Artificial intelligence can improve driver utilization and maximize fleet efficiency

Jason Cannon

This week's 10-44 is brought to you by Chevron Delo 600 ADF Ultra Low Ash diesel engine oil. It's time to kick some ash.

Matt Cole

How artificial intelligence can help improve driver utilization and maximize fleet efficiency.

Jason Cannon

Hey everybody, and welcome back to the 10-44, a weekly webisode from the editors here at CCJ. I'm Jason Cannon, and my co-host, as always on the other side, is Matt Cole. Trucking companies everywhere are always looking for ways to become more efficient, whether that's with a driver, truck utilization, or something else, most fleets have areas they can improve on.

Matt Cole

One way that is emerging that can help fleets is by using artificial intelligence to find ways to be more efficient. Today, we are joined by Priyesh Ranjan, CEO of AI driven supply chain platform, Vorto, who talks about how Vorto started out as a TMS provider and came to be driven by AI.

Priyesh Ranjan

I came in 2017, 2018. And at the time, we used to be a transportation management software company, like a TMS. And one of the main aspects that we were very heavily focused on is how do we fix driver utilization and maximize efficiencies. Then, we were starting to realize that being a TMS company would not solve for that, as supply chain is very complex all the way from how procurement happens, logistics happens, scheduling of pickup appointment times, picking a carrier, picking a driver, so on and so forth. So, we shut the company down and we started a new platform. That's when I came in. And it was an autonomous supply chain platform where we automated procurement and logistics at the same time. And to our surprise, within a year, I think our run rate was about $2.3 billion through the platform. So, this thing took over pretty quickly.

Priyesh Ranjan

And one of the biggest value propositions that it drove is it was a fully automated platform all the way from predicting the demand for the shipper to sourcing raw materials from suppliers to scheduling pickup appointment times to tendering to the carrier to dispatching the driver to paying the driver. Everything was fully automated. And because of that, what the software was able to do, it was able to constantly react to changes in supply chain, which allowed us to move the same amount of payload with 66% less trucks. And that's where the aha moment clicked in that we need to really progress in this journey.

Jason CannonLast year, Vorto launched 5F, a fully integrated transportation platform that links shippers and brokers, owner operators, asset owners, yard and maintenance facilities, and drivers.

Priyesh Ranjan

Post-COVID, a lot of the customers came to us and said, "Look, you guys have already built a software platform that shippers use, suppliers use, carriers use. Why don't you all get into trucking, considering there's so much driver shortage?" So, as we started looking into the trucking world, we started realizing that there were a lot of manual aggregators who play different roles to provide capacity to shippers. And the learning was 96% of America's carriers are less than 20 trucks. So, very small carriers. And the $800 billion of shippers are all fragmented, too. So, you would end up having a broker in the middle who goes and aggregates to shippers. You would end up having carriers in the middle who would go and aggregate owner operators. And then, you would have all these different groups working with each other. So, we launched a platform, called 5F, where there are basically five customers. Shippers and brokers bring the volume to it.

Priyesh Ranjan

Owner-operators bring the trucking capacity to it. Asset owners put assets on it so that the owner-operators have access to different types of trailers. May that be reefers, dry van and so forth. There is a whole yard and maintenance infrastructure where a lot of maintenance shops are on it, where they are the ones who maintain those assets and secure those assets so you can find them all across the country. And then, there is a database of drivers that we let the owner-operators access so they can hire more drivers. So, 5F is basically taking all those different angles of interactions that all have to come together for trucking to happen.

Priyesh Ranjan

That means connecting the shippers and the brokers with capacity and assets and have the infrastructure. Obviously, it's a software platform. So, it's a very asset light concept where it's letting all these participants come in and automatically transact with each other. And 5F has been incredibly successful. We launched this on March 7th of last year, and within a short period of time, we went to 3,000 to now I think well over 6,000 owner-operators on the platform, as well as shippers and brokers on the platform.

Matt Cole

Priyesh said freight transportation is one of the most inefficient industries he's come across. Earlier this summer, when fears of a diesel shortage surfaced, which thankfully didn't come to fruition, the effects of such a shortage would've exacerbated the already inefficient trucking industry.

Priyesh Ranjan

Freight itself is probably one of the most inefficient industries that I have ever come across. 40% of a trucker's time is either idle or it's deadhead, right? So, it's empty, empty miles. So, you already have this incredible inefficiency. And the way we get through it is brute force and by just paying more, right? So, the consumer pays more for that inefficiency so that the trucker can, for basic means, just break even. And now, if you create this shortage of diesel, you would have stranded trucks all over, right? You would have to do rationing and so on and so forth.

