If weekly driver miles had remained the same since 2016, the average over-the-road truck driver in the U.S. would be making $1,247.44 per week today. Instead, miles per truck have declined for a number of reasons – electronic logging devices and detention to name just two – and despite the average pay per mile rising from 52 cents per mile in 2016 to 59 cents per mile in 2018, according to the American Transportation Research Institute, drivers are making less.
Since January 2016, miles per truck per week, according to TCA Benchmarking Indices included in FreightWaves SONAR platform (SONAR: MILTR.VCF), have fallen from 2,114.3 miles on March 29, 2016, to 1,825.2 miles as of Dec. 31. With the pay per mile increase, the average over-the-road truck driver now takes home just $1,076.87, compared to $1,099.43 at the lower per-mile rate in 2016.
Unless restrictions on driving
hours are eased or significant changes to driver detention are implemented,
it’s tough to envision long-term change. But Andrew Berberick and Nate Robert
think there is a way to increase miles, and therefore pay, while improving
efficiency for fleets and lowering overall costs for shippers.
Their idea may not be novel – they
admit some larger fleets already deploy their solution – but the way they are
approaching it and the opportunity they are offering to fleets is, and that is
where the efficiencies can be gained.
“When a long-haul truck drives into
a metro area, once they get into the city and are sitting in city traffic …
that final mile of delivery is the most painful [and expensive] for drivers,”
Robert explained to FreightWaves. “The pain point is felt not only by carriers
and drivers but also by shippers as well.”
Berberick and Robert co-founded Baton Trucking. Baton just closed a $3.3 million seed round of funding and expects to launch its drop-zone solution in Ontario, California, and Dallas in March. The funding round was led by investment firm 8VC and includes commercial real estate giant Prologis and SVAngel as investors. (Both 8VC and Prologis are investors in FreightWaves as well).
In explaining the need for such a solution, Berberick cited a Massachusetts Institute of Technology study that found trucks drivers only spend about 6.5 hours per day driving. Data inside FreightWaves SONAR shows that the average over-the-road truck driver in the U.S. drives 7.59 hours per day (SONAR: OHOS11.USA), while the average of all drivers is 6.41 hours per day (SONAR: HOS11.USA). Conversely, local drivers drive an average of 4.71 hours per day (SONAR: LHOS11.USA).
Add in detention time, which SONAR data shows at an average of 156 minutes as of Dec. 31 and is even worse in Ontario at 166 minutes (SONAR: WAIT.USA and WAIT.ONT), and it is no wonder that over-the-road drivers hate those final miles. The FreightWaves Freight Intel Group said that detention costs the industry over $1 billion a year in foregone profits and over $17,000 per truck per year. The findings will be published in an upcoming white paper taking an extensive look at detention’s true costs to the industry.
Baton is trying to change this by
opening up drop yards just outside urban areas, allowing drivers to drop a
trailer and quickly return to the road. Baton will handle delivery of that
trailer to its final destination. According to Baton, underutilized assets cost
fleets as much as $500 per day – a $350 million lost opportunity for a
10,000-truck fleet.
“What we’re building is economical
today and in the future in five or 10 years when autonomous trucks come out,
this will be the model,” Robert said, noting that “we think it is a
driver-efficiency problem and we’re helping that by taking out the hours that
are the worst part of the journey.”
Berberick said that a trucking
fleet could see several efficiencies, including more miles for its drivers and
more capacity to haul freight, by freeing up those hours spent waiting at
facilities.
“The value for carriers here is the
opportunity cost of not having that driver and asset sitting in the city,”
Robert said. “It’s about getting that driver and asset back on the road so they
can make more profit.”
It also could allow fleets to
fine-tune specifications of their vehicles, Robert said. “The problem is that a
truck has to be designed as a ‘jack-of-all-trades’ truck that not only has to
operate at 55 miles per hour on the highway but be able to handle tighter [city
driving],” he said.
Berberick noted that in the future,
it could enable the use of more-efficient electric vehicles for the local haul
and long-haul trucks optimized for highway driving.
“We’re into really gaining efficiencies. I think one of the reasons many of these efficiencies haven’t happened yet is you need everybody to collaborate.”
Andrew Berberick, co-founder of Baton Trucking
Once a trailer is dropped at a
yard, the OTR driver can pick up another trailer – Baton can retrieve a loaded
trailer from a local location to further improve efficiency. Baton contracts
with a local fleet that handles the final delivery. Because Baton would
contract with multiple OTR fleets in the area, the local fleet driver is able
to drop a trailer at the destination and move on to the next job, cutting
detention time to nearly zero and ensuring that driver remains busy. Berberick
also said this model allows for more accuracy in hitting delivery appointments,
including the ability to deliver during off-peak hours.
“We’re into really gaining
efficiencies,” Berberick said. “I think one of the reasons many of these
efficiencies haven’t happened yet is you need everybody to collaborate” –
shippers, carriers, drivers and real estate partners.
Baton’s founders estimate between a
25% and 50% increase in asset utilization for fleets on delivery day through
use of its services, and that translates into as much as 25% increase in miles
driven per week for drivers.
Baton is a non-asset-based company,
so working with the right partners is critical, Robert added.
“We want to make sure the local
delivery network we work with is high caliber and highly vetted,” he said, and
for now, that means fleets with W2 drivers. Baton is currently in talks with
four of the nation’s top 20 fleets and several medium-sized fleets about
participating in the early launch.
“[The reaction] has been
overwhelmingly positive,” Berberick said. “When you talk about California in
particular … it’s a difficult place to operate and the assumption is this is
great because it allows fleets to get in and out of the area more effectively.”
Use of a drop yard can be done by
any fleet, but Baton’s founders believe the combination of their technology and
the ability to work with multiple fleets at a time will make their service more
cost-effective than a fleet going it alone.
Berberick explained that Baton is
building algorithms that will “allow us to optimize [the outcome] and allow the
driver to load in the most optimal way.” The result will be better economics
for the carrier, better relationships with shippers who will deal with a local
provider that is able to optimize scheduling, and more money for drivers.
“There’s a trove of data about
last-mile inefficiency that we can combine together to make better decisions,”
Berberick said.
Baton is also building an
application programming interface (API) to make the entire process seamless for
customers.
All the drop zones will include
automated entry to ensure security. Berberick said the hope is to eventually
partner with a “valet” company that would stage trailers on the lot
autonomously.
Both Berberick and Robert
participated in 8VC’s entrepreneurs in residence program and worked on a number
of possible logistics ideas before settling on the concept that would become
Baton Trucking.
“A lot of the sales process is a
relationship,” Robert said. “We have seen tech people come into the freight
industry and think they can solve problems and that’s not how it works. … we
see this as [using tech and people]. If you were to ask, are we a logistics
company or a technology company, the answer is yes.”
