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Maximizing trailer utilization: Why is it so hard?

As fleets order thousands of new trailers, as many as 20% of current trailers sit idle at any given time

While new trailer orders are booming to meet capacity demands, 20% of the nation’s fleet could be sitting idle on any given day. (Photo: Jim Allen/FreightWaves)

Earlier this month, the U.S. Postal Service Office of Inspector General (OIG) found that the Postal Service spent an average of $472,744 per month from January 2019 through March 2020 on idle trailers.

“Management needs to improve its monitoring of leased trailer utilization to ensure underutilized trailers are returned or relocated,” according to the OIG’s audit.

The watchdog found the Postal Service leases 76.7% of its trailers and owns the remaining 23.3%. Under Postal Service policy, any leased trailer not consistently used for a period of 10 days or more within a month should be returned or relocated.

The Postal Service has approximately 9,500 leased trailers. OIG’s analysis found that during the audit period, 13.9% (1,076 of 7,746) of leased trailers, on average, were not used monthly.

Francis Roy has studied the issue of trailer underutilization. As vice president of vHub, a Saint Georges, Quebec, Canada-based trailer utilization platform, Roy understands the problem of idle trailers and he told FreightWaves the Postal Service problem is not unique to the quasi-government agency.

Roy said he believes as much as 20% of the North American trailer fleet sits unused at any given time. FreightWaves’ FreightIntel data identified 3.9 million registered trailers and 1.6 million registered tractors in the U.S. and Canada as of Aug. 9 — a ratio of 2.46 trailers per tractor.

That ratio could be growing. Trailer orders in the second half of 2020 have been on nearly record pace. November saw a slight dip, but new trailer orders still reached 41,400, according to FTR Transportation Intelligence. That followed consecutive months of orders topping 50,000 units.

“There is growing optimism by the fleets of a vibrant freight market in 2021,” said Don Ake, FTR vice president of commercial vehicles. “Strong freight growth is constraining capacity, fueling the need for additional trailers.”

If trailer capacity is lacking and yet 20% of trailers are sitting idle, there appears to be a disconnect. Why? It could be in part how trailers are utilized in North America. Fleets tend to focus on maximizing driver hours, which leads to more drop-and-hook freight. That certainly is beneficial for drivers who are paid by the mile and for shippers that can load or unload that trailer at their convenience. But it leads to empty trailers sitting around waiting until a driver is available to pick it up.

That leads to inefficiency.

“The best in the game are running at about 80% [trailer] utilization,” Roy said. “At least 20% of their fleet is not being utilized. The reason trailers are not being used is that sometimes [carriers] build their fleet based on peak season.

“Trucking companies don’t realize how badly they underutilize their trailers,” Roy added, noting that lack of visibility is the primary culprit. In 2019, only about 24% of the nation’s trailer fleet was equipped with trailer tracking, Roy said, citing American Trucking Associations numbers. That number is expected to rise to about 45% next year. “That speaks to the need of our carriers to understand what is going on with their fleet to utilize their assets.”

VHub offers both a web application and mobile app that allows fleets with excess or idle trailers to offer those assets to the marketplace. Matches can be sorted by location, routes and destinations and the number of rental days that a trailer is needed or available. The collaborative trailer repositioning and sharing platform showcases all trailers that are available for one-way and round-trip rentals. Users can offer for rent dry van, refrigerated, flatbed or specialty trailers in less than five minutes. Rates are determined by the trailer owner while vHub handles invoicing and payments and transfers rental funds to the trailer owner.

North America will never reach 100% utilization of trailers, and Roy estimated that only about 50% of idle trailers may be available for use. But for fleets that own those trailers, the question is figuring out how to put those assets in use.

“Technology needs to give the trucking industry visibility into unused assets, which doesn’t exist today,” Roy said, noting that is what vHub is attempting to do. “This has to be the Switzerland of trailers. It has to be viewable in a nonpartisan, noncompetitive, nonthreatening environment. We need to build that Switzerland of trailers — that single window that gives us a view into everything that is available.”

Roy added that this is a “community” approach to trailer usage.

“We want the driver to haul a load, and if we can use a trailer that is not our own, we can get that done,” he said. “It’s just access to equipment. There is an analogy that I can’t help to think about — remember how we used to buy CDs to listen to music and we owned it? Now we subscribe to a service. When it comes to a trailer, it’s more the same; it has more value to the access of it rather than owning it.”

Ryder System Inc. (NYSE: R) is offering something similar to vHub with its COOP truck-sharing program. First launched in 2018 and expanded this year, COOP is a digital asset-sharing platform for commercial vehicles. Using COOP, companies can list equipment they have available for renting and other commercial operators can find equipment to fill short-term needs.

Roy thinks much the same way about idle trailers.

“It is an obstacle, but I don’t think it’s unsolvable,” he said. “If we have more visibility, we can help the driver be more efficient.”

In fact, Roy said vHub’s investors saw the COOP program as validation of what vHub was attempting. “We saw it as a testament that the opportunity really exists,” he noted.

vHub, which was founded in 2018 in Canada, currently has over 50 trailer owners and 45 renters active on its platform and expanded into the U.S. at the beginning of 2020. There are approximately 40,000 units registered on the platform by their owners.

“We’re still working hard on acquiring trailers and acquiring users [in the U.S.],” Roy said, noting he has seen a lot of traction with some of the largest fleets in the U.S. “We have an adoption rate that shows the market sees value in what we are doing.”

Click for more FreightWaves articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].