegooduseofthetrailersbyloadingsomeoftheminpreparationforpickupsandunloadingothersafterdeliveriesaremade.Asaresult,customers can use their loading crews as needed throughout the day without worrying about runningshortoftrailers.

Theavailabilityofapooloftrailers,however,doesnotalwaysresultinawin-winsituation.Ifthetrailerpoolistoosmall,itwillnotserveitspurpose,anddriverswillhavetowaitforemptytrailersuponarrivingatadestination.Also,ifthetrailerpool,whichrepresentsacapitalcosttothecarrier,istoolarge,thecarrierwillsufferfromalowerprofitmargin.Ineithercase,itisimportanttodeterminethe“right”sizeforacustomer’strailerpool.Todoso,thecarrierneedsaccurate,detailedinformationabouttrailerutilization.Withoutanuntetheredtrailermanagementsystem,thisinformationisdifficulttoobtain.

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Built-In Bias “Pads” the Size of Trailer Pools

Trailerpoolsmadeavailabletocustomersareusuallytoolargeandtheirsizecannotbejustified bytherevenuestheygenerateforthecarrier.Threefactorscontributetothispractice:

• Customersplayaroleinpaddingthesizeoftrailerpools.Whencustomersneed40trailerstoaccommodatetheirshippingvolume,theytypicallyaskformoretopreventashortage.Theymayrequest50trailersinsteadof40—sometimesinanticipationofshort-livedbusinesspeaksthatrequiremoretrailers.

• Carriersthemselvesareresponsibleforthenextincrementofpadding.Whentheyreceivearequestfor50trailers,theymayaddanother10trailersjusttobesurethattheneedsoftheircustomersaremet—providing60trailersinsteadof50.

• Thelackofaccurateinformationabouthowmanytrailersarelocatedatthetrailerlotsofeachcustomercontributesyetanotherlayertotheoversupply.Thenumberofforgottenidletrailersatanylocationaddsup,andevenifthisfigureisaslowas10percentofthetotal,itrepresentsanadditionalsixtrailers(inthisexample)—bringingthetotalnumberofavailabletrailersto66.

Asaresult,26ofthe66trailerscitedinthisexampleareunnecessary.Theseextratrailersareadrainoncarrierresourcesbecausetheyareacapitalcostthatfailstogenerateprofits—anexampleofpoorassetutilization.Equallyasbad,othercustomersmayneedthesetrailers.Withoutdetailed,accurate,timelyinformationaboutthelocationandstatusofeverytrailer,carrierscannotdetermineanoptimalsizeforeachcustomer’strailerpool.

Lack of Accurate, Timely Information

Obstacles to Manual Data Collection

Withoutanuntetheredtrackingsystem,manualdatacollectionistheonlywaytogather informationaboutthetrailersinayard—identificationnumbers,ownership,andstatus (fullorempty).Thetaskofgatheringthisinformationmanuallyisfraughtwithobstacles:

• expense.Physicalchecksofthetrailersinayardarelaborintensiveandexpensive,whichresultswithyardmanagershavinglittleincentivetoconductthemregularly.

• Lack of timeliness.Evenifyardmanagersarediligentaboutconductingphysicalyardchecks,thesituationintraileryardschangesminutebyminuteastrailersmoveinandout.

• inaccuracy.Manualdataentryissubjecttohumanerror.Iftheindividualswhoenterdataarecarelessorforgettomakeentriesabouttrailerdepartures,whotakesthem,ortheirstatus,theinformationinthedatabasebecomesobsolete.

Trailer utilization is

an important factor in

determining whether

inventory is generating a

sufficient ROI. An inadequate

roi means that a particular

trailer or trailer pool

is only covering its

operating expenses—

not contributing to

profitability.

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• Lack of interest. Independent trailer yard managers may have only a marginal interest in keeping accurate records throughout the day or when they conduct yardchecks.Additionally,managersofcustomer-ownedyardsmayactuallyhavean incentive nottokeepaccuraterecords.Afterall,itmaybeadvantageousforcustomerstoretainmoretrailersthannecessary.Finally,whendriversareaskedtoconductyardchecks,theymaynotbereimbursedsufficiently—leadingtofrustrationandunwillingnesstodoathoroughjob.Forexample,driversmaynotwishtoleavetheir cabs and may not see trailers parked behind other trailers which leads to under-reportingandotherwiseincorrectreports.

