A recent report* warned that a third of hauliers are at risk of going bust, creating huge uncertainty for shippers over the stability of their supply chains. DigiHaul’s CFO, Matt Window, explains how we can protect carriers – and our supply chains – in such a volatile market.
There is a multitude of indirect pressures on UK hauliers that are driving a higher-than-normal insolvency risk – spiralling fuel costs, rising inflation, post-Brexit challenges and higher costs. On top of this, the cost-of-living crisis has slowed consumer spending so we’re seeing a drop-off in demand.
Carriers need to maximise efficiency, reduce running costs and maximise backhaul opportunities to weather the storm.
Shippers are also looking for innovative ways to reduce costs and regain balance. The recent shortage of drivers in the market has left a legacy of surplus fleet and drivers in their own supply chain operations as they looked for ways to plug the gap.
While larger retailers may own or lease their own transport, it isn’t a good fit for everyone. Many mid-size and smaller shippers are realising the benefits of a capital expenditure light solution – there is no investment in vehicles or drivers but they can still secure competitive rates.
Using a trusted network of third-party carriers gives shippers much greater agility and flexibility. They can better cope with volume fluctuations while releasing funds that they can invest elsewhere.
By becoming leaner they’re able to deliver change throughout their wider business, not just through a more efficient transport model.
For those shippers who do have surplus trucks and drivers, digital networks are the ideal solution to under-utilisation. Moving away from more traditional procurement methods, where shippers are working in silo, they can take advantage of opportunities to collaborate, generate revenue and reduce inefficiency in their operations during periods of reduced demand.
Challenging the status quo is vital for our industry
Digitalising freight allows us to deliver an excellent service, greater visibility and ultimately lower costs and CO2 emissions. And we’re behind the digital curve compared to other industries – look at how much car buying has changed, for example. By the time you factor in all the maintenance costs and depreciation in value, leasing a car is often just as cost-effective as buying one, plus you’ve saved cash upfront to spend on something else.
We believe the best approach to unlocking value in the supply chain is to build long-term, strategic partnerships.
By getting to know shippers and carrier partners better, we can protect shippers in this difficult environment while rewarding our carrier partners with greater revenue opportunities. Everybody wins.
Investing in these relationships enables us to improve the procurement process. Traditionally carriers are used to an annual tender but with DigiHaul, many of our carrier partners are signing up to three-year tenures. This gives our carriers peace of mind longer term, while reassuring our shippers that we have secured capacity at consistent and competitive market rates.
We’re able to give our carrier partners greater visibility on one platform and make more work available, increasing their revenue potential. If cash is tight or they’re focused on investing in other areas of their business, we offer fast-track payment options to help release cash.
We also offer fuel price hedging products with our affiliate partners, which can completely offset price rises at the pumps.
Smart solutions for a brighter future
I’m an optimist and believe that the right support from the government – such as financing of debt and more driver training schemes – will help us resolve the immediate challenges that the industry is facing. Taking a longer-term view, this is an exciting time for change, to remove waste from our supply chains.
Focusing on sustainability – optimising supply chains, removing unnecessary CO2 emissions, removing waste and reducing empty miles – is where our whole industry can benefit.
We’re starting to see a shift towards digital – you can’t argue with the benefits of operating freight digitally through market-leading platforms compared to manual processes.
Digital doesn’t have to be cold and faceless – we can bring all the benefits of digital but with the human touch. We understand how important it is to be able to speak to an expert and we treat each shipper’s supply chain like it’s our own, each one is bespoke and personal. We treat them as we would want to be treated, with a personal touch.
Ultimately the aim is to provide hassle-free shipping for both shippers and carriers. If we work collaboratively at scale we can all benefit as well as protecting the environment.
*Price and Bradshaw, April 2022
