Innovators: Flexible capacity

Greatwide has developed a software interface to link its fleet dispatch system to “outside” dispatch packages that shippers use to operate their private trucking fleets.

By 2000, Transport Industries had grown to become one of the largest transportation companies within the market it had established – dedicated, “closed loop” transportation services to the grocery industry.

In 2000, investment firm Fenway Partners acquired Transport Industries and launched Greatwide Logistics Services. Since then, Dallas-based Greatwide has become one of the largest logistics and transportation companies in the nation through a series of acquisitions. In 2006, the company employed about 3,500 owner-operators and 1,000 company drivers, and revenues exceeded $1 billion.

While its name has changed, Transport Industries continues to exist as a separate business unit within Greatwide under the Greatwide Dedicated Transport name. The business unit is the largest of the four Greatwide units from a revenue standpoint, says Mike Voelk, the company’s vice president of information technology.

For Greatwide’s next stage of growth, the company is preparing to launch a new technology-driven business model for dedicated transportation services. A major component in this model is a software interface that Greatwide has developed to link its fleet dispatch system to “outside” dispatch packages that shippers use to operate their private trucking fleets. The software interface enables Greatwide to provide its customers with visibility of Greatwide trucks and to make optimal load assignments and routing decisions for all assets in the system.

Preparing to launch
With these core technologies in place, Greatwide in December 2006 entered into an agreement to manage a fleet of owner-operators for a major Fortune 500 company food producer. This company had added the owner-operator division from an acquisition and was looking for an owner-operator management arm separate from the large private truck fleet it operates. As part of the agreement with Greatwide, the owner-operators – now leased to Greatwide – use the client’s trailers and are dispatched centrally from the client’s dispatch software. The client uses its own power-to-load optimization system to assign freight to its own private fleet as well as the owner-operators.

“Our owner-operators are automatically added to the system using an interface,” Voelk says. “Our capacity is considered equal from a load assignment and time-at-home perspective.” Driver settlement and billing is supported through a load information interface from the client to a third party that scans and indexes electronic images of load receipts and provides a daily file to Greatwide’s Web-based system. The client then can review and audit load charges through the Web using Greatwide’s software. Greatwide then completes the auditing, billing and driver settlement process.

Voelk says this is a departure from traditional dedicated, and is more like truckload from a management perspective. The solution is original in that Greatwide is operating its trucks on the client’s system for “one single solve.” Greatwide executes the dispatch decisions made by the client to its fleet of owner-operators. However, the joint-optimization process with a major shipper presents challenges, Voelk says. As with any common carrier, truckload or less-than-truckload, Greatwide has to recruit drivers in defined yet changing geographical areas. “Though it can be a challenge, the upside is substantial,” Voelk says. “Our dedicated grocery haulers have an over-the-road option for the short or long term.”

In a larger sense, the business model – with large shippers using the interface to Greatwide – presents an opportunity to create virtual private fleets or “flexible capacity” for other shippers, Voelk says. To illustrate the concept, consider a typical transportation network that consists of multiple shippers tendering loads to the same truck; or vice versa, multiple trucks soliciting the same freight from one shipper. With typical common-carrier truckload, a shipper tenders a load to a carrier based on the “rate” – a low rate signifies that the carrier has trucks close by in sufficient quantities. “Rates are really an abstract method to find out where trucks are,” Voelk says.

The flexible capacity network that Voelk envisions operates with this base idea. In this model, the shippers tender loads to a Greatwide driver pool. The capacity is optimized to create the greatest economic gain by comparing the average common-carrier lane cost with the selected driver. Greatwide is capable of providing the flexible dedicated capacity within the network as well as the optimization system. “The idea is to eliminate empty miles, and do it in the right lanes where common carriers are giving the high-cost alternative, essentially meaning there is a scarcity of trucks in those markets,” Voelk says. If the system determines the freight can’t be hauled economically by the shipper with its own private fleet or with Greatwide’s dedicated “flexible capacity” fleet, then it is given back to the shipper to give to common carriers.

Down the road
In the future, Voelk says Greatwide wants to be involved at the bid optimization project level with shippers to determine common-carrier volumes and pricing. One of the weaknesses of bid optimization solutions today is that the solution tends to atrophy after the awards are let out, and the timing of dedicated engineering is not synchronized with the awarding of lanes. “The rate guide starts to erode as carrier and shipper networks change and markets move,” Voelk says. “You need to manage commitments and execution to common carriers and discover areas where a dedicated fleet fits in. From a high level, it’s best to do procurement and dedicated engineering at once if you can.”

Once bids are collected, Greatwide feels that is the ideal time to run an analysis to determine what the dedicated makeup will look like, and how much savings a dedicated fleet could bring. “The process of moving from carrier alignment toward dedicated is an interesting way of selling dedicated,” Voelk says. “It starts with the right base information. We feel we want to get in the business of managing carrier costs.”

Innovators profiles carriers and fleets that have found innovative ways to overcome trucking’s challenges.

If you know a carrier that has displayed innovation, contact Avery Vise at or (800) 633-5953.