The search for truck capacity should start not on the highway but at sea, says Nina Luu, a former shipper turned digital entrepreneur. US importers or beneficial cargo owners struggling to find trucks to move goods inland from seaports need to begin the search for landside capacity well before container ships arrive at ports and boxes hit the docks, she said.
Truck capacity is tight everywhere in 2018, but especially at seaports. The amount of trucks available to dray containers and haul freight inland is being squeezed by a shortage of drivers and the impact of the US electronic logging device mandate on one hand, and the “bunching” of containers at marine terminals as larger and larger container ships call at US ports. Owner-operator drivers are becoming more careful in choosing the motor carriers they will drive for. Fred Johring, president of Golden State Express, told JOC.com that when he recruits new drivers, they ask two questions: 'How much do you pay?' and 'Will you keep me busy?' (Meaning providing the drivers with harbor work that will guarantee them multiple trips each day. Drivers generally are paid on a per-trip basis).
That’s pushing shippers to search for new sources of capacity and solutions to the trucking problem, including, in some cases, dedicated drayage, which requires a long-term commitment from the importer but also locks in guaranteed truck capacity. Luu thinks shippers need to look further up the supply chain, however, if they want to untangle landside supply issues.
Shippabo: planning for truck capacity on the ocean
“Trucking is a huge problem,” said Luu, a former apparel importer in Los Angeles who co-founded digital shipping platform Shippabo to solve problems she encountered moving freight off ships, through US Customs, and onto trucks bound for customers. “Planning for truck capacity has to start on the ocean,” she said, with better visibility into inbound freight.
As a small shipper, she found that visibility hard to come by. Most of the existing systems designed to give shippers a clearer view of inbound freight were created for larger businesses than her company, she said. In 2015, she launched Shippabo as a cloud-based alternative, connecting the maritime and landside transportation from ocean line to drayage carrier.
“As an importer, everyone talks about the manual processes” in logistics “and how many inefficiencies there are,” she said. “That’s true, but what really mattered at the end of the day was understanding where the product was, and getting insight into how I could optimize to deliver better service and scale and compete in e-commerce. That led me to look for solutions.”
Coming from the shipping world itself makes Luu and Shippabo somewhat unique in shipping and the transportation technology market, which is rife with startups with strong technological backgrounds but less real-world transportation know-how. A venture capital stampede toward transportation has helped many of those start-up companies grow extremely quickly.
Shippabo has raised $1.8 million in two rounds of funding, a drop in the bucket compared with the funding received by some big digital startups, but enough to launch her plan to integrate shipping processes. “We provide interfaces for people to really interact,” she said. “You can think of our system as a collaboration tool as aside from a shipping system.”
Collaboration implies connections, and in a year of tight truck and intermodal capacity, connections matter. “Lots of companies keep their data in silos,” Luu said. “The freight forwarder has some data, the customs broker has some data, but nothing is tied together to give the importer meaningful information. A ton of time is spent on auditing, and it becomes reactive.”
Many of Luu and Shippabo’s clients don’t have direct connections to the drayage companies needed to move freight off the docks to points inland, whether nearby for deconsolidation or for door deliveries. That’s where Shippabo’s connections to ocean shipping lines, information on inbound cargo at sea, and shipping line door contracts and rates come into play, Luu said.
Company netted lower prices for many shippers
Those shippers, especially smaller companies, also don’t have access to “door contracts” that include door rates covering the cost of the ocean voyage and the dray to the customer’s warehouse. The drayage portion of the move is usually subsidized by the shipping line.
Importers without “door” coverage are seeing drayage rates leap by double digits this year.
Shippabo, however, does have access to those door rates, and has been able to get reduced pricing for many shippers using its service. “We’ve been able to help many clients get into direct carrier contracts and negotiate lower prices, and at least lock in drayage rates for the year,” Luu said. “I think by next year things will normalize, but this year is going to be tricky.”
Transportation cost savings can be in the 10 to 20 percent range, Luu said. “Our best case saved almost half a million dollars” on drayage, she said. But savings also come through gains in efficiency. “We help them upload and manage their ocean carrier or forwarder contracts. They can book directly on our system and receive confirmation notices [from the shipping line].”
That’s only one step, and a short-term one, in finding a solution to the trucking problem. A longer-term strategy would be to integrate the flow of information among supply chain partners, from the importer and shipping line or forwarder to customs authorities and trucking operators. That way drayage companies would know what boxes to expect at marine terminals.
That saves the carrier planning time, which in turn frees up capacity. “We have seen a lot of companies use our system to manage deliveries,” Luu said. “Every business has a finite amount of containers that come in every week. They can allocate [shipments to truckers] by arrival notice. Warehouses use us to pre-plan space, so they’re not paying a ton of storage time.”
Saving time is crucial when finding capacity is a scramble. A clearer view of incoming goods and their estimated time of arrival in a container yard can turn TEU into virtual trucks at sea.
Contact William B. Cassidy at email@example.com and follow him on Twitter: @willbcassidy.