Empty Miles – problems and solutions
The international trade of goods and services is a fundamental component of the global economy. According to the global business data platform “Statista”, over 80% of the world’s commodities are transported by sea passing through many ports on the way. Numerous industries are dependent on cargo shipping, especially those that rely on a supply of raw materials.
Hazardous substances such as oil, gas, and products of the chemical industry are often transported great distances by sea, providing the cheapest means for shipping. Actually, the majority of all cargo is conveyed by sea, and many companies choose this mode of transport in order to increase safety as well as to save costs. In 2020, less than 1% of global cargo theft came from shipping vessels.
Efficient port administration requires rapid and large-scale modernization. Operations are significantly slowed down by ship and truck congestion, due to various causes. A port is a facility comprising areas where ships load and discharge cargo (and passengers). The shipping system is complex, while ports serve as hubs for the distribution of freight by all modes of transportation.
In rare case, such as moving raw materials to a production facility, delivery of goods can be carried out from one port to another, without additional transport modes.
It is clear that ports will eventually be automated. However, it should be noted that processes need to be simplified before successful optimization can occur. Major barriers to automation include professional capabilities and experience (technical positions), data quality, siloed operations and more. Automation does not allow solving problems at individual functions.
Breaking down silos between functions is always a challenge, but it is especially difficult for ports that supply the sea/land interface. One of the basic principles of automation is controlling the process, which requires the use of integrated technology for efficient monitoring of traffic and trade flows in the end-to-end terminal process of ports.
A paper published by the Digital Container Shipping Association (DCSA – an independent organization promoting digitally interconnected container shipping) notes the need for a transition from paper-heavy trade transactions to electronic billing. Use of a digital bill of lading (BL – shipment receipt) could result in potential savings of $4 billion per year if only 50% of the shipping industry would adopt the technology.
An OECD report states that global container handling in ports would rise to four times the current levels by 2030, if ports were smart and automated.
Attempts to create an electronic bill of lading (eBL) began in the late 1990s and now more than 20 years later the issue is back on the agenda. It has been called the “Holy Grail of global trade”, referring to a treasure with miraculous powers; however the many obstacles on the way have prevented implementation of the technology.
- How do we connect the ship with road transport?
The transition to an optimized process of connecting sea freight to road transport will take some time. We would like to offer some suggestions:
Short-term optimization of sea freight transport – Multimodal transport involves the use of more than one type of haulage. The best option today is container shipping, where we can combine sea, rail and land transport. This is the easiest way since container shipping companies provide the vehicles, organize the loading in point A and the unloading in point B, while tracking the process. Today, there are companies developing the use of shared shipping containers, allowing different companies to place their cargo in one container in order to get a full load.
Long-term – The concept of the Fourth Industrial Revolution (4IR or Industry 4.0) relates to the ongoing automation of traditional industrial practices using modern smart technology. True optimization of port administration, Port 4.0, is considered to be part of this future 4IR. A smart digitalized port will include the use of innovative technologies to increase efficiency and improve performance, ensure security and cyber-security as well as reduce harmful emissions.
- Which technologies can help us create smart ports?
Big Data has many uses for logistics in the maritime shipping industry, and one of the most important applications is predicting the estimated time of arrival (ETA) of vessels. Different sources (sensors, texts, audios, videos) of information are needed to track ships and cargo, while big data is used to manage ship sensors and for predictive analysis.
Artificial Intelligence (AI), and more specifically machine learning (ML), can be used to enhance shipping routes by determining the best course at the best speed. For optimization and efficiency of the shipping industry, decision-making automation can forecast and optimize performance by reducing human error and accidents, and in addition increase work safety and security.
Internet of Things (IoT) enables real-time tracking and monitoring of cargo at all levels by Port Authorities. It is used to determine location and to identify in detail what each ship is carrying by using sensors.
Blockchain was addressed in one of our previous blogs. This innovative technology stores transaction data which is impossible to change or delete. It provides an open platform paperwork-free system.
These above-mentioned technologies are powerful tools for the shipping industry and enable actions to be carried out rapidly, such as unloading cargo at the port. Port congestion is reduced, resources are saved and there is less damage to the environment.
New ideas are on the table for ship owners. For example, digital twin models will provide a tool for visualization of ship and subsystems, qualification and analytics of operational data, optimization of ship performance, improved internal and external communication, and safe handling of increased levels of autonomy.
We at Trucknet support the idea of creating an ecosystem, where smart vehicles are combined with virtual processes in the digital world. The concept of integration and connection between all systems and processes only can be achieved with maximum transparency and connectivity. In a world of digitalization and sharing economy, business efficiency will be improved and environmental concerns can be addressed.
“Digitalization is a path, not a journey; Digitalization is not all about technology, it is an intersection of technology, innovation and processes – all equally important”
– Mark O’Neil, Columbia Marlow
Empty Miles – problems and solutions
21 October 2021
Founder and President
A well-known problem in the transportation sector is when a truck runs empty, without cargo. Empty miles are also called non-revenue miles or deadhead miles.
