Backhauls: Making the Most of your Transportation Spend
Along with an increasing driver shortage, freight rate volatility, and increasing demand, there are many challenges currently facing the trucking industry. While businesses and fleet managers are finding new ways to overcome these modern obstacles, some lanes are not being fully utilized by truck drivers. For example, many companies are not taking advantage of backhaul opportunities.
It’s estimated that companies can lower transportation costs between 9% and 15% through backhauls. This means a significant amount trucks on the road every day are losing revenue because they’re left empty on their return trips. In this article, we’ll look at the significance of backhauls so you can optimize your transportation network for increased productivity in your supply chain.
What is a Backhaul?
A backhaul is the term commonly used to refer to the return movement of a truck from its original destination back to its point of origin, especially when carrying goods back over all or part of the same route. It is the main aspect of a reverse logistics strategy For example, if a driver transports cargo from Ohio to Texas, that driver would be completing a backhaul if they accepted a new load of products to deliver on the same route back to, or in, Ohio.
Backhauls don’t always involve movement of items from one vendor to a client’s store shelves, however. Drivers can also send products back to warehouses or distribution centers for storage, or deliver waste for disposal and recycling. These can include mannequins or display racks you may see in a department store.
What Are the Types of Backhaul?
There are two separate types of backhauls: external and internal. External backhauls are more common because, typically, companies contract their drivers to handle deliveries of return loads for a carrier or broker they’re working with. Internal backhauls are utilized by companies to make stops between end-user locations, distribution centers, or warehouses within the organization.
How to Optimize Your Freight Network for Backhauls
Some drivers are limited by strict scheduling or routing requirements that, unfortunately, leave their truck empty at times. In fact, according to recent industry research, roughly 35 percent of the heavy-duty vehicles, such as semi-trucks, on U.S. roads are driven empty. This wastes valuable time—and money—while potentially holding up deliveries and restricts businesses from maximizing profits and productivity.
So how can shippers boost their capacity levels and generate extra revenue in the process? By having an optimized transportation network that takes advantage of all available space and backhaul lanes.
Being successful with backhauls is like building a three-legged stool, requiring:
1. Third party interest on the specific lane that matches the network
2. Pickup and delivery schedules that are on-time, every time
3. Reliable drivers and equipment
It is crucial for all three of these factors to be relevant to a backhaul shipment. Otherwise, any missing element will impact and restrict the completion of a delivery.
What Are the Benefits of Backhauls in Trucking?
Backhauls in trucking and logistics are designed to offer benefits to companies, their fleet managers, and their drivers. From instant changes in efficiency to long-term growth in productivity, there are six perks to backhauling:
1. Optimized Efficiency: Backhauls minimize the amount of trucks traveling on the road with empty or less-than-full loads on return trips. In turn, fewer trucks waste fuel consumption and space, and they optimize their capacity.
2. Reduced Environmental Impact: When fleet managers utilize backhauls, drivers spend less time on the road. This reduction in unnecessary trips decreases carbon emissions and environmental impact.
3. Increased Revenue: One of the biggest advantages of backhauling is the additional source of revenue provided for trucking companies due to complete utilization of empty space on return trips.
4. Enhanced Customer Service: When trucks fulfill efficient backhaul operations, more deliveries can have quicker turnaround times which, in turn, improve customer satisfaction through faster and more reliable service.
5. Cost Savings: By securing a backhaul, trucking companies can offset some of the costs of the outbound trip. This can result in reduced operational expenses, potentially leading to higher profitability.
6. Improved Resource Utilization: Backhauls allow for better utilization of resources by ensuring trucks are carrying cargo both ways, making the most of the truck’s capacity.
A company has the potential to reap the rewards of all six of these benefits after every successful backhaul, and a solid reverse logistics strategy. But, there is one more advantage to consider: forming new business partnerships. Each time a company creates a contract with brokers or carriers for external backhauls, they outline a commitment to provide exceptional service. Some companies may use their fleets once or twice to deliver products for separate companies, carriers or brokers, but this isn’t always the case. Once a contract is completed, all entities involved with a backhaul typically work together on future transportation requests. This is because trust is built and satisfaction is maximized among all parties. Plus, most companies, brokers, and carriers would prefer to do business together as opposed to hiring new people for the job.
How to Tackle the Challenges of Backhauling
Backhauling loads comes with some obstacles that businesses face on a regular basis. For instance, fluctuating demand in inventories can affect planning for fleet managers. There may also be unintentional delays on drivers from heavy traffic or inclement weather that can put companies behind schedule and upset customers or clients. Ultimately, with the shipper already paying for the driver, fuel, and truck, not running at full capacity means there’s a lost opportunity to improve their bottom line. So, how can logistics professionals navigate the changing environment and tackle the challenges of backhauling?
When moving their freight on a private or dedicated fleet, companies are paying for round-trip miles, as opposed to paying one-way mileage for truckload or less than truckload. While running a backhaul lane may not be appropriate in all instances, filling those lanes when possible can lead to lower costs for the shipper.
Second, the key to taking advantage of backhaul lanes is consistency. Backhauls should be planned the same way that any other outbound shipment is planned. Finding backhaul lanes when the trailer would normally return empty is also the perfect opportunity for 3PLs to lower their customers’ costs and increase their revenue.
There are times in which shippers need to be flexible to be able to take advantage of the backhaul lanes. For example, some shippers have reverse trips that contain empty pallets, returns, or fixtures. But if the shipper can delay the reverse trip and take the backhaul, they will be able to reduce their transportation costs.
Outsourcing Backhaul Trucking to a 3PL
For many companies, transportation is not a core competency because there are many processes involved with running a successful business model. Because of this, empty backhaul lanes are not the first thing companies think about when they need to get their products from one point to another. That’s where outsourcing backhauling trucking to an experienced 3PL partner can maximize your transportation spend while reducing your costs. Through a third-party logistics provider like Ryder, you gain:
- Clear, consistent communication across all transportation channels
- Increased time for other supply chain or logistics tasks
- Full transparency and real-time updates through fleet management tools such as RyderGyde™
- Coverage on maintenance costs of commercial vehicles