Reverse Auctions to Avoid The Dead-head Run in Trucking

Competitive Bidding Can Resolve the Long-Standing Problem of “Empty Miles” in the Trucking Industry and Produce Great Results for Truckers and Shippers Alike.

Here’s some food for thought. As you are cruising down the highway this summer – whether you have kids in the car or not – help pass the time not just by texting, but by playing the much safer game of “how many trucks can you count.” Odds are, no matter how high your little fella or gal in the car-seat in the back can count – be it 10 or 10,000 (now that could get annoying…), a significant portion of those trucks are rolling by are completely or significantly empty. Much to the consternation of truckers and the trucking industry, no matter how many technological innovations have come down the pipe, many times, truckers have to run a “dead-head” – delivering their goods at the desired location and then returning empty back to their home base or to the next job. These are dubbed “empty miles.” They are inefficient, they cost trucking firms tons of money, it can be disastrous for the little guy (the independent trucker), and it causes millions – maybe billions – of gallons of unnecessary fuel to be used, and needless to say, more carbon emissions being released to pollute the atmosphere. If there ever was a market screaming for rationality and efficiency, this is most certainly it.


For years, there have been matching services trying to find ways to match the empty trucks with paying loads that could help offset the empty miles conundrum. At first, these matching services operated through having truckers phone in to broker services trying to fill their trailers via an 800 number. A few years ago, these operations moved to the Web, greatly improving the accessibility and information available in the marketplace. Now, if I’m in Wichita Falls, Texas and have to drive to my next job in Wichita, Kansas, I can log-in to see if there are loads available that match my route and trucking capability. Using services such as http://www.findfreightloads.com/ and the aptly, but somewhat sacredly named http://www.getloadedtrucker.com/, independent truckers and trucking companies can avoid the dreaded dead-head run back home or to the next paying customer. Now, a new, innovative use of reverse auctions has entered the marketplace. In the United Kingdom, a young entrepreneur saw dead-head trucking as a problem ripe for a better, more efficient solution, based on competitive bidding.

In early 2008, Robert Matthams was a Manchester Business School graduate who was prompted to explore the issues involved when he made note of seeing a truck driver returning to London empty with an empty trailer after delivering a pool table to a friend in Manchester. Mr. Matthams said that: “After doing some research, I realised the problem was a lot more serious than I had first thought, with figures from (the UK) Department of Transport stating 25% of all lorries travel empty on British roads.” The British Government reported that all those unnecessary miles added-up to a whole lot of environmental costs – with over 112,000 lorries and 450,000 vans pumping out a shocking and unnecessary 36 million tons of CO² a year! So, he formed Shiply.com (http://www.shiply.com) to match empty trucks with potential shippers – and the results have been outstanding. In just two years time since the founding of the company in 2008, its registry has grown to include over 14,000 British trucking companies, and Shiply estimates that the firm has saved truckers from driving more than 10 million empty miles (equivalent to going around the world 400 times)!

This is a reverse auction model that works for all involved. Truckers find load that help pay all – or at least part – of their trips that would otherwise have been “dead-head runs.” Shippers find better prices by having trucking companies compete for their business in these spot, time and location-pair dependent markets. And overall, society benefits from having lowered shipping costs factored in to products and from having less unnecessary truck trips (and thus, lower emissions) – and all of this is done on a rapid basis. So, just as airlines, hotels, and sports teams have find that through yield management they can maximize revenue by filling otherwise empty slots of their time-dependent assets, trucking is ripe for application of competitive bidding for these spot trips. It will be interesting to see the future path for Matthams and Shiply, and to see whether his firm and/or rivals can replicate the reverse auction-based business model across Europe and in the United States as well. For sure though, it could well diminish the prospect of the dreaded “dead-head” for truckers – saving time, money, and yes, carbon and even lives, in the process.

So, a tip of the hat to Mr. Matthams, who was recently named the BT Entrepreneur of the Year, as he and his firm may well be creating a model that will rewrite the rules of the trucking industry.
Appendix: How Shiply works:

Here at the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), we’re focused on how to best make use of reverse auctions across all sectors of business and government to maximize the value of each and every purchasing dollar for organizations. If you’re interested in learning more – or if you have a story to share about your own experiences using reverse auctions, please contact me at dwyld.kwu@gmail.com.


About the Author:

David C. Wyld (dwyld.kwu@gmail.com) is the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/). He currently serves as the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a noted expert on reverse auctions and e-procurement topics, being widely published on the topic and a recognized expert/consultant in the area. He has been named among the Rising Stars in Federal Information Technology by Federal Computer Week.


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Reverse Auctions to Avoid The Dead-head Run in Trucking

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