In the United States 36% of heavy-duty trucks on the road today run empty. The Bureau of Transportation Statistics discloses that in 2019 one out of four trucks in operation in the U.S ran empty, two were almost empty and one was 51% full. In Europe, the figure is 27% and in Asia 40% of trucks run empty, according to the OECD. Statistics show that empty or partially empty trucks travel 29 million miles worldwide.
Allow me to mention that more than 20% of global greenhouse gas (GHG) emissions (fossil fuel carbon emissions hit 10 gigatons per year in 2018, or just under 37 gigatone carbon dioxide – 2018) come from the transportation and logistics industry. These emissions contribute significantly to climate change, which we can notice daily in events such as extreme heat waves, drought and wildfires, ocean warming and sea level rise, intensity and frequency of precipitation and more.
This year, 2021, has been overcome with wildfires in the USA and throughout Europe, while Turkey, Russia and Italy were especially damaged. Record rainfall across parts of Europe caused disastrous flooding in Germany, Belgium and Austria. Belgian Minister of the Interior, Ms Annelies Verlinden described the events as “one of the greatest natural disasters our country has ever known.”
For numerous transportation companies, empty miles are equal to non-revenue miles, however, many note that there are different types of empty miles. Some companies choose to run empty for 100 kilometers to pick up cargo that will bring them 5 euro/per kilometer for 1000 kilometers, then to pick up freight that is nearby for 2.5 euro/per kilometer for 500 kilometers.
As we can see from the above, there are situations in which huge amounts of wasted space are moving around from place to place in empty trucks.
Let’s examine a typical situation: truck #1 goes from point A to point B full (B is its point of unloading). At location B there is no cargo for truck #1 to pick up. The driver’s next cargo pick up is scheduled at point C.
In parallel and at the same time, truck #2 has picked up cargo from point B (at the warehouse) that needs to be unloaded at point C.
Truck #1 now has the opportunity to collect new cargo from point C and take it back to his home base at point A.
In many typical situations, we unfortunately see that truck #2 would return empty to its home base at point B.
- Why do we need to cut down the empty miles or even eliminate them?
➤Failure to generate revenue.
➤The extra costs for shippers and truckers for fuel, driver salaries per hour, wasted waiting time in warehouses and facilities; truck maintenance is an added cost.
It seems trucks running empty are more problematic for carriers, as they encounter a loss of revenue. The carrier will then have to increase the charge since these additional costs will need to be covered by the shipper, who will not be pleased. High costs for just shipping air, isn’t it?
➤ Environmental impact: this is an easy equation – more trucks on the road = more CO2 emissions released to the atmosphere.
- How can we eliminate empty miles?
With 20 years of experience in the logistics industry, I support the idea of using a sharing economy model and sharing resources that are able to accommodate reducing empty miles. Real situations in which empty miles are created can be very complex, our example above was quite simple. The average reliable fleet manager will not be able to juggle all the options with the tools he generally has, like: TMS, Telematics, system of fleet management. Relying on phone calls and excel spreadsheets to find all the available possibilities of optimization for reducing empty miles and saving resources will not be sufficient. External digital sources are necessary to assist the fleet manager optimize his fleets, and this is what Trucknet’s platform with the perfect match can offer.
A good example can be seen from a pilot project we carried out with the Renault Group during October 2020. A connection was made to their bid system that tenders each work order. Through the system, contractors were identified on the basis of their location in relation to Renault’s requests. The pilot proved that connection to Trucknet’s platform led to improvement in the efficiency and profitability of logistics services by 17%. In addition, it brought savings of up to 115,000 euros in two weeks for 268 trips out of a total of 371 (68% success rate). With the pilot with Group La Post we saved 20%.
✚ Avoid simply booking the cargo delivery; at the same time provide options for backhaul cargo that would ensure revenue-generating loads; avoid freight consolidation centers and create direct deliveries.
✚ Collaborate/consolidate: partial truckloads on similar delivery routes can be combined and loaded onto one truck. Another example is reverse logistics when goods are moved from a final destination back to the seller and returned in pallets, containers or cardboard packages.
Today, many companies still use in-house fleet management. In order to optimize large amounts of data, a revolution in the logistics industry is needed for changing behavior. Together we can change the conventional work model and create an efficient marketplace.
Trucknet provides AI, BI, ML based technology necessary for the entire supply chain. Our data system promises a solution for empty miles, savings in fuel costs as well as reductions in GHG emissions. The transition from in-house operations towards cross-company collaboration is essential.
I believe that the Trucknet solution is a stepping stone on the way to decarbonizing the freight sector. Here we address avenues for avoiding unnecessary empty miles. However, it is clear that we must be more involved in the global problem and not stand on the side. The key solution remains the same – creating an interconnected global community where transport providers and carriers ‘live’ and communicate in one ecosystem based on connectivity.
“When we talk about ‘smart transportation,’ it is more than moving cargo from A to B. Digitization within transport and logistics means seamless service to our customers, visibility in the supply chain, and driving a more efficient business.”
Søren Skou, CEO of A.P. Møller – Mærsk A/S