Case Study: GPS allows the trucking company to finally know where its trailers are and what they contain.
From coast to coast and most places in between, thousands of trucks operated by Knight Transportation regularly cruise the nations roads, making deliveries of everything from computers to clothing to perishable foods.
Trucking today remains the cheapest and fastest way to move large quantities of goods from manufacturing to the retail site. But as Knight has experienced over its 16 years in business, it is also a system full of inefficiencies.
For one thing, cargoes are often stolen. In one recent bust near Chicago, a theft ring was found to have stolen some $2.2 million in merchandise from a series of truckseverything from prescription drugs and liquor to copy machines, cookies and car parts. Thieves often follow trailers from the time they exit a plant until the driver stops for the night and then make off with the entire vehicle.
Steve Grover, director of communications at Knight Transportation, in Phoenix, estimates that truck cargo theft is more prevalent than bank robbery but said the fact that so many unattended cargoes are available to thieves in the first place points to an even bigger efficiency problem in its business.
Anyone who passes an 18-wheeler on a highway might assume the truck moves swiftly from Point A to Point B, where it immediately unloads its contents and heads back to the nearest manufacturing site to pick up another load. In reality, the challenge of coordinating manufacturer, trucker and retail store schedules gets so complicated that cargoes of anything that are not perishable tend to sit hours or even days until the store has the capacity to receive the load or the manpower to empty it.
Grover said that communications between truckers and its delivery sites are so poor that the company often doesnt know which of its tractors are loaded and which have been emptied. Lacking this kind of up-to-date data, it regularly sends trucks long distances to pick up freight when, unbeknownst to Knight, there is an available trailer much closer to the pickup site.
All this confusion adds up in costs. Historically, Knight has had to maintain three times as many trailers as tractors that haul them, since so many remain idle for so long.
"It had always been the normal way of doing business, but it didnt make sense to keep adding trailers," Grover said.
According to Grover, as GPS technology was becoming more widespread, the company began to explore ways it could remotely track its trailers to reduce idling times, as well as the risk of theft. Knight found a number of companies that were offering GPSes as a way to improve fleet management, but many of these technologies were geared toward tracking drivers to ensure they were not veering off course or taking excessively long breaks.
Some of the newer technologies appearing on the market did offer more than simple vehicle locating. And some of Knights rivals had even tried building in-house solutions. But because the industry was still so new, no one seemed to have a thorough understanding of all the features essential for an effective fleet tracking system.
Early in that review process, Knight discovered that one key differentiator was in-trailer sensing. While all the products on the market could identify a vehicles location, fewer offered critical information regarding the contents of that vehicle.
Eventually, Knight selected sensors developed by Terion, of Plano, Texas, and manufactured by Bulova Technologies, of Lancaster, Pa. Grover said that Terions FleetView GPS won the competition because of superior cargo-sensing technology, which could pick up even small amounts of cargo in trailers when other technologies identified them as completely empty.
Unlike many other technologies, Terions sensors could also transmit data on up to 10 separate eventssuch as vehicle location, contents, temperature and the time of its last drop-offin a single message. Terions technology, which transmits this information via a cellular network, was also found to be more cost-effective than other sensors that relied on satellite coverage.
"It became obvious to us that we could implement this technology and save in capital expense outlays," Knights Grover said.
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Knight Transportation began the process of installing Terions sensors into its fleet in 2001. In 2005, when Terion came out with an updated version of FleetView that could collect information beyond vehicle location, Knight made the decision to install the devices throughout its entire fleet.
Terions FleetView devices are mounted inside trailers to track vehicle locations, and they use high-frequency sound waves to measure the contents inside a trailer, as well as any changes that occur to the cargo or the truck. Other sensors included in the FleetView technology collect additional data on the state of the vehicle, such as its fuel supply, tire air pressure and the exact times at which trailer doors are opened.
"Our sensors give our customers visibility, remotely, into their fleets," said Terion spokesperson Todd Felker. The information transmitted by the sensors offers multiple opportunities to save money by monitoring what happens once a cargo arrives at its unloading point.
A software program that accompanies the equipment lets back-office workers chart all the incoming data into a complete picture of the vehicle activities, such as when the trailer doors are being opened at unauthorized locations, or when they are hitched to unknown or unauthorized tractors, each of which could signal a theft in progress.
"What we do is build a device, installed in the front wall of the trailer, equipped with GPS technology and a cargo sensor to tell a company if the trailer is loaded or unloaded," said Felker, who explained that the ability to detect the contents of a trailer is a critical piece of the technology and one that differentiated Terions sensors from other GPS sensors on the market.
Terion charges $500 for its basic FleetView device, which the company says can usually be installed in a truck in less than an hour.
Before it installed cargo sensors in its vehicles, Knight was challenged to distinguish empty trailers from loaded ones and ran into some confusion making sure the trailers it took off the road were, indeed, empty and able to have sensors installed. Still, the process went pretty smoothly.
Over the course of approximately six months, Knight installed Terions FleetView devices in all of its 7,800 trailers at an estimated cost of $125 per vehicle. It now installs the device in new trailers at the manufacturing site, which lowers the installation cost to approximately $100 per vehicle.
Terion designed its equipment in-house but turned to contract manufacturer Bulova to build it. Bulova, a well-known brand of consumer watches dating back to 1875, exited that business altogether when it sold its watch division to Loews and has focused on manufacturing ever since.
A relatively small operation with just 150 employees, Bulova today specializes in so-called total solutions, putting together everything from the product itself to the battery, antenna, any additional peripherals and the final packaging.
"We bundle the order and ship direct to the customer so that Terion doesnt have to touch it at all," said Jim Davis, president of Bulova.
Davis said this form of end-to-end contract manufacturing helps Bulova deal directly with customers if there is a follow-up order, a damaged item requiring replacement or any other kind of warranty issue.
Terion and Bulova first formed a partnership in 2003 and later expanded that relationship to keep up with Terions growing base of customers and its expanding line of products. Today, Terion has more than 100,000 devices installed in trucks operated by more than 400 companies, including Knight Transportation. It continues to collaborate with Bulova on new product enhancements with specialized features, such as those for monitoring refrigerated cargoes.
Knight, which completed its installation of Terions equipment less than a year ago, still has not made a thorough accounting of return on its investment, but Grover estimates his company has already saved $1 million in fuel alone, simply by sending its trucks on more efficient routes and eliminating the need to drive around in search of an empty trailer.
Other anecdotal evidence of savings is piling up as well. Grover said he estimates that Knights fleet operators spend 1 hour less every day trying to locate trailers. And because it has a more complete picture of its trailer whereabouts, it has been able to improve on that well-known industry ratio of three trailers to every one tractora ratio that always seemed wasteful but which it previously could never seem to avoid.
Today, Knight has a fleet of 3,400 tractors that is supported by just 7,800 trailersa ratio that is closer to 2-to-1.
"Obviously, having three or more trailers per tractor was not a good thing," Grover said. "Before Terion, our drivers would drop off a trailer at a retailer like Wal-Mart and then sit and wait at the site. Now we are able to go onto our Web site and look at all our trailers and get an instant view of where they are and where they are moving. Its a significant savings."
Andrea Pettis is a freelance writer in San Francisco.
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