Electronic tracking could become universal by 2017.
Regulation brought produce into the computer age, as food safety traceability requirements led both shippers and retailers to adopt pallet and case labels that can be scanned to reveal instantly where and when fruits and vegetables were harvested. Now, computer technology is being brought to bear the complex logistics of moving produce, which is frequently picked up and dropped off in partial loads by trucks operating under the time pressure that comes with carrying perishable cargo. “There is some really good stuff out there,” says Jimmy DeMatteis, co-founder of Des Moines Truck Brokers, Norwalk, IA. “One of the challenges we had for years as a broker is having the ability to see where the trucks are.”
Des Moines Brokers is one of the firms that organize hauls by the small trucking companies that characterize the business of produce transportation.
GPS systems made it far easier for these brokers to know where the trucks are, if they are on schedule, or if there is a fire that needs to be put out.
“One of the consequences of the smartphones and new technology is it opened up doors for brokers to track trucks where they are,” says DeMatteis.
“We’re a broker, but most of the trucking fleets we use have their own GPS systems, and they give us access to their websites,” says Paul Kazan, president of Target Interstate Systems, Bronx, NY.
Even when there is no emergency, transportation software can improve the efficiency of delivering a truckload of produce comprised of a number of smaller loads.
The meteoric rise in the use of smartphones provides an opportunity to take this communication to new levels.
“The iPhone really came on in 2008, and GPS in 2010,” recalls Ricardo Salgado, chief executive at LoadSmart, New York City. “In 2010, around 25 percent of the truck drivers had smartphones; but today, 95 percent have them. This increases the communication of shipment details; and it allows the driver to communicate with us if something goes wrong.” Ken Lund, vice president of Allen Lund Company, La Cañada, CA, says software gives better visibility of the entire shipping process.
“If you have a truck with 17 pallets, and you can add a few more, it reduces the cost for each pallet,” he says. “You can also see when it will cost you more or less to ship, and maybe you can adjust your time. You can also see when you will be charged a fee because trucks have to wait.”
Allen Lund Company is a broker that lines up produce trucking, and provides software and logistics services. “The advent of transportation management systems (TMS) is helping companies be more efficient and give better service,” says Lund. “We sell the first TMS that was designed from the bottom up for produce. A billion dollars a year in produce is shipped using this system.”
“We are working with a company with a device in the trailer that lets the driver pick up the temperature via Bluetooth, and then we can follow it,” says Kazan from Target.
Iowa State University and transportation logistics provider C.H. Robinson produced a white paper concluding that the amount of time shippers have to wait to load or unload is a highest priority for shippers.
“Carriers most frequently commented on shipper and consignee dwell time and the influence shippers have on the carrier’s ability to utilize their drivers and assets,” according to the white paper titled, Do “Favored Shippers” Really Receive Better Pricing and Service? Concerns were about shipper location, like congestion and distance from the highway, drop trailer opportunities, appointment setting, and load/unload times. This wasted time for drivers and trucks also has a substantial impact on freight costs.
“Significant and large relationships were found between both origin and destination dwell times and increased freight rates,” according to the white paper.
Until now, only a relative handful of forward-looking shipping companies are taking full advantage of the combination of GPS and tracking software, but that is about to change in a big way and not everyone in the transportation business thinks it’s a good thing.
“Electronic logging devices are going to be mandated by December 2017,” says DeMatteis of Des Moines Truck Brokers. “I think it will be okay, but the smaller businesses that comprise most of the trucking may or may not be able to afford it.”
Tracking As A Requirement
Tracking is about to go mainstream if proposed new federal regulations go into effect, and many of the small truckers who form the backbone of the produce shipping business are anxious about this brave new world.
“The latest regulation is requiring on board electronic recorders,” says Bill Martin, an Oklahoma-based consultant who has researched and written about produce transportation since the 1970s. “Small owner operators look at this as something that’s going to increase their cost of operation.”
The purpose of the new requirement is to make it easier for regulators to know if safety rules are broken, but electronic recorders could also take flexibility out of the transportation system.
“It could effect receivers or chain stores expecting a shipment at a certain time,” says Martin. “Now drivers might say if I go over my time of operation by a couple hours I can make my delivery on time. They won’t be able to do that.” The Washinton, D.C.-based regulatory office that mandates safety rules, Federal Motor Carrier Safety Administration, is proposing the new rule go into effect in 2017, but the Grain Valley, MO-based Owner Operator and Independent Driver Association filed suit to prevent that regulation.
“The advent of transportation management systems (TMS) is helping companies be more efficient and give better service … A billion dollars a year in produce is shipped using this system.”
— Ken Lund, Allen Lund Company
The trucking industry believes a strong case can be made that there is no need for greater enforcement of rules on hours of operation.