• strained customer relationships.Whencarriersaskcustomerstoconductyardchecks,itcanplaceastrainontheirrelationship.Fromthecarrier’sperspectiveitisawkwardtoaskforafavorfromsomeonewhoispayingyouforaservice.Fromthecustomer’sperspective,itisanunwanted—andunreimbursed—task,anditplacesthe customer in a position where an accurate report may not be in his or her own bestinterests.

data reliability

Manually recorded data is most accurate when it involves trailers that are currently attached totractors,whentrailersareintheshopforrepairsormaintenance,andwhentheyarebeingtransportedonrailcars.Otherwise,thedataissubjecttothelimitationsdescribedearlier.

Location of Trailer When data is Collected

data Accuracy

Accurate not Accurate

in a carrier lot x

in a customer lot x

in a rent-based storage yard x

hooked to a tractor (cab) x

In the shop for repairs or maintenance

x

on a rail car x

Summary of Manually Recorded Data Reliability

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Poor Driver Productivity and Safety

Aftermakingadeliverytoacustomer,thedrivermustfindanemptytrailertoreplacetheonethatwasdroppedoff.Ifthereisnountetheredtrackingsysteminplaceorifthemanualsystemisnotaccurate,thedrivermustengageinatime-consuminghunt—physicallycheckingeachtrailerinthelotuntilanemptyoneisfound.Ifanemptytrailercannotbefoundthere,thedrivermayrepeatthehuntinanotherlot—perhapsdiscoveringmuchlaterthatanemptytrailerhadbeenwaitingatathirdlocationallalong.Duringthishunt,thedriverdoesnotgenerateanyrevenueforthecarrierandburnsexpensivefuel.Ifthetrailerhuntconsumesaslittleastwohoursperweekduringa48-weekyear,thelosttimeaccumulatesatarateof$13.80perweekpertruck(assumingcarrierchargesof$1.50permileat45milesperhourandadriverpayscaleof$0.33to$0.50permile)—reaching$662inlostrevenueeachyear.Thisamountiscompoundedforeverydriverinafleetandmustbesubtractedfromthe carrier’sgrossprofitmargin,whichisusuallyabout10percent.

Inadditiontolostrevenue,thetimespenthuntingfortrailershasotherimplications.Forexample,whilethetimespenthuntingmaynotalwaysbesubjecttoFederalMotorCarrierSafetyAdministration(FMCSA)regulationsthatgovernhoursofservice,thedriverscouldhavebeenrestinginsteadofhunting.Theresultantfatiguemayhaveanegativeimpactondrivingperformancefortheremainderoftheworkshift.

low driver morale and high turnover

Becausetheyarepaidonlyforeachcargo-haulingmile,driversareacutelyawareofthe efficiencyofcarriers’businessoperations.Whensidetrackedbyhuntsfortrailers,theyknowthattheyarenotearningmoney.Asaresult,theymayfeelthattheyarepayingapersonalpriceforacarrier’slackofefficiency—underminingmorale.Justasimportant,itisnaturalfordriverstoresentchronicsituationsoverwhichtheyhavenocontrolbutforwhichtheypayaprice.Undersuchcircumstances,itisnotsurprisingthattheykeeptrackofwhichcarriersenablethemtoearnthemostmoneyintheleastamountoftime.Theyunderstandwhichcarriersmakethebestemployers,expressedinstatementssuchas,“CarrierAwillkeepmemoving.”Consequently,carriersthatdonotuseuntetheredtrackingsystemsmayfacehigherdriverturnoverrates.

