How To Save Money With Your Backhauls
Return journeys or “backhauls” are the logistics manager’s most opposing foe. Going in one direction is fairly straightforward, but coordinating the most optimized return can be a greater challenge. It’s every operations officer’s worst nightmare to have an empty truck making the trek cross-country to come home, wasting precious time, resources, gas, and money.
So how can you save money with your backhauls? Read through this blog post and drop us a line afterward to help you put these recommendations into play in your logistics operation.
What is a Backhaul?
The backhaul, also called a “deadhead,” refers to the return trip of a commercial truck, coming back “home” from its final destination. For some routes, this process isn’t that hard. A truck that consistently drives from LA to San Diego and back doesn’t have too much to coordinate. But going from LA to NYC, with stops along the way, is a long-distance with lots of mileage and time under the belt—so optimizing a return route is critical to making the revenue stream efficient.
Backhauls are typically one of the heftiest costs for supply chain operators. Our clients often ask us how they can implement programs that ease the backhaul burden. We can help you not only save money on backhauls—but actually increase your revenue stream on the return trip too! Here’s how.
Contract with Steady Volumes and Destinations
The easiest way to ensure your return trip is always optimized is to keep the backhaul route as consistent as your other routes. If possible, contract with clients who frequently send steady volumes to the same destinations. A regular flow of freight allows you to efficiently plan routes, both on the way there and on the way back.
Plus, shipping is growing increasingly competitive. Capacity is tight, and businesses are working diligently to get their items shipped. Your clients will be happy to have consistent contracts, so they know they have room on a truck to send their goods regularly.
Clients want consistency just as much as you do. So don’t be afraid to work for stable contracts that help you strategize your forward and backhaul shipments more effectively.
Develop Relationships with Clients
Long term contracts usually only exist between trusted business relationships. Your business has to build a strong level of rapport and trust with its clients, so they want to remain loyal to you. This is critical for overall business success and ensuring you have a steady stream of income.
When it comes to backhaul specifically, this level of loyalty is one of the best ways to keep your trucks filled on the way home. Your clients will use you and only you, which means they’ll also contract with you to do their return items or bring goods at least part of the way back.
Long-term contracts create a more efficient network that reduces backhaul mileage dramatically.
Coordinate Backhauls on Off-Peak Days
You may not always have control on the timeline for sending goods to their initial destination since the freight is more likely to be on a time crunch to get to customers. You might have a little more leniency with the backhaul, though, and this is where you can save a bit on shipping costs. If you can plan the backhaul in advance (to return items or bring back another client’s goods), we recommend shipping on off-days. This helps avoid traffic on the roads and in distribution centers, which saves a lot of time and resources.
Friday is one of the best times to ship since most retailers are looking to get a product in by Thursdays for the weekend. Sundays and Mondays are also typically lower volume, so it might be worth it to see if the routes will be faster on these days.
Reverse Last-Mile Logistics and Your Backhauls
A strong majority of backhaul loss happens in the first return mile, also referred to as “reverse last-mile logistics.”
This is where a product from a consumer is being returned to a distribution center or all the way back to the manufacturer or retailer itself. That package requires repackaging and labeling, and it also needs a shipping company with available space to make it to its original home.
Since returns can be unpredictable (you don’t know which consumers won’t want their products), planning for reverse last-mile logistics is a delicate process. This can be especially problematic for businesses that are working to regulate available inventory levels while minimizing shipping costs and delivering top-notch customer service.
Shipping carriers that can master reverse last-mile logistics have the greatest capacity to make the backhaul process simple and streamlined. It’s critical to be flexible with return goods while also maintaining long-term contracts for forwards and backwards shipments.
Leverage Artificial Intelligence
One of the key roles of artificial intelligence in the transportation world is route optimization. AI machines can analyze trucks, routes, stops, and volumes in an instant to determine the fastest and most cost-effective way to make the drive. Backhauling routes have become substantially easier since the implementation of supply chain artificial intelligence, and it’s only going to keep getting better as more and more data is stored up in the cloud.
Our clients love having access to the most advanced technology in the industry, including our analytics solutions that put your reports to work in real-time. It’s no longer enough to just map out with pen and paper a route that could do well by the looks of it. You need real data with real results if you want to compete in today’s driven market.
That’s what machine learning technology provides for clients looking for a logistics overhaul.
Partner with Other Shippers and Companies
Let’s say you have a truck filled with five of your clients’ goods going from Chicago to Boston. But only one of your clients wants goods moved back from Boston to Chicago, and you don’t have any other shipments that need to leave Boston. You could try to do pickups in other cities along the way, like NYC or Stanford, but this could end up causing even more logistics loss if not planning effectively.
Or you could partner with other companies or shippers who need cargo sent from Boston but don’t have the capacity or routes to handle it. They may not be your “clients,” but other shippers need the room so they’re willing to rent out your truck. This essentially functions like a network of 3PLs.
You want to find mutually beneficial partnerships that are trust-based and transparent, so you can feel confident in how you work together to move freight.
Offer Discounted Rates
If you’re backhauling and you’ve got free space, open it up to the market at a discount. You’re sure to come upon some small companies or shippers who will hop on the chance to get on a truck at a discounted rate.
An important note, though…
You don’t want to overextend yourself on your backhauls. You don’t want to be returning to Chicago from Boston and have to make a stop in Miami just to pick up a load. The goal is to minimize the extraneous and optimize the routes you already need to do for your large contracts.
With a little forethought and strategy, you can fill your trucks and utilize all your resources during the backhaul process. Forget the empty trailers and unhappy drivers. You can optimize the entire route from start to finish, back to start, with a high level of cost-, time-, and resource- efficiency.
How do you do that?
Work with Redwood Logistics. We create custom solutions for our clients, so your operations are always streamlined. With advanced technology and a network of transparent shippers and clients, we’ll work tirelessly to make your backhauls a highly-valued part of the logistics process.
Reach out to plan your free consultation now.