Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Why Truckload Lead Times Matter and How to Improve Them

truckload_capacityFirst come, first served is a familiar statement to most of us. Maybe the phrase reminds you of a free tchotchke given out at the local baseball game. Or maybe you’re reminded of events that serve free food. But very few of us think about truckload capacity when we hear the phrase. And maybe we should.

Let’s look at a hypothetical situation.

This represents every operating truck in North America:

Yet not every truck is available every single day of the year. According to DAT Solutions, the average length of a truckload delivery is between 600 and 700 miles. It would take roughly a day and a half to complete a truckload shipment of this length. Which means that at any given time, up to half of the available trucks are already busy with someone else’s shipment—in transit, en route, or loading/unloading. And if this is the average, roughly half of the trucks are hauling shipments even longer, taking more time to execute.

Your capacity options are already drastically reduced:

So, if you are trying to find a truck for today or even tomorrow, from this simple perspective, you already have a greatly diminished pool of capacity available.

Who are you competing against for truckload capacity?

While you may have a few companies you officially recognize as “the competition,” you have to remember that when it comes to truckload capacity, they’re not the only people you’re competing against. In fact, any company, moving any product, in any industry becomes your competition for truckload capacity. And the latest Census Bureau data indicates there are over 6 million companies in the United States. Not all of them have products to move, but that’s still a lot of competitors to worry about when your products need to move.

Why truckload lead time is important

Let’s say you need a truck. Well, so do all of those other companies we talked about. And as they start booking carriers, the pool you draw from will dwindle. That’s why lead time is so important. If you don’t secure the space you need early on, all the other competing companies out there will get it first.

The key to understanding this is that carriers work diligently to pre-book the next load and even another one or two after that where possible. So even offering loads to the market one or two days before you need them greatly lessens the market’s unplanned capacity. Multiple day lead times can significantly improve your chances of securing the capacity you want at the price you are seeking.

How do I improve my truckload lead time?

There are so many variables that influence lead time, which can make it difficult to figure out which processes need to change. While lead time may seem like a supply chain problem, many other aspects of your business play a role, too. It might be manufacturing, sales, or even customer service that cuts into your truckload lead times. Be sure to include these departments in any lead time discussions.

There are situations when you may not be able to add to your lead times—an unexpected weather disruption is a great example—but understanding why your truckload lead times are short can help when you communicate to the rest of your business why shipping rates are higher or why the best transportation service providers reject so many tenders.

Editor’s note: This post originally ran on Transportfolio. Since this is a relevant topic, we wanted to share it with our readers on Connect.

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