Increased Theft

Shippersofeverytypeareconcernedaboutcargotheft,andtruckfleetsbear85percentofthisburdenamongallshippingmodes.7Whilemosttheftisunreported,theInternationalCargo Security Council estimates that more than $10 billion in merchandise is stolen each year.Whenunreportedtheftandindirectcostsincludingdamagedormissingassets,lostproductivity,andhigherinsurance8premiumsarefactoredin,estimatesrangebetween$20billionand$60billionlostannually.Inadditiontothesecosts,cargotheftrepresentsasignificantcustomerservicefailure,anditaffectscustomersthatshiphigh-valuecargotoagreaterdegree.Intheabsenceofuntetheredtrackingsystems,apromptresponsetotheftisunlikely.

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Poor Back-Office, Field Staff, and Fuel Efficiency

Withoutuntetheredtrailermanagementsystems,carriersmustresorttoinefficientmanualsystemsthatareneithertimelynoraccurate.Therefore,back-officemanagementsystemscannotefficientlyintegratetheinformationwithmaintenanceanddispatchsoftware.In thefield,forexample,valuableresourcesarewastedonlabor-intensiveyardcountsandondrivers’huntsforemptytrailers.Everyminuteofengineoperationthatdoesnotcontributetothehaulingofcargo—whetheritisspenthuntingforemptytrailersoridlingwhilecargoisloaded—representsawasteofexpensivefuel.Alloftheseresourcemisallocationserodebottom-lineprofitability,andcanbereducedbyimplementinguntetheredsystems.

Trailer Tracking as a Solution to Industry ChallengesImproved Trailer Utilization

Byobtainingaccurateinformationabouttrailerutilization,carrierscanbillcustomersaccurately,andtheycandevisestrategiestomaximizeprofitswhilemaintainingcustomerservice.Strategiesmayinclude(1)reducingorexpandingthesizeofthetrailerpoolmadeavailabletoanysinglecustomerand(2)buildingincentivesintothenegotiatedfeestructure(tariff)sothatprofitableutilizationismaximizedandlessprofitableutilizationisminimized.

Untetheredtrailermanagementsystemsofferanumberofadvantages.First,thesesystemsrecordtrailerlocationswhenevertheyaredroppedorhooked,andtheyreporttheselocationsonaregularbasis.Asaresult,carrierscanmaintainaccuratetrailerinventorieswithoutconductingphysicalyardcounts.Sincethesesystemsalsosendstatus-changemessageswhentrailersareloadedandunloaded,carriersalwaysknowthestatusofeachtrailerandcanpasstheinformationtonearbydrivers.Carrierscanmonitortrailerdwelltimesonaper-customerbasistodetermineiftrailersarebeingusedtotheirfullestpotential.

Insummary,carriersenjoythefollowingbenefitsfromuntetheredtrailertracking:

• Accurate,up-to-datetrailerinventories

• Reduced labor costs when collecting trailer pool data

• Substantiatedcustomerloadingandunloadingtimesfortrailerdetentionbilling

• Historicaldetentioninformationforuseincontractnegotiations

• Abilitytorenegotiatetrailerpoolcommitmentsbasedonactualusagebycustomers

• Identificationofdemandtrendsversussupplyovertimeandbylocation

• Abilitytoredeploytrailersfromlow-utilizationcustomerstocustomersthatneedmoretrailers—withoutpurchasingadditionaltrailers

• Abilitytoreducetrailerinventoriesreducecapitalexpenditures

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Optimal Trailer Pool Size

Optimizingthesizeofatrailerpoolhasadirectimpactonreducingcapitalcosts.Todeterminetheoptimaltrailerpoolsizeforeachcustomer,carriersneedup-to-date,detailedinformationthatonlyuntetheredtrackingsystemscanprovide.Asnotedpreviously,thebuilt-inbiasthatpadsthesizeoftrailerpoolscausescarrierstowonderifcustomersareabusingthemand,correspondingly,ifsomecustomersarebeingunderservedbytrailerpoolsthataretoosmall.Itisimportanttoremember,however,thattheobjectiveisnottobilldetentionfeesortoprovideon-sitestorageforcustomers.Carriersareinthecargo-haulingbusiness,andtheymustmaximizeprofitsbyhaulingcargo.

