Driver as a service: J.B. Hunt becomes Waymo’s first self-driving freight customer
Waymo announced a long term-strategic alliance with J.B. Hunt, which will become Waymo Via’s first customer for fully autonomous, driverless freight routes. Waymo, a subsidiary of Google parent company Alphabet Inc., began trial runs with J.B. Hunt in June 2021 for its autonomous driving technology, involving daily routes along the I-45 corridor between Houston and Fort Worth, Texas. At the conclusion of the pilot, Waymo released results showing zero accidents or speeding events and 100% on-time pickup and delivery with 100% of freight intact.
Driver as a service
Waymo’s approach involves long-term partnerships and collaborations, but the interesting takeaway from this news is the concept of driver as a service. This model involves Waymo partnerships with OEMs like Daimler, which will build the autonomous trucks equipped with the Waymo Driver autonomous hardware/software package. Afterward, these upgraded trucks will be purchased directly by fleets or motor carriers like J.B. Hunt, then serviced and maintained by partners like Ryder System.
Waymo’s approach is not without competition. TuSimple, another autonomous startup, successfully completed the first driverless Class 8 run on Dec. 22 during an 80-mile journey in Arizona from Phoenix to Tucson. TuSimple partnered up with Navistar International to produce self-driving trucks and currently has partnerships with U.S. Xpress and Penske Truck Leasing.
What we are beginning to see is OEMs and large fleets partnering with autonomous trucking software startups to pilot and test driverless routes. This benefits both carriers and manufacturers, as both see opportunities for savings in a driverless cab, with carriers saving costs in wages and benefits and OEMs able to take advantage of data and telematics to improve their products.
I believe that J.B. Hunt has an opportunity to gain a first mover advantage if it is able to perfect its J.B. Hunt 360 platform and adjust operations around future integration with autonomous trucks. With full automation still years away, large carriers are racing to catch up or partner with startups to adapt, as automation can result in trucking consolidation, since the current limiting factor for trucking companies is finding qualified drivers.
Commentary: The dangers of dwell
Trucking companies are unique in the supply chain, and determining success can be tricky. General Motors measures success by vehicles made and sold. McDonald’s measures customers served or food sold. But trucking companies must rely on transporting goods and charging someone for it.
The traditional take is this: The unit of production is the tractor and trailer, its output is revenue miles, and the more revenue miles you get, the better you are doing. The operational realities of trucking point to a better metric to determine success: dwell.
Dwell is the driver calling to say he or she has been at a shipper over four hours due to lack of staff and/or product, leading to a late delivery and a fabrication plant that must halt line production. It can be the day cab stuck at a freight forwarder due to a mixup causing the wrong chassis to be pulled from the port. Or it can be the quarter-mile-long line to check in at a major beverage distributor, where half the forklifts are inoperable due to lack of repair parts and the third shift is only a quarter staffed.
Consumers do not see dwell, but they end up paying for it at the register. Dwell leads to higher rates, as carriers and brokers charge more due to less workable time. These rates translate into higher transportation costs for manufacturers, which then pass these costs onto consumers. Our current environment of inflation is directly impacted by higher transportation costs, as consumer demand translates into inventory replenishment and starts the supply chain cycle anew.
The solution is deceptively simple but complicated to execute. Reducing dwell — wasted time at shippers, docks, ports and receivers — benefits all parties, as carriers can turn more loads per week, shippers can reduce inventory backlogs and brokers breathe a sigh of relief, as their blood pressure is temporarily lowered due to fewer uncomfortable conversations with customers regarding detention, layover and other accessorials.
I can propose to you many concepts involving trailer pool management, truckload network optimization and API integration for greater visibility as potential solutions. But I believe, at the end of the day, the most important concept is recognizing the value of time — and making decisions built around saving it. Rate per mile and revenue miles all hinge on time, and understanding the costs associated with wasting time can help us find strategies built around saving it.
Market update: Outbound tender rejections decline amid rising spot rates
Outbound tender rejections represent carriers’ availability to move freight at their contracted rates in the market. High rejection rates can be due to either lack of capacity or the rate is lower than other competing loads. Normally as contracted rates go up, tender rejection rates will go down.
Given current supply chain disruptions, there remains more freight than available supply, causing an increase in Truckstop.com spot rates. With contracted rates rising into 2022, there is an opportunity for greater tender compliance and we might see rejections decline if the price is right.
FreightWaves TRAC lane spotlight: Seattle to Los Angeles
Commentary courtesy of FreightWaves Daily Watch
Summary: Tender rejections out of Seattle dropped 33.8%, indicating more capacity entering the market amid high spot rates.
- Seattle outbound tender rejections decreased 33.8% to 17.21%, from a three-month high of 26% reported on Jan. 7.
- In comparison, nationwide outbound tender rejections fell to 21% with dry van spot rates reaching $3.83 per mile according to Truckstop.com data.
- Spot rates remain elevated from Seattle to Los Angeles at $2.67 per mile, over $1 per mile higher than three months prior ($1.64 per mile on Oct. 17).
What does this mean for you?
Carriers: Spot rates remain elevated, and depending on customer commitments, there is an opportunity to gain extra revenue if contracted rates are less than the spot market. Be mindful of weather and chain laws. Also, newer drivers in the fleet may have difficulty with the conditions and that can impact tender compliance. If tender rejections continue to move lower, there will be greater pressure from existing customers to adhere to their original commitments.
The Routing Guide: Links from around the web
‘World’s largest’ cast-iron skillet travels down Tennessee highway (UPI)
Orange-Juice Prices Climb After Forecasts for the Smallest Crop Since 1945 (The Wall Street Journal)
High-resolution land value maps reveal underestimation of conservation costs in the United States (National Academy of Sciences)
Schneider to shut down Canadian operations (FreightWaves)