Freight exchanges and backloads
Freight exchanges are usually subscription-based services where freight customers and carriers can post information about loads, or submit quotes for loads they would like to carry. Hauliers can also advertise empty space in their vehicles. Freight exchanges are a good source of backloads or return loads. Backloads are important to road transport companies because empty journeys cost almost the same as laden ones in terms of driver salary, fuel and other running costs, despite generating no income.
Most fleets try to maximise fleet utilisation which means minimising empty running. This is important commercially and environmentally. Freight exchanges have become more efficient and useful since the general adoption of the internet, email and mobile phone services. Many freight exchanges send out instant text/email alerts of new loads to relevant members. However some still struggle to make money. Although service levels are improving, freight exchanges have been accused of having too little control over quality and too little awareness of freight customers’ needs.
It is indicative of the difficulty of this market that many of the early freight exchanges which started circa 2000 have since evolved into other types of product or left the market entirely. Freight exchanges can operate throughout the UK, Europe or the world. They also have different customer criteria and levels of security to ensure that loads are delivered safely and carriers are paid.
Pros and cons of freight exchanges
For road transport operators, freight exchanges work well providing margins are not driven too low by the bidding process. Hauliers particularly dislike reverse auctions. Freight exchanges give consignors or freight customers a huge pool of available transport which keeps rates competitive. However they also need to be assured of the quality and reliability of service. A good business service costs money. ‘Free’ services take a load-based commission. More respected generally are those which claim a monthly membership fee.
How do I find backloads?
Freight exchanges are the most common place for finding backloads. There are a number of other ways to find return loads:
- Strategic partnership with another company, which can work if you are routinely delivering to specific regions.
- An informal network or small trade association such as the Transport Association, a collection of non-competing regional hauliers who offer commercial and practical support to one another.
- Freight forwarders. Freight forwarders are companies who act as intermediaries between cargo owners (consignors) and freight transport companies either for part or all of its journey.
What are freight forwarders?
Freight forwarders are usually positioned at UK ports, where they oversee the transhipment of goods coming into the port by road or rail. Usually freight forwarders advertise their loads on web-based freight exchanges to be bid for by transport companies. Freight forwarders therefore do not usually run transport fleets of their own but will build a list of companies to whom they subcontract business.
Occasionally established transport companies operate a freight forwarding division, allowing them to still make a margin on jobs they do not wish to take on themselves. Freight forwarders, among others, are represented by the British International Freight Association (BIFA).
Limitations to backloading
To make backloads work the new load must be:
- Within reasonable distance of the original delivery
- Available for pick-up without unreasonable delays
- Be suited to the kind of vehicle you have sent
Some companies find that too much time is lost in travelling to and waiting for backloads and therefore it is more cost efficient to bring the truck home directly. However they are in a minority.