Best-in-classuntetheredtrailermanagementdatatypicallyincludesthelocationofeachtrailer, dropandhooktimes,connectionanddisconnectionevents,dwelltimes,andtrailerstatus(loadedorunloaded).Thisdataalsoenablescarrierstoengageintrailer-pooloptimizationtaskssothattheycanavoidthetwinproblemsofprovidingtoofewtrailerstocustomersthatneedthemand,conversely,toomanytocustomersthatdon’t.Thesetasksinclude:

• Determiningiftrailerpoolcommitmentsarebeingobservedbycustomers

• Obtaininghistoricaldetentioninformationforuseincontractnegotiations

• Identifyingdemandtrendsversussupplyovertimebylocation

• Renegotiatingtrailer-poolcommitmentsbasedonactualcustomerusage— offeringpricebreakstocustomersthathavetoomanytrailers

• Improvingcustomerservicebyredeployingtrailersfromlow-utilizationcustomers tocustomersthatneedmoretrailers—withoutpurchasingadditionaltrailers

Accurate, Timely Information

Untethered trailer management systems resolve the obstacles presented by manual data-collectiontechniques—theexpense,inefficiency,lackoftimeliness,inaccuracy,andunavailabilityasaresultofthelackofinterestincollectingit.Anuntetheredtrailermanagementsystemcanprovideavarietyofconveniences,dependinguponthesystemused:time-anddate-stampedpositionreporting,connectanddisconnectnotification,dropandhookevents,anddwelltimes;over-the-airupgrades;configurablereportingtoassistindataanalysis;integrationwithexistingdispatchsoftware;modulardesigntosupportmultipleinstallationconfigurations;Web-basedaccesstoinformation;multi-modecellularcoveragefortransmissionreliability;satellitemapping;virtualboundaryalertstominimizethecostoftheft;sensorsthatdetectunauthorizeddooropeningsandclosings;reefermonitoringandnotificationcapabilities;tripreporting;systempowermessages;groupsupportandreporting;andachoiceofbatteryorsolarchargingsystems.9Asaresultoftheseconveniences,carrierbenefitsincludetheabilityto:

• Monitordetailsaboutthestatusandlocationoftrailersandcontainersinnear-realtime

• Increasedriver,tractor,fieldstaff,dispatch,andback-officeproductivity

• Optimize asset utilization and trailer pool inventories

• Enhance detention billing

untethered trailer

management systems

resolve the obstacles

presented by manual data-

collection techniques—the

expense, inefficiency, lack

of timeliness, inaccuracy,

and unavailability as a result

of the lack of interest in

collecting it.

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• Increase trailer and cargo security

• Createvaluablereportsforoperationsandplanning

• Improvecustomerservicewithaccurate,timelyinformation

• Maintain visibility in harsh environments

Improved Driver Productivity and Safety

Untetheredtrailermanagementsystemsresolvedriverproductivityandsafetyproblemsrelatedtothehuntforemptytrailers.Armedwithdetailedinformationaboutthetrailerinventory,dispatcherscanprovidedriverswiththespecificlocationofemptytrailers.Thisimprovesdriverproductivitybecauseit:

• Eliminatesdriverhuntsforemptytrailers—eitherwithinayardorbetween differentyards

• Eliminates instances in which drivers are sent to a yard to pick up a trailer only to discover that no trailer is available

• Improvessafetybyprovidingopportunitiesfordriverstorestifnecessaryinstead ofhuntingfortrailers

improved driver morale and retention

Withuntetheredtrailermanagementsystems,driversnolongerwastevaluableincome-generatingtimeonhuntsfortrailers.Thiscanhelpeliminateresentmenttowardtheiremployersandimprovemorale.Justasimportant,carriersthatuseuntetheredtrailertrackingsystemsgainreputationsamongdriversascarriersthatkeepdriversmoving.Inadditiontoreducingdriverturnoverratesforthesecarriers,untetheredtrackingsystemscanactasrecruitmentdevicestoattractnewdrivers.

