Drop Trailer Programs for Freight Brokers | Episode 267
Freight 360
October 25, 2024
Curious about how a small change in logistics can make a big impact? In this episode, we dive into drop trailer programs and trailer pools, showing how these strategies can improve efficiency for shippers and carriers. We explore the flexibility of drop-and-hook operations and power-only carriers, along with the importance of container management and preventing costly per diem charges. We’ll also discuss how platforms like Repowr are transforming drop trailer programs, offering practical tips on reducing idle time, boosting flexibility, and cutting costs. Whether you’re in freight brokerage or logistics, you’ll find strategies to enhance your operations.
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See full episode transcriptTranscript is autogenerated by AI
Welcome back. It's another episode of the Free360 Podcast. We're trying out a new but not new to us, but new for first time in a while new recording software here, so let's hope this works out good. It's going to be a good episode. We're going to talk about drop trailers and trailer pools today, something that we've never I don't think we've ever really dug into, but we're going to break it down from a 40,000 foot view. But first, as always, if you are newer to the show, please make sure to check out all the other content at the website Freight360.net. You can also check us out on YouTube, all your podcast sources. Share us with your friends and while you're on our website, you can hit the contact form to ask us a question. You can subscribe to our twice-a-week newsletter and check out the Freight Broker Basics course. That'll give you an option for a full-length training on how to start a brokerage. Ben, how are we doing, man? We're coming off of a good-feeling week for our football teams. I know that much.
Speaker 2: 1:23Yeah, it was definitely a hell of a game to watch. I mean, it's probably one of the better Steeler games I've seen in the past few years.
Speaker 1: 1:30So yeah, a couple of blowout wins from the Bills and Steelers there there was a couple of. There was a few really good NFL games this past weekend but I was. I was interested because you guys had the Jets right and everyone was like Aaron Rodgers, devante Adams and I think Devante Adams went like three catches out of 10 attempts for like 30 yards it was. It was not impressive, but so they dropped two in five. Do I want to say Bills had a nice win over the Titans. They're five and two. Steelers are five and two.
Speaker 2: 2:12It's a good feeling man, yeah, and I think Cincinnati beat Cleveland at least from the last time I've checked.
Speaker 1: 2:17Yeah, yeah, yeah, cleveland is not looking good this year and Deshaun Watson got hurt, I believe. Oh, yeah, if you're a, if you are a Cleveland Browns fan, I feel for you right now, because that is like they basically, if you look at the cap, hit I think Deshaun Watson. His cap space is like 70 something million dollars this year and next year.
Speaker 2: 2:43Plus they give him a bunch of draft picks too.
Speaker 1: 2:46Yeah, so anyway, chiefs still holding it undefeated. We're going to have to get Trey on here in a future episode to talk a little football and a little business and freight and love, some banter Anything else in sports.
Speaker 2: 3:07That's pretty much it.
Speaker 1: 3:08It's that time of year though, man, the basketball is coming back. Oh, obviously, we're in the World Series now. We've got that. As I called last week, dodgers and Yankees are going to the World Series or are in the World Series now. So, yeah, we'll, we'll see how that pans out over the next week or so. News so yeah, we'll, uh, we'll see how that pans out over the next week or so. Um, news we got anything in the news space. I just had our news are. Just, we were recording on tuesday this week the newsletter just went out. Um, there was, let me, let me pull it up here and see what we had.
Speaker 1: 3:40So headlines, the freight, all of the like hurricane, you know, all the disruptions. Everything seems to have been, has eased at this point. So we're about what a week, two weeks post hurricane, like double hurricane hit to Florida and it looks like tender volumes are falling back down. Rejection rates are dipping. Those are all signs of the market loosening back up down there to where it was pre hurricane. So if you got in on any of the opportunities, they're good on you. If not, it's back to the old school prospecting port volumes in LA. I know we hit on this a little last week in our newsletter, but they had a one trillion dollar milestone of the amount of imports in this quarter alone, or Q3. The one quarter we just finished up.
Speaker 1: 4:35So a lot of activity. If you ever look at the DAT's market map, the market is called the market, it's not the index, but it's always red outbound from California. It's so, so tight there. So a lot of opportunities. Also, and here's a nice little, I'll just read it verbatim If you're looking for some government spending to help boost the freight market, the Biden administration is committing nearly two billion dollars to fortify the nation's electric grid, aiming to protect it from extreme weather events like Hurricane Helene and Milton. So government spending is not always the way for the freight market to be corrected, but the what do they call it? The, the, something. The geopolitical climate often has an effect on the economy and spending which obviously trickles down to us. So two billion, it's a drop in the bucket in the grand scheme, but there's obviously going to be opportunities if you're in that space. And what else do we have? Uh, chassis regulations. A new study suggests that tighter enforcement, rather than new policies, is the key to improving safety in the intermodal chassis market. So check that article out as well. Basically saying that we don't have to change the regulations but enforce, kind of the same way that the fmcsa doesn't enforce uh, really much with fraudulent brokerage activities.
Speaker 1: 6:06So those are some of your little tidbits and highlights. I've got a new. So when this drops Friday, our Thursday newsletter will have dropped as well. We were testing out a new format for the, the market update that comes from DAT, so it's going to be a little bit more easy to digest versus the verbatim from Dean Croke. So stay tuned for that and check that out. Sign up at the at the website. Cool, you got anything else in news or sports or anything else. You and I are gonna be hanging out this weekend. Man, I'm excited for that Coming down to Florida.
