January 3rd 2020
If you’re like most Canadian trucking companies and you haven’t already done so, you are considering which electronic logging device (ELD) product to purchase ahead of the June 2021 ELD mandate. Of course, if you offer service to the US, you’ve already had to make the transition based on the US regulation coming into effect in December 2019.
Although not necessarily a given, many ELD systems are combined with telematics systems that can provide trucking companies with a lot of data to better manage their business. I often hear concerns raised as I talk to trucking companies about moving to ELD and telematics systems based on the cost of these systems, and their ability to afford implementing them given the low margins that exist in trucking. In my mind, the payback in moving to these systems as soon as possible when the data is actively used, is a no-brainer. For more information on things to consider when choosing an ELD supplier, check out my blog on the topic here an-unbiased-guide-to-eld-implementation-for-trucking-companies
In this blog, I offer up one recent example of how a telematics system can pay you back in as little as 7 days.
The log hauling industry is paid based on cycle times established for each haul, multiplied by the hourly rate, multiplied by the net weight of the load. It is a specialized sector operating in tough conditions, but it has many similarities to other hauling sectors…particularly when it comes to a portion of the rate being dependent on the amount of time it takes to unload at the customer’s site. For easy math, let’s assume that an 8-axle log truck in Western Canada earns $150/hr.
We were recently asked to start a haul into a mill that was very short on log inventory and in jeopardy of shutting down as a result. They were bringing in additional contractors from far and wide to try to shore up this inventory, and they weren’t really set up to handle a large influx of logging trucks unloading in the mill yard. Typically, rates allow for 30 minutes of unloading time within the calculated cycle time. Unfortunately, we were experiencing much longer unloading times, sometimes as long as two hours. Of course, the mill didn’t feel that it could possibly be taking that long.
Fortunately, all our trucks are equipped with ELD and onboard telematics systems which gather all sorts of data about our truck activity for the day. As a rule, we geo-fence all customer locations in order to accurately track the amount of time the customer takes to move our trucks through their yard. All sophisticated telematics systems should allow for geo-fencing of locations and routes. Geo-fencing allows trucking companies to draw a box around a given location. Anytime one of your trucks enters that geo-zone the time is separately tracked and can be reported out based on your needs.
Geo-Fenced Mill Yard:
As the mill challenged us about how long it was taking to unload at their site, it was extremely easy for us to produce a report summarizing the times our trucks were kept at the mill yard each trip. When we geo-fence a location, we also have the advantage of being able to include “staging” areas where trucks have to wait before actually entering the site (this information is most often not captured by customers who track their unloading time, but is very much a part of the time a customer ties up your drivers and equipment). In the case of sawmills, trucks are required to weigh-in on scales as they enter the site, and then weigh out as they leave with both the weigh-in and weigh-out times tracked by the customer, giving them their “apparent” unloading time. Mills basing their yard times on this data alone are leaving out the staging time trucks are waiting in lineups before even reaching the scale to weigh-in. As a result, our geo-fence report, which includes the staging area, is a much more accurate reflection of true unloading time.
Below is a sample of the report we were able to provide to the mill to renegotiate the unloading time allowed for in the cycle time:
In the end, we were able to provide the mill a detailed report of all 72 loads hauled from Dec 1-15 instantly. Our data showed an average yard time of 1 hour 22 minutes. Compared to their allowance of 30 minutes in the rate, it was easy to demonstrate the significance of the issue. The mill agreed to increase our unloading time allowance to 1 hour 20 minutes, a 50 minute (0.8333 hrs) increase per load, or $125/trip rate increase ($150/hr x 0.8333 hrs). At two trips per day per truck, this meant a daily rate increase of $250 per truck. We had four trucks on this haul, so this equated to $1,000/day to our company.
ELD/telematics systems can range widely in cost. In our case, we have an investment of $1,200/truck, plus a monthly cost of approximately $50. At $250/day in rate increase for each truck, our entire purchase price of the system was repaid in 4.8 days for each truck ($1,200 divided by $250/day = 4.8 days). Our total annual monthly subscription costs ($50 x 12 months = $600/year) were recaptured from this one haul in an additional 2.4 days ($600 divided by $250/day = 2.4 days). So, the payback in our entire upfront and annual costs for each truck on this haul was achieved in 7 days (4.8 days + 2.4 days = 7.2 days). Incredible by any measure.
Even better, this meant we could ensure our professional log truck drivers were paid well for all of their time on this haul. In a trucking environment of high driver turnover and increasing difficulty in attracting new drivers to the industry, this system helps us to make sure our drivers are recognized for the time they put in and remain the best paid in the industry. While we would all prefer the mill simply solves the unloading delays to meet their 30 minutes allowance target, that remains out of our control. All we can try to ensure is that our team is paid for their time.
This is just one example of how we have been able to share data out of our telematics system with our customer to support rate changes. There have been many others. In fact, prior to the implementation of a telematics system, it was common in our sector to have regular disagreements between log hauling companies and mills regarding cycle times, especially when trucking companies often lacked data to support their position. We no longer have those disagreements because we are open in sharing our telematics data – whether to our benefit or the mills. Our customers trust us and are very prepared to make sure cycle times are fair and achievable.
Struggling to decide whether to implement an ELD/telematics system or which one to choose? Read our other blogs on the subject or connect with me at firstname.lastname@example.org or 250.828.2821.
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