When you’re dealing with road freight, every mile counts. Time spent not carrying goods is time you’re wasting. Worse still, expenses are growing. You’re still burning fuel and putting miles into your truck’s tyres.
Backhaul is a way to reduce costs and maximise profitability. In this article, you’ll learn what backhaul is and how it works. We’ll explain the benefits and challenges of backhaul and how you can implement your own backhaul process.
What is backhaul?
Backhaul is the return trips commercial trucks make after delivering their freight. Rather than returning empty, trucks maximise their revenue potential by taking a new load.
If a truck takes goods from Felixstowe to Birmingham, for example, a backhaul will take different goods from Birmingham back to the port or a nearby location.
Backhaul vs. deadhead
Backhauling reduces deadhead miles: the miles trucks travel without a load.
Deadhead miles don’t generate revenue but still cost carriers money in fuel, maintenance and wages. Backhauls cover the cost of return journeys, contributing significantly to a carrier’s bottom line.
Carriers aim to reduce deadhead miles as much as possible. This increases revenue and minimises a carrier’s environmental impact by reducing fuel consumption and emissions.
What are the different types of backhaul?
There are two types of backhaul trucking: internal backhauling and external backhauling.
Here are the differences between the two:
Internal backhauling
Internal backhauling is when a company uses its fleet to transport goods on a journey’s return leg. It keeps things inside the company (hence internal) rather than relying on another carrier. It’s reasonably straightforward to manage, as a result.
External backhauling
External backhauling is when a carrier transports goods for another company on the return leg. It can be more complex because you must coordinate with at least one third party. However, it gives you more opportunities to maximise your fleet’s utilisation. You may not have goods you can ship on the return leg, but another carrier probably does.
What are the advantages of backhauling
Backhaul offers many benefits to businesses willing to shoulder the additional administrative burden.
A more efficient fleet
Carriers use backhaul to maximise their fleet’s productivity. There’s less idle time and fewer overall journeys, allowing carriers to do more with less.
Lower costs
Backhauling significantly reduces the cost of deadhead miles by offsetting fuel, maintenance and other expenses. In some cases, carriers can eliminate deadhead miles.
Fewer emissions
Backhaul can help businesses meet ESG targets. Eliminating deadhead miles lowers fuel consumption and cuts emissions. It also reduces additional journeys that may have been necessary without backhaul.
Bigger profit margins
Backaul helps carriers maximise their profit margins by earning additional revenue without significantly increasing costs.
What are the challenges of backhauling
Backhauling isn’t perfect. Businesses will need to overcome several operational hurdles.
1. Finding backhaul loads
Backhauling is easy if you have a lot of goods that need to go in the opposite direction. If you don’t, finding loads can be time-consuming and competitive. Brokers can solve this problem, but carriers must pay a finder’s fee.
2. Scheduling conflicts
Delays can cause significant issues. A disruption during the first leg of a journey can throw off the entire schedule.
3. Deadhead miles between backhauls
It’s almost impossible to eliminate every deadhead mile. In reality, trucks often need to travel short distances in between loads. The more miles you incur, the quicker cost-saving benefits diminish.
4. Administrative headaches.
External backhauling requires coordination of activities with multiple third parties. Managing dozens of schedules and ensuring deliveries stay on schedule can be a lot of work.
Backhauling’s impact on profitability
Backhaul significantly increases profitability by ensuring that as many miles as possible generate revenue. Here are three ways it increases your bottom line:
- Additional revenue. First and foremost, backhauling increases revenue — primarily if you work with third parties carrying loads you otherwise wouldn’t.
- Operational efficiency. Backhauling maximises the efficiency of your trucks, ensuring they generate revenue for as many miles as possible. This can reduce the impact of maintenance work.
- Fuel saving. Carrying loads both ways optimises fuel usage, which can be a significant expense.
It’s not a given that backhauls will increase profits. Careful planning is still required to ensure that the additional revenue is worth the administrative burden on your team.
Building a backhaul strategy
You must develop a backhaul strategy to leverage the practice’s full potential. This will typically involve the following features:
1. Digital load boards
Load boards are digital platforms that connect carriers, shippers and brokers. They highlight real-time availability and make it easy to find backhaul opportunities.
2. Building relationships with brokers
Establishing strong relationships with brokers will ensure a stream of backhaul opportunities. Brokers can even work with you to negotiate favourable rates on your behalf and coordinate with other carriers.
3. Investing in route optimisation software
Route optimisation software highlights the most efficient routes. It helps you minimise deadhead miles and maximise revenue.
Maximise your revenue with Pro Carrier
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