Speaker 2: 6:39See you at Disney this weekend. Never been there before, so super excited to take my daughter there. My son's in town, so it'll be my first trip up there.
Speaker 1: 6:49Yeah, there's a lot to do there. The first time I ever went to Disney World I was an adult, with my wife and I was like I don't want to go, it's a kid thing. And then you go there. You realize it's an adult playground as well. They have literally stuff for adults to do. It's like it's an adult playground as well, like they have literally stuff for adults to do. It's funny. My old boss at my, the first brokerage I worked at because that was the first time I was gone I was like man, I'm not looking forward to it. He's like he tells me he's like Nate, he's like. He's like you are going to love Disney World. He's like the reason that dads and guys will go there is they sell beer like every 10 feet. He's like so you can, you can, you can walk around and push a stroller and literally grab a cocktail or a beer, like anywhere you want to go.
Speaker 2: 7:33So yeah, there's definitely some upside, because I had this similar sentiment in my head when we were planning it, exactly what you said.
Speaker 1: 7:41So so Sunday we're doing that's when we'll see you we're doing epcot and if you've ever been to epcot, they have a. It's called like the world showcase, I think, and it's a. There's a giant lake and around the lake are all these different themed pavilion. They're themed after countries. They're like pavilions and expos, but they have food and drinks and um shopping and music and stuff. That's themed for each country and I think there's like 10 or 13 or something, but people call it drinking around the world.
Speaker 1: 8:09So the goal is you have to have a drink at every country around the world. So we had, we made T-shirts that said because it's also the Bills play that afternoon, so it says our shirts say drink around the world during the day, bill's Mafia by night. So you'll you'll probably laugh at our. It's my family and my brother's family and we're that weird, we'll be that weird group at Disney that has matching shirts. Ben, you're going to see a lot of those like families go in, like groups of like 20 people, like extended families, and they all wear the same bright colored shirts so they can find each other.
Speaker 2: 8:43It's hilarious sense yeah, I could see that. Yeah, I'm looking forward to it. Never been to your point. I'm really excited. I mean my daughter's super into, obviously, the princesses. My wife we got her I think. She has like five or six different princess dresses, like the full costumes, from rapunzel to bell to. So we're gonna do like the princess dinner, I think Saturday and I think Sunday, one at Magic Kingdom and then one at Epcot. I know like she's super excited for it, so nice very good, well, cool, let's get into, uh, drop trailer.
Speaker 1: 9:15Today we gotta start off like very, very basic here, because I think for like the first like three or four years that I worked in this industry, I would hear like drop trailer and trailer pull. And I was like what, because it's not something you typically learn, like we don't even talk about it in our course. We teach the TIS course. We don't talk about it at all there, unless somebody would ask us a question about it. But let's talk about what drop trailer is at its most basic level and why you would ever do it, and then we can kind of peel back to layers. Have you ever done any drop trailer, ben?
Speaker 2: 9:53I've done a lot of drop trailer. It was mostly like container drop trailers, so they weren't drop trailers, they were drop containers, but they function the same.
Speaker 1: 10:00I've done.
Speaker 2: 10:01Drop trailers but I've done way more container yards, setting up container pools, which are trailer pools. There's the same thing they're sitting on a chassis, they're loading them, we're bringing in either imports or exports, coordinating them. Did a lot of that, like 2017, 18 and again less on, like driving and trailers and things, but definitely familiar with the process so it functions the way, just with a different equipment type.
Speaker 1: 10:23So if we, I'll paint the picture this way right, we've. We've talked a lot on our show about Different things and issues that will pop up with loading and with unloading as well. Right, you could have trouble checking in missing an appointment detention layovers. Checking in missing an appointment detention layovers, slow load times, congestion in the actual loading facilities, because if you, let's say, you've got a large facility and they've got 100 dock doors like think about a big distribution center and you got 100 trucks all trying to get in and back into their to their dock door to get unloaded or to get loaded, it's pretty, it's chaotic, right, and especially if it's first come, first serve, and you got to wait in line and all this. So a solution to that is, in some cases, a drop trailer program. Oh, here comes producer Steve and we'll let him in, good deal. Hey, steven, I I don't know if you're in producer mode or not, but, um, all right, so the uh drop trailer.
Speaker 1: 11:30The solution would be you can stage empty trailers at a customer's facility. They can load it in their free time. It could be overnight, it could be days before. You know, case by case it could, you know, would depend on that. That way, when someone comes to pick that trailer up, it's already loaded. It's probably staged somewhere off to the side. They don't have to back up to a doctor, they just hook it and they go in and out. Really quick solves a whole bunch of headaches right At its most basic sense.
Speaker 2: 12:00Yes, and the thing I would add is the other use and you kind of like touched on it it's there's not enough warehousing space right. Oftentimes these are set up because it's just an extension of the warehouse. They got a bunch of product coming in. It's not perishable, they don't have the warehouse space or they don't have the warehouse organized in the way that they wear. They want that product right. So as that space opens up, they will bring in more of the loaded trailers from the parking lot, get them into the slots they need and, vice versa, get product out in the same way Makes the facility more efficient, gives them extended warehousing space, reduces turn time for the drivers.
Speaker 2: 12:35They're able to drop and hook. Drop the empty hook, the loaded, take that one out. And it makes it more convenient for the facility because, to your point, they don't need to wait for a specific truck to get there to load that specific order. They grab the next empty trailer, jot the number down, make sure they know which product is in which trailer. So when the drivers show up they know which trailer to go pick up and go run to the customer.
