Technology can drive up efficiency in trucking industry
THE trucking industry is a bellwether industry in Malaysia. Almost everything we buy online or in a store, and the raw materials that went into making the products, are transported by trucks of varying sizes all across Malaysia.
This industry is, therefore, an important contributor to the country’s economy and gives employment to many families. The sector is also highly fragmented in Malaysia with lots of small and medium companies.
Transporters are increasingly struggling with increasing costs and reduced profit margins. The fragmentation of the industry results in a lot of inefficiencies in matching supply with demand. This becomes especially apparent through a phenomenon called “empty backhaul”.
Small and medium transportation companies, particularly, have great difficulty finding return loads after they have completed a job. As a result, they often return with an empty truck, even though there are likely shippers around the corner that are in need of transport.
The problem is that available truck capacity and shipments are not efficiently matched.
To put this inefficiency in perspective, in Malaysia about 65 per cent of the trucks return completely empty after delivering a load and on average, the trucks driving on the roads at any given time are less than half full.
That is a lot of empty truck space moving around! The result is obvious: a waste of capital investments (with low return of investment), human resources and unnecessary pollution and congestion on the roads.
As margins are thin, improving truck utilisation has a very high leverage factor. This means that transporters can massively increase revenues and profits just by increasing their utilisation of trucks by only 10 to 20 per cent!
Many have tried to find a solution for this problem over the past decades, but with limited success until now. Fortunately, there is hope as online trucking marketplaces that emerged in the United States are now finding their way into Southeast Asia.
Innovative companies like Ezyhaul are deploying advanced Internet and mobile technologies that result in a much better matching of supply and demand.
Chief executive officer Raymond Gillon explains that Ezyhaul has introduced an Uber-for-trucking concept in Malaysia.
“Through our technology platform shippers can make online bookings for shipments in a matter of seconds that will be pushed out to hundreds of qualified and insured transportation companies on our platform that have available capacity on their lorries.”
His experience in Malaysia thus far has been extremely positive.
Transportation companies love the concept as they can get additional loads and income, get new customers, and eliminate the paperwork. This allows transporters to improve their truck utilisation, revenue and profits.
On the other hand, shippers like this new technology since they can quickly make bookings and find trucks at very competitive rates. Shippers obtain real-time visibility in the status and location of their shipment and receive immediate electronic proof-of-delivery as soon as the shipment is delivered.
The transportation industry is a conservative industry with low and slow increasing technology adoption rates as compared with other sectors.
These new technologies are therefore most welcome, helping truckers better connect with their customers and at the same time facilitate tracking and tracing.
Trucking marketplaces create a more transparent transport market, solve the backhaul problem, and stimulate innovation and investments in the transport sector.