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October 15 2018

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www.joc.com Cover Story Special Report Inland Distribution October 15 2018 | The Journal of Commerce 33 peak pricing. The advance notice for capacity utilization will provide LTL carriers ability to match capacity with the demand in the right markets and lanes. This kind of pricing approach is quite practical in today's market where machine learning, artifi cial intelli- gence, and data analytics make it feasi- ble for shippers to predict their needs for LTL service and share those details with the carriers. For carriers, having such advance commitment for pickup and delivery and linehaul operation provides productivity gains that would reduce cost of service. Improved utilization reward The result will be to reward ship- pers for helping carriers match capacity with demand in their entire network, which can reduce the number of partial or totally empty trailers moving due to lane imbalances. Better utilization of equipment and drivers will help carriers handle more freight with same resourc- es, resulting in lower costs for shippers who assist with such matching of demand and capacity. For the truckload segment, which is experiencing an unprecedented shortage of drivers, a new pricing model is needed to eliminate empty miles and unutilized or underutilized time within drivers' hours of service now monitored via electronic logs. Demand-based pricing that allows shippers to book capacity will help carriers' position capacity in the right places to eliminate empty miles. Such conversion of empty miles into paid miles would increase truck- load capacity by 12 percent, which is much greater than the shortage of capacity because of scarcity of drivers experienced by the truckload seg- ment. It will also help shippers gain additional capacity at more predict- able rates during spikes in demand and avoid paying much higher spot market rates. With tight capacity prevailing in all three trucking segments and ex- tensive data available on the project- ed needs of the shipping community, the industry should implement de- mand-based pricing to optimize the tight capacity. Such approach should expand capacity for carriers without adding drivers, increase income for drivers, and reduce the cost for the shippers. Innovation and "outside-the-box" thinking needed to help shippers and trucking companies kick old, bad habits and bring pricing into the 21st century It's time to tear up trucking's pricing playbook

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