Speaker 1: 12:59Precisely, yep. So we actually, when I worked for an asset-based company, it's different. So we actually, when I worked for an asset based company, it's. It's different obviously because it's your own trailers, but we would preload a lot of our trailers that were going to get line hauled and we would stage them out in the yard, and the yard being like the giant paved area around the terminal. And that way, when if it was a, let's say, it was getting brokered and we would have a third party because I worked for Conway Freight, it was an LTL company. So if something was going, let's say, east coast to west coast, we're not going to run it through our LTL network and stop at every single terminal across the country on its way and get unloaded and reloaded. We would just box everything up, go on east to west, stage it out there. You'd have, you know, another full truckload company come in, They'd hook our loaded trailer and, yeah, they might drop an empty and hook a loaded one and go right. So that just brings up another point.
Speaker 1: 13:58There's multiple ways to do drop trailer. You can have it where a a trucking company has access trailers so they'll keep some empty trailers available to stage at a shipper so they can bring an empty in, drop it in the yard, hook a loaded one and go down the road. There's no load time, right, it's just hook and go. Another option would be unless you have something to add there, finish that, and then I'll. The other option would be power only right and we find this more common if you get power only carriers and if you can get a a way to have trailers that maybe don't belong to that power company. Maybe you're leasing them from somewhere, and we'll talk about options about that in a little bit. You can lease a bunch of trailers or get a bunch of trailers, have them stage at your customer, and now you're just hiring power only carriers to come in, and they don't have to drop an empty, they just drive their, hook a loaded trailer and head down the road to delivery. What did you have to add there, though?
Speaker 2: 14:55I'd say the third one is you can also have a driver go in the day before. Drops their empty, takes the reset, grabs the loaded when the reset's over is probably the third option.
Speaker 1: 15:07Yeah, we can't skip over that one, and that's a great one. Like you said, depending on how their hours work, if they're able to get to the loading facility the night before, like you said, drop their empty, take their 10 hours, come back at the appropriate time the next day and then they're off to the races. Fourth, one.
Speaker 2: 16:36So the fourth one, and it's not I wouldn't even say it's that different. It kind of has a different motivation. But it's container yards, actually they're called container pools, right. So oftentimes when a company is bringing in a lot of imports for example, like I did this with a company in Ohio and they were MREs for the military, so these were military containers coming in from overseas and a lot of them would come in at one given time right, like 50, 70, 100 containers coming in within a given month right, that facility cannot unload that many containers or didn't have the warehousing space to put all of this product as it was coming in. However, when it comes through the port, you pay demurrage if that container sits at the port too long. So they can't leave them there because they're paying upwards of two $300 a day after a few days. That's too expensive.
Speaker 2: 17:26So what we do is we run the similar thing with drop-in hooks back to the facility, meaning like for the first four or five we run, we call them my mind just went blank bobtails. They call it a bobtail because when the tractor is driving without the trailer, it doesn't have the weight in the back. So sometimes when it's slippery or there's snow, it literally bobtails. Right, there's less weight in the back, so we would take the import, grab it with the chassis, take it out there and then you leave the container on the chassis in the parking lot at the facility. Then you're bringing the next one. You bring five out, right, maybe the first day, because that's how many they can unload in any given day or that they can get out of the company. Then the next day maybe you're bringing in 10 a day, so you got 10 coming in, five empties coming back out. The next day maybe you got 10 more loaded coming in, 10 empties coming out. And that's really what you're doing, like you're giving the warehouse more space, you're being able to get them out of the port so they're not paying demurrage, and then you're able to charge per day for your chassis sitting in their yard and a little bit of a premium for the time and use to the carrier that they get paid for the chassis sitting there.
Speaker 2: 18:36The thing I wanted to segue into are what are the downsides and what are the risks to doing this right? The big one is organization. So for containers, you need to know which container was taken by which driver, which creates somewhat of an issue because most TMSs don't have the ability to put two different container numbers on one truck. But yet you've got one guy coming in with container CMAU 1, 2, 3, 4, 6, coming back with DEAU 4, 5, 6, 7, 8, 9. So it's like a half of a transaction because you didn't complete the full turn on the one container to be able to invoice it, but the driver completed a full turn, took a loaded one in and an empty one out, so you owe him for a full trip both directions.
Speaker 1: 19:21However, you can't really bill your customer until you have taken Customer cares about the container move. Not half of this one and half of that one.
Speaker 2: 19:28Right. So it creates some organizational challenges to making sure which containers are on which drivers, which ones are still on the lot, which empties need to be returned. And there's a cost to that too, because if you let one container stay there too long now that container is going to run into per diem because it's been sitting there empty for two weeks Now. The steamship line's charging your customer per day because the empty hasn't been returned. So you have to do it first in, first out. Yeah, so the first one that comes in. Once you get the yard established, you need to make sure your customer is aware of which order they came so they can unload them in the same order to get them back out. So you don't end up with two containers sitting there for three weeks and the other ones getting turned over every two or three days, because then you end up with a very big bill that you don't see. They just get it from the steamship line three weeks from now or a month from now for a couple hundred or a couple thousand dollars. Like, well, what's his bill for? Well, it's because you didn't manage your container pool correctly, as in which container stayed there too long. And again, the other issue is the organization to paying your carriers because they're going to send you like you would in the drayage world. It's not really a bol, but we'll call it. That is like you'll have two for each trip.
Speaker 2: 20:45They took a loaded one. What do they call it? Well, well, it isn't. It is a bol, right, but like it's not a, it's not a.
