The word “recession” is top of mind for everyone in transportation heading into 2023. DAT recently reported that spot rates currently sit below contract rates. This is great news for shippers planning bids, but a sign of potentially rough roads ahead for trucking companies and freight brokers.

Pair declining rates with inflation averaging around 8% for 2022 and record-high diesel rates ready to ring in the new year. Plus, many analysts and investors anticipate a freight demand slowdown in the coming months. 

If the data were a road sign, it would read “Caution.” 

Transportation providers need ways to operate economically in 2023 and beyond. Maintaining margin will be critical with an unpredictable market looming.

Getting More by Going Lean

Carriers and freight brokers often approach downturns with an across-the-board, cost-cutting approach. They cite the lean methodology, which helps organizations strategically operate with fewer resources and less waste. 

But approaching an economic slowdown this way often proves a common misstep. 

Lean reduces waste by identifying value and looking for better ways to provide it. That sometimes requires investments first to create reduction opportunities. 

One of the best bets for building value and eliminating waste is investing in a modern, SaaS-based transportation management system (TMS). Adopting or upgrading a TMS in tough times not only helps companies survive but puts them in a better position when the market improves. 

A Gartner study found TMS users gain up to 15% in annual savings. To quickly understand the impact, simply calculate the reduction as part of annual freight spend. The savings are significant. 

The TMS as a Cost-Cutting Investment

An enterprise-grade TMS drives efficiencies throughout an operation — from inside the truck all the way to the back office. Companies wanting to save money are wise to spend on the right TMS. Here’s a few reasons why: 

1. Cut Fuel Costs
Fuel is a top-three expense for carriers consuming about 60% of the average operating budget. CNET reports trucks burn through 20,000 gallons of diesel a year. Much of that fuel goes toward empty miles which average 20-33%. 

A good TMS offers optimized routing to plan the right truck and driver on the best load. The software factors in hundreds of data points including minimizing as many fuel-guzzling miles as possible, especially when they do not generate revenue. In addition, teams can use the system to track individual consumption and identify opportunities for coaching drivers on ways to improve fuel economy. 

2. Increase Driver Productivity and Equipment Utilization
The American Trucking Association found that just one hour of truck idling per day for a year is the equivalent of 64,000 miles in engine wear. Plus, for over-the-road operations, when a driver’s wheels aren’t turning, they usually are not earning money. Pay is the number one contributor to driver turnover. A study by the Upper Great Plains Transportation Institute estimates the average cost to replace a driver is $8,234. 

Keeping drivers and equipment moving offers a huge opportunity to both make and save more money. 
A sophisticated TMS pairs with each truck’s telematics system to monitor driver hours, equipment locations, and performance. Planning loads can happen in seconds as dispatchers stack assignments to keep drivers rolling. Staff can easily see where gaps exist before idling occurs to book more loads. 

3. Better Manage Maintenance
ACT Research reports the price of used Class 8 trucks over the summer was up nearly 48% from the year prior. The sticker shock has companies running trucks an average of at least 12 months longer than normal. That makes routine maintenance a must-have. One missed visit to the shop can have costly consequences. 

TMS platforms make monitoring mileage and scheduling preventative maintenance simple. The regular upkeep prevents roadside failures and prolongs the life of equipment. Deloitte reports that poor maintenance practices reduce an operation’s productivity by up to 20%. In contrast, predictive maintenance increases productivity by 25%. The gains translate to more opportunities for revenue-generating miles. 

4. Reduce Overhead
The TMS digitizes the entire freight transaction from order booking to load delivery. Easy order entry offers more time for staff to solicit additional loads from customers. Electronic tracking minimizes the need for check calls. The TMS allows dispatchers to manage more trucks with less effort. Applying advanced technology to the work allows companies to reduce or reallocate staff. 

Streamlined processes even benefit the back office. The Magnus TMS comes with a mobile app that connects driver-submitted paperwork directly with accounting to expedite payments and invoicing. Improved cash flow is always a good thing in a recession.

5. Improve Service
When looking to manage costs, companies often overlook the value of good service. Carriers and freight brokers boasting superior scorecards level the playing field with shippers in down-market rate negotiations. These transportation providers are less likely to lose core lanes and have a better opportunity to expand their network with a customer during the RFP. They also often receive a shipper’s first call to take additional freight before it goes to the open market. 

Leveraging a TMS directly impacts on-time performance. The platform allows teams to monitor freight movements in real-time and proactively plan service recoveries. With many of the world’s largest retailers and manufacturers charging carriers for missed deliveries, finding and solving these issues before they occur offers very real cost benefits. Automated alerts also keep customers informed on the status of their loads minimizing the need for manual communication, which wastes staff resources.

Manage the Market with Magnus

The Magnus Technologies SaaS-based TMS platform helps trucking companies and freight brokers save more by managing their operations better. The TMS, Driver App, and Carrier Advantage systems work together for process efficiencies that create value and reduce waste. Easy to use and affordable, Magnus leads the way in reducing empty miles, increasing service levels, and managing drivers better—all through an advanced system that brings lean to logistics. 

See the Magnus TMS in action by calling (877) 381-4632 or emailing sales@magnustech.com.