Insummary,untetheredmanagementsystemshelpcarriersaccomplishthefollowinggoals:

• Improve driver morale

• Reduce driver turnover

• Increasetheearningpotentialofdriversbyreducingtheiridletime

• Helprecruitnewdriversbyattractingthemasaresultofimprovedcarrierreputations

Reduced Losses from Theft

Untethered trailer management systems play a role in promptly recovering stolen cargo and trailersaswellasinpreventingcargotheft.Becauseuntetheredsystemscanalertcarriers whentrailerdoorsareopenedoriftrailersmovebeyondpre-setboundaries,carrierscan respondquicklytotheft.Carrierscanbeginbyqueryingdriversandyardpersonneltodetermine ifasituationmeritstheinvolvementoflawenforcementauthorities.Quickactioncanpreventtheremovalofcargofromtrailersthatarestillintheyard.

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Whentrailersarestolen,untetheredsystemskeepcarriersandpoliceinformedabouttheirlocations,andtrailerscanbeidentifiedmorequicklyontheroad.Asaresult,trailerscanberecoveredwiththecargointactinmanycases,andinsomeinstancesthievescanbeapprehended.Furthermore,whencarriersbuildareputationforcombatingtheft,itactsasadeterenttoexperiencedthieves,whowillmoveontomorevulnerabletargets.Untetheredtrackingsystemsalsominimizetheancillarycostsoftheftbyreducinginsuranceclaims,lossofthetrailerandcargo,timespentbyemployeesonassetrecovery,andcustomerservicefailures.

Carrierscandifferentiatethemselvesfromcompetitorsbyinstallingtrailertrackingontheportionofthefleetthathaulshigh-valueorhigh-riskcargo.Thiscanattractadditionalbusinessfromcustomerswhohavesufferedahighdegreeofcargolosswhenusingcarriersnotequippedwithtrailertracking.Somecustomersarenowrequiringthatfleetsbeequippedwithtrailertrackingintheirrequestsforproposal(RFPs).

Insummary,untetheredtrackingsystemscanreducetheft-relatedexpensesanddifferentiatecarrierservicesinthefollowingways:

• Alertcarrierspromptlyaboutunauthorizeddooropenings,unexpectedtrailer movements,andtheunloadingoftrailersatunplannedlocations

• Alertcarriersiftrailersfailtoreporttheirlocationsaccordingtoschedule(thetracking systemmayhavebeendisabled,andthecarrierwillnototherwiserealizethatthetrailer is missing)

• Enablecarrierstoproactivelymanagemissingtrailersinsteadofwaitingforreportsofmisseddeliveriesasabasisfordeterminingthattrailershavebeenstolen

• Enablefasterrecoveryofstolentrailersandcargobysupplyingtrailerlocationdata

• Minimizetheancillarycostsoftheftincludinginsurance,cargoandtrailerloss, employeetime,andcustomerservicefailures

• Actasadeterrenttopreventcargotheft

• Minimizetheftofhigh-valuecargowhenappliedtoaportionofthetrailerfleet

• Differentiatecarriersinwaysthatattractnewbusinessfromcustomersthatare sensitivetotheftorretainthebusinessofcustomersthatrequiretrailertrackingintheirRFPs

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Improved Back-Office and Field Staff Efficiency

Thevarietyofinformationmadeavailablebyuntetheredtrailertrackingsystemshasadirectimpactontheefficiencyofback-officeandfieldpersonnel.Inthefield,untetheredsystemseliminatetheneedforyardcountsandothererror-prone,labor-intensivemethodsoftrackinginventories.Thereislessscramblingtofindmissingtrailersandfewerchancestodisappointcustomers.Intheoffice,armedwiththenewinformation,taskssuchasinventorymanagement,dispatch,responsestounexpectedshipmentopportunities,utilizationanalysis,andplanningbasedontrenddataareeasiertoconductandmorereliable.Asaresult,carrierscandomorewithfewerresources,andcustomersenjoybetterservice.