Speaker 2: 20:52I guess it is technically your pod, because they're going to sign it when you take it there. But oftentimes when you're running the container yard in the pool, like, they go in and check in but they don't always sign them because they haven't emptied them. So sometimes they'll just keep that document there until it's unloaded. But your driver needs some form to come back and say this loaded container was parked at this spot, at this facility, and we would have them, like, take a picture of it so that we could verify that container was on the property, which spot it was parked in, which number was on it and then convey that back to the customer so they knew which one they had to give back. But it does layer on something, because most of these systems aren't built to do that and I know some TMSs probably can do this now, but it used to create tons of invoicing issues because, again, like you're not just matching up one load number to one invoice and they're not built to do that.
Speaker 1: 21:44Yeah, I never thought about that. That's interesting. Yeah, you could. I mean the same thing.
Speaker 2: 21:52Well, first of all, possession of trailers for your dry trailers too. Right, like if I'm a carrier, stephen's a carrier and you're a carrier and we all service the facility with drop trailers, and that company goes oh no, this load's got to go out next, but yet they loaded Stephen's trailer and your truck's there. Oftentimes they'll just give that trailer to you and go well, this one needs to go there. Well, now that trailer is in wherever in the country and it's got to come back. Well, that driver needs to either get paid to bring the empty trailer back or somebody's got to keep track of where this trailer is. And this is a huge issue. Like we do like gen logs we talk with them a lot like finding lost trailers and lost equipment. Like this is a huge issue for large fleets, because when you have hundreds or thousands of trailers around the country, knowing what is, where and when it was taken there becomes a whole task onto itself.
Speaker 1: 22:39Yeah, so for your to add to your glossary of definitions, you mentioned chassis or not chassis, a container pool. Right, the same thing would apply with a trailer pool. So if you ever hear that, I think about it's a big pool, a big group of trailers or of containers. And I did say chassis pool. That's the same thing too. We're not talking dredge today, though, so we'll leave that one out. So I want to get into, I want to, I want to highlight the concept of a loadout.
Speaker 1: 23:12I don't know if you've ever done anything with a loadout trailer before. So, basically, let's say, as a freight broker, you have secured a, let's say, you've got 10 trailers and you've leased them or rented them or whatever from some company and we'll talk about options for that in a little bit and you are going to get them staged at your customer's facility to do a drop trailer program, because your customer says, hey, I'm going to need 10 trailers, that way I can get them loaded up in our time. We'll get trucks in there and then you know they'll get, they'll get sent out at, you know, once they're loaded, according to our schedule. Well, a loadout is when, let's say, let's say I'm my customers in Chattanooga and the trailers that I'm renting or leasing. They're currently in Atlanta, a couple hours away, all right, and I want to hire a power only truck to well 10 of them in this case, or 10 trips worth. I need to find power only truck to well, 10 of them in this case, or 10 trips worth. I need to find power only trucks to pick up my empty trailers that are currently in Atlanta and get them up to my customer in Chattanooga to drop off there. A loadout is when I can tell a power only carrier hey, I need you to pick this empty trailer up in Atlanta and it needs to be in Chattanooga and we'll say three days from now you can use that trailer for wherever you want between now and when it gets to Chattanooga three days from now, for free, right or included in your rate. So a lot of times you can get it. That's called a loadout. They can take the trailer and load it and go house like they could pick it up in atlanta, go across town, pick up another load in atlanta, go run a load up to knoxville or nashville and then bring it back empty to chattanooga, or they can do as many varieties of that that they want to as long as my trailer gets to chattanooga when it needs to be in chattanooga. So that's a great selling point.
Speaker 1: 25:13So we've actually got a project that we've been working on this whole year. It appears for a customer actually a couple of customers but the main big project is it's a big drop trailer program and we're sourcing these trailers from various different companies and they're not all in one location, they're kind of scattered around and we're right now in the process of getting them all positioned to our customer's facility. So we've got to hire power only carriers to snag the empty trailer, bring it to the customer's facility. They have plenty of lead time and we're letting them. We're doing it as a loadout. They can use it for a couple of days as long as it gets to where it has to get to on time. The carrier can do whatever they want with it. So in some of these cases we're not paying them anything. They'll haul it for free, because now they're able to use that equipment and go get paid by someone else to move freight. And sometimes you pay them a little bit of money, maybe 100 bucks or 200 bucks, but and sometimes you pay them a little bit of money, maybe 100 bucks or 200 bucks, but you're not paying on the full line haul rate that you normally would if it's a, if it's their trailer and a full load, because there's a value add there. So it's obviously a more of a complex situation there. But you'll see loadouts a lot with.
Speaker 1: 26:28Years ago we used to do we used one of our customers was a trailer manufacturer to do we used one of our customers was a trailer manufacturer. So every time that someone would order a fleet would order a bunch of new trailers, like Wabash, for example, as a manufacturer. Let's say, trucking company buys 10 new trailers and Wabash is our customer. Well, we've got 10 brand new trailers and we were allowed I think it was like 10 days worth from pickup until it had to get to the trucking company. They could do whatever they wanted with it. So it was amazing because you can sell these loads for really low cost to a power only truck and now they've got free equipment to use and make extra money, right? So that's that's the whole concept of loadout. Now, keep in mind here if you are, if it's a loadout, if it's a leased or rented trailer, if it's anything outside of that trucking company's own equipment, it's not insured by their standard insurance Right so.
