The Present and Future of Technology for the LTL Industry—and Insight Into the Current Regulatory Landscape

Day two of the SMC³ Connections 2022 supply chain event offered a glimpse into SMC³’s exciting product roadmap for the LTL industry, with SMC³’s Chief Commercial Officer Brian Thompson delivering the morning’s keynote address. “We’ve got some tremendous things in store now and in the near future,” Thompson told the crowd of approximately 400 event attendees at the annual summer conference in San Diego.

Thompson opened by describing SMC³, a neutral trade association for the LTL industry, as sitting “in the center of the industry between shippers, 3PLs, carriers and technology providers to provide solutions that benefit everybody.”

Thompson recounted how CzarLite®, an LTL base rate pricing benchmark solution, was the launching pad that made SMC³ successful. Next came Rateware® XL, an LTL rating engine that enabled connection and running of rates through a TMS system or carrier management system. This was followed by the introduction of CarrierConnect® XL that aggregated all carrier transit data and made it available to carriers’ customer so they could compare operational data and rates. BatchMark® XL soon followed as a solution that allows bulk analysis of thousands of LTL freight bills in seconds and also serves as a tool for auditing freight bills.

SMC³’s most recent innovation, LTL APIs, enables pulling of rate quotes straight from a carrier system through an API connection. These solutions also integrate with CarrierConnect, providing visibility into carrier transit time, points directly served by carriers, bills of lading and other physical documents. Realizing smaller carriers don’t support API service, SMC³ added EDI connection to support these carriers.

“We don’t care what technology we utilize, we just want to make sure we’ve got the solution to help you execute and meet your business needs,” said Thompson.

As for the future, Thompson noted that new products and use cases were born out of ideas gathered at SMC³’s Jump Start conference breakout sessions in January 2022. For example, shippers and 3PLs shared struggles with carriers embargoing freight, creating an extremely tight environment.

“We went back to the team and needed to do something to communicate carrier operational abilities,” said Thompson. “We integrated with 750 of the largest shippers and 3PLs and thought CarrierConnect was the perfect tool to help carriers communicate to their customers based on what freight they can handle, what they can’t and what they want to handle so they can provide the level of service their customers expect.”

Thompson revealed that SMC³ is also in the process of adding new features to its Bid$ense® LTL freight transportation procurement bid tool. Going forward, Bid$ense will improve communication between carriers and bid administrators through in-app messaging, declined invitation rationale and other communications functionality. SMC³ also added system-generated notifications in Q2 of 2022 to the solution and a feedback thermometer is coming in Q4. Bid$ense has also been integrated with CarrierConnect so shippers can see transit times and SMC³ is working on integrating assessorial analytics into the tool for release in 2023.

“We’re coupling products to add more value, simplify processes and improve the user experience,” said Thompson.

Also in the works is a new interface for BatchMark that adds new tools that simplify decision-making and a guided path that serves up only the questions necessary for a specific use case, rather than the typical 30 fields. The new interface will be launched with several use cases by the end of 2022, with more use cases built into the solution throughout 2023. In addition, SMC³’s LTL API suite is being expanded to include a stand-alone user interface (UI) for credential management and a service orchestration feature planned down the road.

Thompson noted that SMC³’s FastClass® LTL freight classification tool is being refreshed with improved search functionality that will reduce classification updates from the current four- to six-week timeline to just two to three days. This improvement will be released in the next 60 days.

“These solutions keep building on each other in truly exciting ways,” said Thompson.

Navigating Regulatory Hurdles

On the regulatory front, a four-panel session featured insight from John Bagileo, attorney at the Law Office of John R. Bagileo, Mike Kelley, vice president of external affairs at Yellow Corp, Chris Shimoda, senior vice president of government affairs at the California Trucking Association (CTA) and Bill Sullivan, executive vice president of advocacy at the American Trucking Association (ATA).

Bagileo kicked off the session recounting his days right out of law school as an attorney at the Interstate Commerce Commission (ICC), which regulated carrier operations transporting goods between the states. Citing a variety of onerous problems with the ICC’s tight industry regulation, Bagileo noted several waves of deregulation from 1980 through 1994 were intended to ease regulations related to rates, rules, practices and services of carriers serving interstate commerce.

“But it was not as deregulated as you might think,” said Bagileo.