“The transportation industry has never been safer,” says DeMatteis. “My fear is some small carriers will decide, ‘I can’t do this,’ and park their truck. There’s going to be a reordering of the whole produce buying and shipping business. We counted on the truckers to take up the slack. Now these trucks are going to have to stay by the book. I think it’s going to drive prices up.” Even more important than the cost of installing the devices on all trucks will be the loss of flexibility drivers now have in going a little over on driving hours to make up for time lost to traffic congestion or glitches in picking up or dropping off loads. “If we are picking up an eight-pick load with one stop, when the new electronic logging device requirements kick in, we will have problems getting those loads delivered properly within allotted hours for service,” says Fred Plotsky, president of Cool Runnings, Kenosha, WI. “If it is a one pick and multiple stops, freight rates will spike due to the same drop constraints.” Cool Runnings is a transportation broker providing trucking, including refrigerated trucking, and logistical services. The loss of flexibility could be particularly important for cargo, like most produce, that is highly perishable.
“If you run out of hours, you’re going to have to stop, even if you’re a half hour away with a load of something perishable, like strawberries,” says Lund. “This is something I think will really affect long haul produce.”
“The requirement of electronic recording is going to be a problem for our industry,” says Kazan from Target. “When a truck has to wait all day to get loaded, that’s counted as ‘on duty’ time. You’re taking a lot of the driver’s actually driving time away from him. It’s going to impact delivery time. I hope the regulations will include cellular technology among the approved devices,” says Kazan. “Otherwise the driver will have to put in a new device at a cost of $500 to $1,000 a truck.”
The Future of Tracking
If the electronic recorder requirement does go into effect, it would bring virtually all trucking operations into the world where a combination of GPS and software can be used to track shipments, and also integrate the information into all aspects of the business.
The sheer number of parties involved can easily make moving produce a complicated and unpredictable process. “There are five players involved when you move produce – the shipper, the dispatcher, the driver, the warehouse manager and the drop off manager,” says Salgado of LoadSmart. “We try to bring seamless communication among all five.”
“The fresh produce industry has a variety of companies at different places in terms of technology,” says Ron Myers, executive vice president at Linkfresh, Ventura, CA. “I’d like to see this industry adopt technology at a greater pace. There are cloud-based solutions that work for the Mom-and-Pop truckers.”
Linkfresh provides enterprise resource programs (ERP) that allow people in the produce industry to see, record and analyze the relationships among purchasing, transporting, storing and retailing.
“We have an ERP purposely built for the produce industry,” says Myers. “There’s a constant drive toward lower transportation costs, and that’s where the software can help you. There are programs in place to help you decide how to load or route a truck, or track the tax implications of crossing state lines. We have a component that creates a transport request that goes into a scheduling queue. You can use it for load planning, back loading and scheduling.”
Target also uses software that makes it possible to follow, with permission, the location of the drivers’ cell phones. “Anybody can follow the location of a cell phone if you have permission of the owner,” says Kazan. “The MacroPoint program will send you a text message asking you to go to a website and give permission. Another program will send a text message asking to track the phone. The driver answers ‘Y’ and you can track. When the load is delivered, they text ‘N’ and the tracking is turned off.”
Because the company believes tracking is necessary to be competitive, Target offers incentives to truckers to use the technology. “We create a little bit of a financial incentive for them to opt in to tracking systems,” says Kazan. “We cut out some of our fees to encourage truckers to use it. The weakest link in the produce business is not knowing where a truck is.” Surprisingly, only a handful of the users of this product for the tech savvy are already following trucks in transit to see if issues are developing.
“Probably only 15 percent of our customers are using GPS to track produce as it moves,” says Myers.
That will probably change however if truckers are required to have devices federal regulators can monitor, because trucking brokers and receivers will almost certainly want access to that information.
“The vast majority of the carriers are good players, but the technology allows us to see where they are during a trip,” says DeMatteis.
Not everyone in the trucking industry, however, is smitten with the logistical power of these new age tools. “I find there are so many different technologies that customers get involved with, we spend way too much time updating it all,” says Plotsky. “We got the same job done with less effort in the past.”
Give Thanks for Cheap Gas
While the production transportation industry heads toward more complex times, for better or worse, the low cost of gas is providing a temporary buffer.
“The cost of diesel is down to $2, except in states like California,” says Lund.
There is no hard-and-fast rule on how this transportation bonus is shared among retailers, consumers and truckers. “We adjust weekly, or within the month,” says Lund. “Transportation costs are down, and a big part of that is fuel costs. The cost difference gets to the retailer quickly, but sometimes it takes longer to get to the consumer, because the store sets prices in advance.”
Trucking companies are hoping to hold onto at least some of the savings to pay the drivers, and invest in equipment. “Carriers are trying to keep the rates constantly high through falling fuel prices and using the money for raising drivers’ pay and upgrading equipment,” says Plotsky. “Some of the savings will find its way to the retailer, but will the savings be passed on from the retailer to the consumer?”
The question of how to share an unexpected bonus is, at least temporarily, a nice problem to have.
“The lower fuel prices are helping,” says DeMatteis. “We’re adding $200 to $300 to a motor carrier’s profit on a 1,500- to 2,000-mile run, and they need it. We want everybody we do business with to make a buck. We all need to stay in business.”