Speaker 2: 27:27I want to ask you that I was like we need to segue into some trailer interchange insurance and 100 percent works, into some trailer interchange insurance and 100% works.
Speaker 1: 27:33So if we go back to Ben your first example truck you know, drop. They get there at night, drop their trailer, take their reset, pick it up in the morning. It's their trailer, their insurance covers it, right. But if it's a trailer manufacturer doing a loadout, if it's a leased or rented trailer that you've that you're using from somebody else, that equipment is not covered by the carrier's insurance because it's not one of their, their trailers. This is where trailer interchange comes into play.
Speaker 1: 28:02So trailer interchange is a separate policy that a motor carrier would need to have, and most of the power line carriers are going to have this by default because they don't. If they don't own any equipment, naturally they're going to have this by default because if they don't own any equipment, naturally they're going to have to have insurance for someone else's equipment. So trailer interchange will allow them to have insurance to cover someone else's equipment. So we'll see this in the case of leased trailers, of loadout trailers for new manufactured equipment. You'll also see it if a truck breaks down and another power only carrier comes in to haul that first carrier's equipment to delivery or to wherever Right.
Speaker 1: 28:42Trailer interchange will then cover it. You need to have an agreement in place that states so you have a trailer interchange agreement which states all the contractual language and then the actual insurance. Sometimes it's only like ten thousand dollars or it could be more. Um, it's not like your standard cargo insurance of a hundred grand. It's just covering damage to that trailer. So if they were to get into an accident, or if they were to back into a loading dock or something like that, to uncover any of the physical damage to the, to the trailer itself, um, anything else on interchange to I'd add this that is the exact same reason why, when you move containers, you need to have a carrier that is a member of the UIIA.
Speaker 2: 29:26I really should know this Uniform.
Speaker 1: 29:28Intermodal Interchange Agreement.
Speaker 2: 29:30Yeah, and what that is is basically an organization that just has all the different trailer interchange agreements with all the companies that own the containers and the chassis, so that, when-.
Speaker 1: 29:42All rolled up into one big agreement.
Speaker 2: 29:43One big agreement. And again, if you really get into the system, each carrier actually has to sign each of the agreement for every one of the SSLs that own the containers or at least amount to another company, and all the chassis, so that when they go into a port, if they got to grab a different container, they know to your point it's not their equipment, the container is not owned by them, neither is the chassis. In a lot of cases those are where all those agreements sit, so that everybody in the industry can pick and choose carriers and use them knowing that all of those agreements are in place.
Speaker 2: 30:13Yep for sure, even a good example too, if you want to read it, on what he does with one of his customers. He said he has a drop trailer customer that allows us to use their trailer. They occasionally have one-off loads that go to a unique destination, but the trailer has to come back, so they will pay round trip and allow the driver to load whatever they want coming back to the origin, provided it isn't a certain excluded commodity. And then they typically give them five days from where they were unloaded to get back to their origin.
Speaker 1: 30:43Yeah. So let me give you an example of that as a broker I'm assuming he's talking about his trucking company in that scenario, but regardless as a brokerage. So here's a situation that we're, we're we're putting together with Pierce. So we've got a bunch of lease trailers for a customer. Now I'm just going to make up the locations for the sake of this scenario here. So I've got I already mentioned how do we get our trailers to my customer, right? So now the trailer goes and delivers somewhere, but then what happens? Right? So now the trailer goes and delivers somewhere, but then what happens? Right? So we'll, I'll stick with the Nashville and Atlanta situation.
Speaker 1: 31:20As Chattanooga, atlanta, it's kind of a short one, let's go Nashville, atlanta, it's more of like a four hour drive, all right. So let's say we're shipping from Nashville down to Atlanta and I've got all my trailer staged in Nashville. My customer gets them loaded up. I get power only carriers to then drop them in Atlanta. And now what happens? Now, my, that trailer is empty, but I need to get it back to Nashville or whatever city your situation might be. So again, I'm going to look for a power only carrier to then bring that trailer. I'm going to pay them to bring it back to Nashville so it can get reloaded by my customer assuming it's not, you know, round trip freight there. So now, maybe it's the same carrier, maybe it's another carrier, but I do another loadout option there. Hey, I need you to move this empty trailer. It needs to be back in four days. You can use it for whatever you want in the meantime and you can. Sometimes you can move it at no cost, sometimes it's just very low cost. But this is how the whole system works. Right, think about the amount of value add that's going into it. I mean, albeit, it's very complex and there's a lot of things you got to track. But think about how value added is to the carrier. Right, you're giving them access to use a trailer at essentially no cost to them. Right? They have someone else's equipment and they can go use it for a handful of days or a week or whatever, and haul someone else's freight, as long as they get it delivered to wherever it's got to be at the right time. Value add to your customer You're basically guaranteeing them capacity in advance and lets them load on their schedule, so they're not worried about getting X amount of trailers loaded in a single day. If there's delays from weather or from an accident or congestion or whatever, they can load in their time, in their space, whatever works for them, and all you're doing is sending trucks in to pick it up, you know, per their schedule. Now that's the great value add.
Speaker 1: 33:21What is the? I don't want to call it the downside, but what is the added work on your end? Well, you've got to source these trailers, which means you've got to either find a company that's going to lease them at the right price, that's at a location that's close enough that you can get them there at a reasonable cost If you're going to pay anything and within the time frame that they're needed. It could be that you've got to source a full truckload carrier that has excess trailers that they're willing to haul and drop and they don't already have that business themselves. So there's a lot that goes into this. Or maybe you're dealing with like 10 different companies that are providing trailers for you and you've got to manage.