Priyesh Ranjan

And there wouldn't be any short term answer. There's a lot of efforts going on with electric trucks, but all those things are not short term solutions. Those are technologies being evolved where, eventually, I can see a world where they would do short hauls, relays so that they could drop and haul, and they could create certain networks like trains, like small little trains, right? For a lot of that to happen, it's going to take some time. A lot of technology has to get developed. A lot of adoption has to happen. And the short term, it would just be mayhem, to put it simple.

Jason Cannon

Priyesh said the inefficiencies of trucking are where AI can come in to help. But before we hear more about that, let's hear a word from 10-44 sponsor Chevron Lubricants.

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Jason Cannon

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Priyesh Ranjan

The way to simplify this, what the root cause is and how AI ends up solving for this, is the problem statement here is you have two sides of the equation. You have one side where you have shippers, which, I was mentioning, is about $800 billion of freight. And all of them are incredibly small. Like, a shipper would do $5 million in a year, or $50 million in a year, or maybe a hundred million dollars. So, they're very small. So, because they're so small, the country's so big. So, they're looking for truckers, and on the trucking side, you have 600,000 carriers because they're so small, right? So, now a shipper cannot go and build 5,000 relationships or a trucker cannot go and build 5,000 relationships. So, that's a matchmaking problem. So, what has happened, unfortunately, in today's world is shippers tend to go through multiple layers to go find this truck.

Priyesh Ranjan

But because they go through multiple layers, the truck ends up not having efficiencies. So, they'll end up going doing a load to some... Idaho, for example, and then, they won't have a load coming out of Idaho, right? So, the way AI solves for these kinds of problems is a computer is able to very quickly figure out, "How do I mix the volume of different shippers and match it to truckers who match those preferences?" That is humanly impossible to do if you and I try to do it, right? Because it changes every day. The way we are using AI is we basically are solving for just two things. One, reducing the deadhead and idle time for truckers by mixing and matching these loads so their earnings go up. Second, dropping the line haul, the rate to the consumer, which is a shipper. Or in our case, is a shipper or a broker.

Priyesh Ranjan

Both of them give us volume. And you create a win win. They want capacity. You're giving them good, reliable capacity at a lower cost. Truckers want volume. You're giving them good volume at higher earnings. And it is an interesting dynamic. Sometimes it's a head scratcher. So, the earnings go up for the trucker and the rates go down for a shipper. That just tells you how inefficient this matchmaking problem is. That there is so much fat in the middle that, yeah, it can remove just simple numbers I'll give you. In the short haul world, we work in the oil and gas world, as well. I think we have reduced the rate for shippers by almost 48% while the earnings for truckers has gone up by 50%. So, you can just see it's incredible. The OTR world, over the road, which is it's a different problem statement.

Priyesh Ranjan

The country's very big, and deadhead an idle time is solved in a different way. Even in that, just ballpark numbers. Shippers have seen 20 to 25% reduction in their freight costs, while truckers have seen 30 to 40% higher earnings above market. So, this problem gets solved. In every market, you're solving it differently, but you're using the same tools where you're just saying, "Okay, how do I reduce idle time and deadhead from the trucker's life, and at the same time, give this shipper good capacity by mixing other shippers?" Because every shipper is too small to create efficiencies. But a computer can mix all the other shippers and almost create a volume advantage where you may be a small guy, but because you're in a platform where everybody gets mixed, you end up getting good capacity as a shipper. The same thing works for a trucker. You may be a very small guy. You may only have three trucks. But because the platform has over 6,000 on owner-operators, it gives you the efficiencies of a large platform. And that's what we are solving for. One side of the equation.

Matt Cole

Priyesh also talks about how AI can help improve transportation's impact on the environment.

Priyesh Ranjan

Transportation is a huge consumer of fossil fuels depending on the year, depending on what's happening in the global economy. When I say transportation, I mean everything. Freight, ocean, the whole nine yards, right? Air. And depending on the year or depending on what's happening in the economy, you'll always see 50 to 56, 57% of the consumption comes from transportation, right? If you saw when the oil prices went down during COVID, it's because the world had locked down and half of the demand had gone away, right? So, a lot of the carbon emissions come from that, right? I mean, it's not a no brainer, right? It's very, very simple, right?

Priyesh Ranjan

So, the world is moving in different directions, right? They're trying to change the composition of where energy comes from. May that be electric, may that be renewables, may that be fossil fuels, right? But there is also another angle in that transition, which will take some time because it's a very multifaceted and a complex problem statement. It's also how do we solve for our consumption behaviors? And how do we consume these things? And the simplest way, in the trucking world, you can reduce carbon emission is by solving for efficiency and reducing the idle time and deadhead.

Jason Cannon

That's it for this week's 10-44. You can read more on CCJdigital.com. And as always, you can find the 10-44 each week on CCJ's YouTube channel. And if you've got questions, comments, criticisms, or feedback, please hit us up at [email protected], or give us a call at 404-491-1380. Until next week, everybody stay safe.