Tosummarize,carriersbenefitinthefollowingways:

• Eliminateunnecessary,error-prone,labor-intensivetasks

• Eliminatescramblingandbacktrackingtolocate“missing”trailers

• Improvetheefficiencyandaccuracyofinventorymanagementanddispatchoperations

• Enable quick responses to unexpected shipment opportunities that can win new customers

• Conductutilizationanalyses,trendspotting,andlong-termmanagementmoreeasily

• Improve customer service

the impact on trailer rentals to Carriers

Asthenumberoftrailersequippedwithuntetheredtrailermanagementsystemsincreases, industryexpectationswillrise.Notsurprisingly,thecriteriabywhichcarriersselectvendorsofrentedtrailerswillreflectthistrend.Asaconsequence,vendorsthatequiptheirtrailerswithuntetheredtrackingsystemswillenjoyacompetitiveedgewhenseekingcustomers.Inparticular,carriersthatalreadyhaveupgradedtheiroperationalsystemstoincorporatethenewtrackingtechnologieswillbeunlikelytorenttrailersfromvendorsthatdonotsupportuntetheredtracking.Theyareunlikelytotakeastepbackwardafterinstitutionalizingthesetechnologicalchanges.Finally,thewidespreadpracticeofcarrierskeepingrentedtrailerslongerthanoriginallyplannedwillceasetobethenorm.Instead,carrierswillbeabletolocateandreturnrentedtrailersmorequicklytotheirvendors.

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How to Evaluate Trailer Management ProvidersThetelematicsindustryhasexperiencedconsolidationinrecentyears,andsomeprovidershaveabandonedtheindustry.Asaresult,somecustomershavebeenleftwithantiquatedequipmentandinteroperabilitychallenges.10 Toaddresstheseconcerns,carriersthatareconsideringaninvestmentinuntetheredsystemsshouldevaluatepotentialprovidersbydrawingupalistofassessmentcriteria.Theseshouldincludethefollowingelements:

• Adequate resources to respond.Anuntetheredtrackingsystemprovidershouldhaveadequatecustomerserviceresourcestorespondquicklyandeffectivelyto questionsandproblemsituationsfromcustomersinawidegeographicalareaat anytimeofday.

• financial stability.Business stability is an important element in purchase decisions and untethered tracking providers should be able to demonstrate a longstanding commitmenttoservingtheircustomers.Providersshouldhaveadequatefinancialresourcestoweathergeneralmarketplacefluctuationsandperiodsofindustry retrenchment.

• Availability of professional services.Customers that use untethered tracking systems mayrequirevarioustypesoftechnicalandprofessionalassistance.Theseservicesmayincludeassessmentcapabilities,theabilitytointegratethenewsystemswithotherproductsandsystemsthatarealreadyinusebycustomers,trainingservices,andcustomdevelopmentandprogrammingservicestoaddspecificfeaturesorotherwisetailorsystemperformance.

• Proven track record.Pastperformanceoftenprovidesevidenceofanorganization’scommitmenttoitscustomers.Untetheredtrackingsystemprovidersshouldbeabletodemonstratearecordoflongstandingcustomerservice,productsupport,updateassistance,technologicalexpertiseandleadership,andahistoryofproductimprovement.

• industry knowledge.Untethered tracking system providers should be able to demonstrateathoroughunderstandingofthetransportationindustry,itschiefchallenges,andtheneedsofitsparticipants.

• technical expertise.Sincetechnologyliesattheheartofuntetheredtrackingsystems,aprovidershouldbeabletodemonstrateknowledgeandawarenessofarangeofwirelessinformationtechnologies,systemhardware,informationtechnology(IT)issues,andsoftwareintegrationanddevelopmentpractices.

• system robustness.Foreachsystembeingevaluated,customersshouldbeableto verifythelikelihoodoflong-termreliabilityandperformanceintheoperatingenviron- ment.Thisshouldincludeboththetrailermanagementsystemdiscussedhereand

Business stability is an

important element in

purchase decisions and

untethered tracking

providers should be

able to demonstrate a

longstanding commitment

to serving their customers.

19


thecommunicationsnetworkdiscussedbelow.Akeyaspectofsystemrobustnessistheabilityoftheapplicationtoutilize,operatein,andbuildupontheadvantagesofmultiplecommunicationtechnologiesandfrequenciestosendandreceivedata—inotherwords,demonstratemodediversity.Forexample,itshouldbeabletoapplyavarietyofsatellite,cellular,andWi-Fi(IEEE802.11)communicationtechnologies.

