The electrification of supply chain delivery is upon us. The latest news illustrates an abundance of electric truck ventures that aim to electrify supply chain delivery networks in both long, middle and short-haul markets. The desired outcome is a lower cost of operation and reduced carbon emissions. As we look at the latest Tesla headline hitting record sales in the 3rd quarter and the acceptance of electric POV (personal operating vehicle) we see consumer acceptance in full view. Couple the advances being made in battery technology, electric truck manufacturers are targeting all legs of the delivery supply chain.
The latest headlines illustrate a large swath of electric truck and battery manufacturers all vying for a piece of the commercial truck market. At the core of the electric push are corporate governance and state and federal regulations aimed at cutting greenhouse emissions. In addition, a global push to reduce localized emissions has created a competitive landscape to push technologies forward to capture global market shares.
The competitive landscape is filled with both new and old players competing with technology partnerships, joint ventures, or as a startup. The result is a dramatic increase in
models available for carriers to meet the demands in the market. A couple of available models to fit a carrier’s market with government subsidies and battery pack prices falling from $1,000 per kWh in 0210 to $156kWH in 2019, the electric commercial truck market has nowhere to go but up.
Are there any signs that the increase in truckload rates is slowing down? After four continuous months of double-digit increases, the answer is yes. Though the September index reflected an average of $2.62 cost per mile, many of the leading indicators that pushed spot prices higher are starting to fall as we move into Q4.
The 2020 trend line isn’t something we have seen in the last five years, especially with fuel costs staying flat. The trend line starting in May had nowhere to go but up as economic restrictions began to lift and inventories were being replenished. The increase from May to September resulted in a 35% increase in cost. Breaking it down further, the spot market drove the majority of the increase as ports and hubs became congested and rates increased dramatically as shippers purchased capacity through spot boards and the market.
Rockfarm’s lane indexes consider a number of segments within the truckload market that include truck traffic departing ports and major border crossings, industrial lanes in the Midwest, rail hubs and long-haul traffic. As illustrated below each of the indexes tell a similar story, with the exception being found in the national lane index where the rate per mile rose at a much smaller slope. The national lane index reports on lanes such as Atlanta to Los Angeles; Los Angeles to Seattle and Chicago to Dallas. As we look ahead all indexes are showing a decrease in cost per mile as normalization begins to take hold with inventory replenishments and congestion easing at ports and hubs.
Digitization of the bill of lading has been gaining a great deal more traction as the restrictions of COVID-19 has become the norm for shippers and receivers. The domestic electronic bill of lading is the digital equivalent of a paper bill of lading with the same contract of carriage as well as acceptance of receipt. The challenge is the lack of widespread acceptance among the various parties to which the bill of lading is governed: shipper, receiver and carrier.
Unlike parcel, whereby the parcel provider provides the electronic platform for acceptance of an electronic shipment confirmation and electronic receipt, a carrier may not have the means to accept, store and present a digital bill of lading while in transit and at the point of delivery. As a result, the fallback to paper bills of lading becomes the standard process.
What needs to change? A broader acceptance by shippers and receivers to use electronic bills of ladings alongside the mechanisms that streamline the use of the electronic bill of lading amongst truckload carriers. Transport modes such as parcel and LTL are much more widely accepted by shippers. This is due to the wide use of carriers utilizing handhelds to allow for the transfer of receipt for live deliveries similar to what has been the norm in parcels for some time. The challenge lies with truckload carriers. Truckload carriers used for capacity fulfillment will not be familiar with an electronic bill of lading process that may be in place by the shipper. It becomes important to make the pickup and transfer of ownership within the bill of lading process seamless for the truckload carrier base. To do so requires ease of use for the drivers making the pickup.
The electronic bill of lading process may include an email or a text link to view the bill of lading and accept an electronic signature for both pickup and delivery. A copy of the electronic bill of lading should be made available to the driver while in transit and upon receipt by the receiving party. Once the driver obtains an electronic signature at the time of delivery an electronic copy of the proof of delivery is created for the shipper. The challenge to the above is broader acceptance by and between all parties.
For more information regarding supply chain planning please reach out to info@rockfarm.com for additional information.
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Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”
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