Sullivan echoed that sentiment, noting “We began as a regulated industry and moved through deregulation seeing a diffusing or fragmentation, and it feels like the pendulum is swinging back now.”

The ATA is focused on several areas that impact the LTL sector, said Sullivan. First is traffic congestion that idles roughly 400,000 trucks a year. He lauded the ATA-supported federal bipartisan infrastructure law, which includes streamlining permitting, launching a younger driver apprentice program, implementing smart safety advancements and mandating new equipment.

“Many of our members were giving us feedback that they were frustrated with the infrastructure bill because they heard in the media that it’s a social bill, but that’s garbage,” said Sullivan. “What’s in the bill is great…and what’s great is what’s not in the bill.”

Workforce issues and ongoing driver shortages are also a key focus for the ATA. Sullivan said 36 is the average age of a driver coming into a private training school today and 92% of the industry is comprised of white males. Also, there’s constant attrition because many view the trucking industry as a job of last resort.

“Our long-term plan is to shift the demographic bubble so young men and women who want to work hard but don’t want to go to college can access this middle-class career and choose it in the beginning of their work life—not in their 30s when they have a family, obligations and limited ability to shift around the industry,” said Sullivan.

In California, the CTA sees one of its biggest challenges is a state bill that passed in 2018 where independent contractors have to be a separate line of business from the contracting company. The CTA has filed a lawsuit and received a preliminary injunction that remains in place today. The CTA is awaiting a decision from the U.S. Supreme Court on whether the justices will take up the case, which impacts 70,000 independent truckers in California.

“We need to add 80,000 truckers a year to keep up with demand. Don’t run off 70,000 truckers in the state,” said Shimoda. “If independent truckers go away, the pressure on getting drivers will increase for everybody. If you think you’re having trouble getting drivers today, just wait and see if all these folks are no longer able to roll in the state.”

Another major hurdle for California is emissions regulations. The state is coming up on a final deadline for the EPA’s Truck & Bus Regulation that stipulates every truck will have to be equipped with a 2010 model year emission engine or better by the end of 2022.

Shimoda also noted that the Advanced Clean Fleets regulation draft language, if adopted by the California Air Resources Board (CARB) this October, would have grave implications for the industry. It stipulates that trucking companies will be required to start moving toward zero emission vehicles as soon as 2024—with phase-in by 2040. The proposed regulation applies to fleets of 50 or more trucks, fleets with at least one truck operating above 8,500 gross vehicle weight rating (GVWR), trucking companies with greater than $50 million in revenue nationwide and motor carriers of any size operating at major seaports or intermodal rail yards.

“I don’t know of a more consequential rule that is being proposed as the Advanced Clean Fleets regulation,” said Shimoda. “We don’t have the infrastructure in place to support this regulation. We’ll need more energy, and utility companies will have to make billions in investment to support charging.”

Kelley, overseeing one of the largest trucking companies in the U.S., echoed Shimoda’s alarm. “We see the future of trucking that meets the diversity of fuels, but that’s a ways down the road,” Kelley said. “We’re not ready to write the obituary on the internal combustion engine yet. It still has a lot of mileage.”

Plus, Kelly said the industry can’t follow a field of dream analogy where if you build one million Class A power vehicles, a stable and reliable power grid will come. To go forward toward zero emissions, the industry needs a power grid that is reliable, stable and can handle the introduction of renewable energy, said Kelley.

According to Kelley, the best way the industry can go forward to reduce emission right now is to pass the Modern Clean and Safe Trucks Act that is lingering in Congress. This act would repeal the current 12% excise tax on the trucking industry, opening the door for trucking companies to purchase modern, fuel-efficient vehicles.

“This could move the ball on environmental and safety and reduce dependency on diesel fuel,” Kelley said.

To address workforce challenges, Kelley’s trucking company has set up 20 driving academies through the U.S. Department of Labor apprenticeship program and it expects to produce 1,000 new drivers. “It’s a tuition-free, earn-while-you-learn program that allows us to be competitive for training,” Kelley said.

The three-day Connections supply chain event produced annually by SMC³ provides the ideal environment for qualitative, valuable networking and industry education. Carriers, shippers, logistics service providers and technology providers consistently attend the summer’s premier collaborative supply chain intelligence event for its unrivaled networking opportunities, top-tier presenters and timely content to finish 2022 strong.

To learn more about SMC³ supply chain conferences, visit http://www.smc3.com/supply-chain-education.htm.