• network service availability and assurance. The wireless network that is paired with theuntetheredtrailermanagementapplicationmustalsobeagoodmatch.Sincethewirelessnetworkprovidermustbeabletoservethefunctionssuppliedbythetrackingsystem,carriersshouldconsiderthe“5Cs”ofcapacity,coverage,continuity, costeffectiveness,andconsistencywhenevaluatingnetworkservice.Doesthenetworkhavethebandwidthtohandlethenumberofusers,thetrafficvolume,andservices usedbytheapplication(capacity)?Canitprovideallofitscommunication,reporting, andalertfunctionsthroughouttheentiregeographicalareawhereitwillbeputintoservice(coverage)?Doesthenetworkhavealongstandingrecordofperformanceindatatransmissionandahistoryofnetworkavailability(continuity)?Doesthenetworkofferlowesttotalcost—includinghardwareandmessaging—fromamongthemanysolutionsavailable(costeffectiveness)?Withintheframeworkoflong-termcontinuityofservicedescribedearlier,doesthenetworkprovideconsistentserviceregardlessoflocation,applicationtype,ormodeofoperationsothattheuntetheredapplicationcandelivertheexpectedbenefits(consistency)?Notallapplications—inthiscase,anuntetheredtrackingapplication—placethesameburdensonthewirelessnetwork.Consequently,thesamewirelessprovidermaynotbethebestchoiceinallcases.

• Partnership approach.Thetransportationindustrypresentscomplexchallenges.Theseinvolvethenatureofthebusinessitself,commonpractices,employeeissues,andcompetitivepressures.Untetheredmanagementsystemprovidersshoulddemonstrate a willingness to understand customer concerns and objectives and act as a trusted partner and advisor to develop solutions that incorporate the most suitableprocessesandtechnologiesforthechallengesfaced.Theyshouldalsobeabletodemonstrateaknowledgeofbestpracticesandhavetheresourcestotraina customer’sstafftoobtainoptimalresultsfromthesystem.

20


ConclusionByadoptingwirelessuntetheredtrailermanagementsystems,carriers,privatefleetsandtrailerrentalvendorscanaddressthekeychallengesthaterodeprofitabilityandcompetitivestanding.Thekeybenefitsprovidedbyuntetheredtrackingsystemsarebasedonthesuperiorityoftheinformationsuppliedbythesesystemsanditseasyintegrationwithtrailermanagementpracticesandstrategies.Thechiefbenefitsofemployinguntetheredtrackingsystemsincludemoreefficienttrailerutilization,optimaltrailerpoolsizingforeachcustomer,reductionincapitalcosts,improvedbillingaccuracy,theprovisionofaccurateandtimelyinformationforeffectivemanagementoftrailerinventories,improveddriverproductivityandsafety,improveddrivermoraleandretentionrates,areductioninlossesfromcargoandtrailertheft,improvedback-officeandfieldstaffefficiency,andimprovedcustomerservice.

21


References1ABIResearch,TrailerTrackingMarkets.A Global Analysis of Trailer Tracking and Monitoring

Systems, Vendors, and Technologies(OysterBay,NY:ABIResearch,2005)p.3–2.

2ABIResearch,TrailerTrackingMarkets.A Global Analysis of Trailer Tracking and Monitoring Systems, Vendors, and Technologies(OysterBay,NY:ABIResearch,2005)p.3–3.

3ABIResearch,TrailerTrackingMarkets.A Global Analysis of Trailer Tracking and Monitoring Systems, Vendors, and Technologies(OysterBay,NY:ABIResearch,2005)pp.1–2,3–4.

4C.J.Driscoll&Associates,U.S. Mobile Resource Management Systems Market Study, 2005-06 Edition. A Comprehensive Study of the U.S. Fleet AVL Market and Other MRM Products and Services(PalosVerdesEstates,CA:C.J.Driscoll&Associates,2005)p.12.

5AnOmnitracsestimate.

6Omnitracs,internalderivedestimatebasedonindustrysources,(SanDiego,CA:OmnitracsEnterpriseServices,January11,2007).

7NationalCargoSecurityCouncil(NCSC).Shining A Light On Cargo TheftbyDavidCullen,ExecutiveEditor,FleetOwner,August,2006.





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