Speaker 1: 34:02Right, where is this trailer?
Speaker 1: 34:04Who does it belong to? Is the insurance in place for the carrier that's picking it up, all that goes into it, and you're paying for the cost for a whole bunch of stuff here. Right, you're paying for the rented trailer, the power only truck, et cetera. What I think you'll find, though, is that scale. If you can perfect this and this is what we did this year it appears, when it comes to a bid, you can usually come in at scale at a lower rate than if you were to bid each lane individually, assuming that it's going to be a live, live load versus a you know, drop trailer, drop and hook or whatnot. But you've got to be able to price it accordingly. You've got to be able to establish good relationships with power only carriers, with the equipment providers that are going to lease or rent you trailers.
Speaker 1: 34:55We actually found a company called Repower. It's R-E-P-O-W-R, and they're kind of like an Airbnb of trailers. It's really cool. So, essentially, what happens is like and it works two ways for us, because we have a trucking company too, and we've got some excess trailers.
Speaker 1: 35:13So if you're a trucking company and you've got equipment that's not being used, you can basically put it up on their market, and it's like Airbnb Someone can come in and rent it and you know you set your, your daily rate and any late fees, the same way that you'd have a nightly rate for an Airbnb and you know fee if you trash the place or if you smoke inside or whatnot.
Speaker 1: 35:34So now you've got your price and you've got someone can come rent your stuff. And then on the other side, let's say you're a broker or maybe you're a carrier and you're like, hey, I need some equipment to rent. You can go in there and see all their available equipment Is it a van, is it a reefer, flatbed? Where is it located? When is it available, how? What's the minimum length of days I got to rent it for, et cetera and you can go in there. So it's basically an open market for for buying or for renting and leasing equipment like that, renting and leasing equipment like that. So if you've never looked into the drop trailer option for a customer because you're like I don't know how to get the equipment, there are markets out there and there's, you know, platforms like Repower that will allow you to do that.
Speaker 2: 37:35So, yeah, pretty good stuff and it's like why is it actually cheaper? Right Cause I think from the outside you think to yourself well, if I'm going to leave five trailers there for a month, like that seems like that would be expensive. How do you end up being cheaper on a bid? Right and what's round numbers? I mean 35, 40 bucks a day for a trailer off there. I think we looked at them yesterday. Give or take, right.
Speaker 1: 37:58Yeah, I want to say well, here's the deal. It is literally supply and demand, so the numbers you just gave are in the ballpark. I have seen companies offering far lower, like in the twenties per day, because they're. They're literally like they're either sitting here making no money for me or someone's going to pay me 20 bucks a day, which is $600 a month Right. So a day, which is $600 a month, right. Or if you have a high demand, if it's a high demand season, right. It's like, hey, there's only so many available, people are going to charge higher. It's the same way that freight rates will fluctuate based on the market.
Speaker 2: 38:42And here's the other thing that I think is interesting about the economics of it. Like to give you two extreme examples the more times you're loading in a shorter period of time, the more this makes sense. Right, and I'll give you an example. Right, like, if I'm a driver and I'm running a five-day load, coast to coast, right, I'm probably only waiting two hours to load on Monday, roughly two to three hours to unload on Friday, so five hours. Right, if I am running short hauls, call it three to 500 miles, like a one day run, okay, now I'm loading two hours in the morning, unloading two hours at the end of the day. That's roughly, you know, three to four hours a day, times five right, that's 15 hours. I am not driving, I am not making money, I am just waiting to load or unload. That's the inefficiency that gets made up with a drop trailer. And where I've seen, like really extreme examples where this really makes sense is well, it was more in drayage, but it's exactly the same. Like we ran cotton loads, but it's exactly the same. Like we ran cotton loads like 2016 or 17. It was in like Memphis. They were like 35 to 45 mile runs to like three or four different cotton gins around where the containers came in from Texas basically up into Memphis. And when you looked at what a driver could do with live load and unload, like he could only really still even do like two or three containers a day because of the loading and unloading time. He could only really still even do like two or three containers a day because of the loading and unloading time. Even when they were quick 45 minutes to an hour to load and unload right After three containers, 45 mile drive is still about an hour and you got an hour on each end of unloading Like you can really only get within legal hours like two or three of those moved. But what I did was like I did exactly this with container pools and I was like, well, hey, can we do have enough yard space for us to do drop and hooks there, because they had so much they needed to move and they couldn't move it quick enough. And I was like, well, if you guys can do drop and hooks and you got enough yard space, we can drop loaded and just keep dropping hooking. We were able to go from like three containers of driver per day to like eight because now they're only driving the 45 miles. They drop that, grab the empty one, go back, just wait to grab the next one and they're literally just driving most of their time.
Speaker 2: 40:50So even though you're paying to have a trailer sit somewhere, when you get that much more efficiency out of your driver because they're just spending so much less time per day or week or month waiting to load or unload, all of a sudden that even if it's 40 bucks a day for the trailer or 50 bucks a day for that trailer, it makes a lot of financial sense to leave them on the property because the drivers are also making more money, because the only time they're not making money is when they're deadheading or waiting to load and waiting to unload. So the more you minimize that, the more of a benefit is to a driver. They get to make more money, move more freight. The more of a benefit is to the shipper because they're more efficient on their loading schedule. They get more product in, they have less wait time waiting for the right driver to pull to the right dock at the right appointment time.
