Transport: ‘low hanging fruit’ for farmers seeking cost savings
Farmers are currently facing myriad environmental challenges – from water shortages to avian flu – so finding new ways to cut costs is critical. Transport is one of the ‘controllable’ expenses that farmers can reduce using online technologies and crowdsourcing.
Nick Hoffman, general manager of Linebooker – a nimble, online bidding platform that matches trucks with loads – says technology is unleashing new ways for farmers to cut costs in the weak economy.
“Innovations such as drones and drip irrigation are helping farmers cut operational costs, but transport is emerging as another avenue for cost-cutting. Traditionally, farmers have locked themselves into contracts with transport suppliers. When crops are market-ready, there are urgent transport requirements and small windows of opportunity. But with new technologies offering online crowd-sourcing of the best price among a range of suppliers, these arrangements are beginning to change.”
Hoffman says the increasing price for diesel (a major component of transport costs) is forcing farmers and transporters to add efficiencies to their operations. “Intense transport requirements for crops at certain times of the year in certain parts of the country mean that farmers are challenged by a finite number of transporters and the availability of trucks.” For example, in citrus, the season is different based on the type of fruit (see chart). In the case of limes and tangerines, there is a small four-month opportunity to get produce to market, creating truck shortages during overlapping peak seasons among different crops.
Because of the perishable nature of agricultural products there is a one-way requirement to transport produce to cold storage as quickly as possible, but return trips for transporters are limited. “Fortunately, the powers of supply and demand are now made transparent through online bidding, offering better ‘lane balancing’ to fill trucks that otherwise would be empty.”
Linebooker, is an example of this growing trend. The company that has seen its ‘virtual fleet’ of trucks grow by over 50% in the past three months. With over 4 500 vehicles available among a range of transporters, the company connects customers requiring transport to transporters looking to efficiently fill their trucks. With access to an array of vehicles and trucks – from refrigerated trailers and taut liners, to flatbeds, tippers and pantech trailers – Linebooker is broadening its services into South Africa’s agriculture sector.
See document on availability of citrus fruit from the department of Agriculture, Forestry and Fisheries here .
“While we don’t own any trucks, our online platform connects farmers looking to address their transport requirement during peak periods to a wider range of transporters keen to carry loads,” says Hoffman. “Sourcing transport – particularly if one is looking for the best price – can be a time-consuming exercise; and we know farmers have very little time to think about such things while harvesting.”
Small windows of opportunity but big savings
According to Linebooker, the company has saved customers an average of 12% since beginning operations eight months ago. All of the company’s transporters are pre-approved and vetted for requirements such as goods-in-transit insurance. Moreover, Linebooker’s transport controllers look after administrative elements associated with deliveries such as securing proof-of-delivery documentation and invoicing.
“We’ve already engaged with two major fruit stakeholders in the Eastern Cape about Linebooker and will commence their first loads next week!” Nick Hoffman general manager at Linebooker.