Speaker 2: 41:36All those 10, 15 minutes add up throughout a day of a giant facilities loading schedule and when you eliminate all of that and you just have a yard jockey is what they'll call them right Like in fact, now there's like literally a machine, it's like a dolly that will pull around a trailer. They don't even need a tractor to pull these around in some of these yards. No-transcript.
Speaker 1: 42:10Yeah, so I want to very clearly explain what you said. And the carrier side too. So here's why it can be cheaper overall. You just outlined the efficiency on the customer side. They are able to get more product moved with less work because they're not having to worry about all the loading and unloading live, they can do it at their pace. So they have improved efficiency. They can do it at their at their pace. So they have improved flexibility or improved efficiency. The carrier side they are not paying for the cost of maintenance and insurance et cetera on their own equipment all the time, right, they obviously they have the trailer and change, but they can.
Speaker 1: 42:56If you get a power, only carrier is what I'm referring to. If you get a power only carrier is what I'm referring to. Someone else's trailer that someone else is paying to have maintained to make sure the brakes are good on it and the lights are all good on it and the tires are all good on it. Someone else is paying for that, right, and in a lot of cases they get to use that trailer for free for a handful of days. And back to your point they don't have excess time sitting there, like a lot of drivers will ask about hey, what's your detention policy? The first two hours are assumed in the rate and then they pick up X amount per hour after two hours. Sometimes it's four hours. There is no, you're not going to run into detention or layovers and all the headaches that go into this stuff, because in a perfect world, everyone's like yeah, I'm just going to drive a full 11 hours every single day, I'm going to make all this money, it's going to be great. It's like well, no, that's not how it works in the real world.
Speaker 1: 43:48At every customer's facility, there's literally carriers that are like if you mention the word Walmart to them, they're like nope, not dealing with it. And there's a whole bunch of other companies that are on that. That naughty list of like. They're just stereotypically awful when it comes to congestion appointments, like we had. We had one like last week where the driver was literally two minutes late and they're like nope, it was on a Friday. Like, come back tomorrow. There's always like are you kidding me? And it's like well, they give you a two hour appointment window from from 12 to two, and you showed up at 202. Sorry, like you had two hours to work with there, but you won't have those issues with a drop and hook because you're not taking up a doctor, you're just going to the pool hooking, maybe dropping first and then hooking and you're on your way. So a lot of good stuff there.
Speaker 1: 44:42Um, yeah, just, I mean, it's all around efficiency, so you can, because there's lower. So basically, the carrier point um, you're gonna pay less to hire a power only carrier. You're gonna pay less to hire a power only carrier and the cost to rent or lease the trailer than you would if you're hiring a, you know, a dry van, a truck that has their own trailer, because a lot of times they're figuring in their deadhead, they're figuring in their cost of maintenance and a lot of times these carriers that have poorly maintained vehicles, they want higher rates because their trucks break down more often and they have less time operating. So if all they got to worry about is keeping their truck up to sniff and not worried about the equipment, yeah, I mean, you're just it's.
Speaker 1: 45:29It's much cheaper in that sense, which is why you can pass that savings off to your customer, which is why you can get awarded more business. But the tradeoff is you have a lot of work to do. Where's the equipment? Who does it belong to? When does it have to get to its next spot? What do I do if I can't find a truck to get it to its next spot? You might have a couple loads where hey, I'm actually taking a loss on this one. But in the grand scheme of things, like I said, at scale it is a way more efficient and profitable way to do business if you can manage it properly.
Speaker 2: 45:59One last tip and a thought is the other thing is it makes you more sticky with your customer. They're far less likely to switch providers if you've got equipment in their yard and have been operating it efficiently and effectively, like even if someone comes along and goes. Well, I can do that as well and I can do it a little cheaper. It would have to be quite a bit cheaper for them to be able to switch that out, because things are working and these things take time to set up. There's a lot more legwork.
Speaker 1: 46:22To your point Let me add something real quick on that point to prove that One of the customers that we just went into contract with for a drop trailer program. They said if we're going to do this, it is going to be a three year contract because we are not going to try and rebid this and bring somebody else new in. So make sure you get your pricing good now, because it's a three-year contract, which there's a lot of risk to that, obviously. But that's how sticky you become with your customer because basically you become part of their process and if any part of that process fails, the whole thing's in shambles.
Speaker 2: 47:00Yeah, there is something I'd be curious to, and I never really looked into this, but I mean, I got to imagine that contract required workman's comp of all of your carriers as well, like because you're spending more time on the property.
Speaker 1: 47:11I feel like that's I couldn't tell you off the top of my head.
Speaker 2: 47:16The last thing that I was going to say for anybody out there looking to do this or want some tips on how to manage this better, if you are already doing this. Like one of the things I found incredibly effective is outside of my TMS. I am creating a spreadsheet and I'm usually using like G drive because I can share that with my carrier, and it's a list of which trailers are where on the property, which date they were dropped and which load number they were dropped with and which load number picked it up. As I was going back before, tmss aren't really built to do these. I'm sure some of them have some of this ability. I know a couple I've used have the ability, but it's still not really meant for it and also it's hard for your carrier to see the same information you have and when you've got a different dispatcher and the next morning from who was there last night, like there ends up being confusion.
Speaker 2: 48:09One driver doesn't get the right number, he grabs the wrong trailer and then you got to go back and work through and figure out what went where. It's far better Like that ounce of prevention is better than a pound of cure. Like put everything in a shared spreadsheet with the dates, the trailer number, the load number that was taken there, the load number you're expecting to attach it to picking that trailer back up, when and how long they're expected to be there, and share that with your carrier so that your carriers can see it literally in real time with you. So if your customer calls you 15 minutes before a trailer is supposed to pick up and goes hey look, I know you were going to pick up one, two, three, x, but I need you to pick up one, two, four, z today in an hour, your driver's already there. You call the driver, you remind them that information doesn't always make it right back to the dispatcher and if that doesn't happen then the invoice doesn't come in correctly. So now what happens is the dispatcher books that load, sends over the rate con to the accounting person, they invoice you later that day or the next day and it's the wrong PO, and then your accounting team rejects that.
Speaker 2: 49:10And then what happens is because again, like when I used to do a lot of these, we would have rejections by like a handful every week, and to work back in time to what happened four, five or a week ago is next to impossible. You're literally looking at every piece of paperwork, trying to remember which driver was supposed to pick up what and what changed. Like you really want to have this, I think, in a spreadsheet shared with your carrier in real time, so that every morning and every afternoon you can review it with them to make sure everything still was done, per what those notes are, because organization is, like, the most important part of this. It's not the negotiation, it's not the rates, it's usually not even getting the drivers. Once it's moving, it's moving Now, it's just making sure everything is where it was supposed to be when it was supposed to be.
Speaker 1: 49:57Yeah, totally, you think about it to put a bow on it. Here's the complexity. You've got on the customer side, the invoice specific to the load that was moved, the carrier, the payment associated with whatever they hauled, whether it was round trip, which could be two different, you know two different shipments. Or if it was one way different, you know two different shipments. Or if it was one way, if you're renting a trailer or leasing a trailer, you've got that cost right there that you've got to manage. If you go to the dredge world, you've got separate from the container, you've got a chassis as well that's associated with that. So you've got all these moving parts that you've got to figure out. All right, I got to pay this person for this, this person for that invoice, these guys for the project itself. Yeah, so it's definitely a use a spreadsheet, and ultimately the goal would be use some kind of software that will manage it for you in a better way than a spreadsheet. But if you don't have a software that can do that TMS that can do that, at a minimum track it in a spreadsheet. Like I know Steven put in the notes, mcleod does it and it's a pain in the butt unless the dispatcher uses it correctly. Yeah, I will say, one of the things about McLeod that I will give them credit for is it does just about anything you want.
Speaker 1: 51:20If you learn how to do it the right way. They, they, they break out the customer facing side of the shipment from the carrier facing side, so you can split things up. You can have multiple carriers associated with the same load. Multiple, you can have multiple customer shipments associated with the same truck. There's all all kinds of ways if you know how to do it properly, and some TMSs can do that, some can't. Obviously, in the case of what you mentioned before with, I think, multiple container numbers, a lot of, a lot of TMSs are not drayage friendly in that aspect. So, yeah, cool. Any other thoughts on a drop chart? Man, I didn't think we'd go almost an hour on this topic, but we did.
Speaker 2: 52:07I think we pretty much covered it.
Speaker 1: 52:10Let us know if you guys do drop trail or in any other way that we didn't discuss today. Send us a message or leave a comment on this or just let us know in the YouTube comments or whatnot. We'd be curious to see because obviously we only know what we know and what we've been exposed to and experience, so there's probably other way. Oh, there is one way that I didn't think about that I wanted to head on and this is a guy I used to work with did this and I'll just tell this story real quick. Think about trailers as a storage option for your customers. So during covid, there was a company that was importing hand sanitizer into California and there was some issue with a bunch of the hand sanitizer that came in that was mislabeled or something. And they're like we there's no warehousing facility available, like anywhere. Right now it's all being used by the big, the big dogs and the Amazons and everything. We need storage. Can you get us warehousing? And the guy's like I can't get you a warehouse, but I can get you a mobile warehouse with a pool of a bunch of trailers, mobile warehouse with a pool of a bunch of trailers. So he was able to get a equipment provider to pay them to get access to all their trailers for like a very long I think it was like 12 months, maybe 18 months and he paid a monthly set rate for it and he charged his customer. Hey, here's the. I'm going to get these all positioned here. I'm going to charge you a monthly rate for these trailers as well. He makes a margin there and if you need them moved, I'll get them moved for you too. So you can use drop trailers for additional storage. Like, if you ever, if you ever, gone to Target and Target is renovating their store because they feel like they do that every six months there's always a bunch of like containers, or sometimes trailers, just sitting out there. You'll see it with job sites too, like, literally, the new bill statements going up. There's a pool of flatbeds sitting there and they're constantly like swapping them out with concrete. You know prefab concrete stuff that's going up on that stadium. But it's essentially storage right A place to a place with wheels to put stuff that I may or may not need now or tomorrow or next week or whatnot. So that is another option for drop trailer is for flexible storage space for your customers. So, yeah, anyway, yeah, good discussion.
Speaker 1: 54:34Good stuff, I see the Pittsburgh Steelers are primetime. Primetime in it again. Monday night. Monday Hosting the Giants. I think you guys are going to be sitting pretty at 6-2 after that game Time will tell. Six-and-a-half point spread Bills are at Seattle on the road. Sunday Three-point favorites on the road. It's not going to be an easy game. Yeah. Cincinnati hosting Philly. Two and a half point favorites for our producer, steven. Well, good stuff, man. Any final thoughts?
Speaker 2: 55:12Whether you believe you can or believe you can't you're right, and until next time, go Bills.