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Scott Johnston said capacity constraints are a top issue in the vehicle transportation industry today.

Putting it simply, that means too many vehicles to move.

“And not enough transport trucks to move them,” said Johnston, who is chief operating officer for automotive inventory management platform CarOffer.
CarOffer and the industry as a whole are seeing many more of what Johnston describes as “onesie-twosie” moves, with transporters moving fewer vehicles at a time, Johnston said.

Others in the industry agree with Johnston.

“The biggest trend we’re seeing is more of the single-car moves,” said David Sperau, co-founder and chief executive officer of Autosled, a digital automotive logistics marketplace.

Autosled co-founder and chief financial officer Dan Sperau (David’s brother) said he expects the strong demand for used vehicles — and demand for transporters for those vehicles — to continue.

“It’s still going to be a shortage of new cars, so there is a ton more used cars that will be moved,” he said.

Density equals efficiency

With the movement of all of those cars, density (or the lack of it) will be a top issue. Density is a transportation company’s dream, said Jason Walker, chief operating officer at United Road, a finished vehicle transport logistics provider. The more density you have, the more efficient you can be, he said.

“And when things are done in a live auction-type environment, you have a greater density of units,” Walker said.

He went on to say, “The transportation providers can cobble together more units at the live auction and operate more efficiently. With things being done in a virtual environment, you disperse that density into so many different places, the transportation providers now will see a lower load factor, which means they’re less efficient.”

But even as transportation providers see their efficiency levels drop, their costs are still there. Or they’re rising. That places upward pressure on prices in the remarketing space.

“To make up for that lack of efficiency, the transportation providers are asking for more and needing to get more, because now they’re picking up more ones and twos instead of threes and fours,” Walker said.

Technology taking over

Times have changed from the days of vehicles coming from many different locations to run through one location, which made things easier for transporters, said Dan Sperau of Autosled. The pandemic is a main reason for that, along with the development of technology such as digital retailing platforms and inspection tools, he said.

“The confidence for dealers to find the vehicle without actually having to physically touch it, is revolutionary,” Sperau said. “Technology is taking over this industry in leaps and bounds … which is why we created Autosled, because of the fact that there is a need for it.”

Sperau said Autosled is set to launch a new fin-tech transport product in the third or fourth quarter of this year that will streamline payment. The product will be a disruptor in the marketplace, he said.

Other companies are introducing new services in the transport business. A service that digital driver assistance services provider Agero introduced in April removes the hassle and minimizes the costs and risks of safely moving vehicles, according to the company.

Agero said it built the new service — called Vehicle Transport — for automotive manufacturers, dealer groups and fleet management companies. The service assists in areas such as contactless service and sale transactions, dealer trades, and transfers to body shops and auction sites.

Driver shortage: Still a real thing

Walker at United Road said the parts shortage affecting OEMs will not go on forever. But the shortage is equally affecting the remarketing side, he said.

“We’re seeing that the demand for remarketed vehicles is screaming through the roof,” Walker said. The need for transporting those vehicles has grown exponentially, he said.

Although live auctions have started back up, Walker is hearing that sales through live auctions are probably down by about 20 to 30%.
“But virtual auction sales are just all the rage right now,” Walker said.

That virtual activity, along with the activity of vendors such as CarMax, Carvana and Vroom, and the activity of dealers conducting more business virtually, is placing greater stress on the transportation end, he said.

Is the transportation industry still seeing a shortage of drivers?

“Yeah, it’s a real thing,” Walker said.

Walker participated in a conference call in May of last year with industry executives and economists, and someone on the call said COVID cured the driver shortage.

“I guess you could say that, but it’s a temporary cure, just because demand dropped so low there were no capacity issues,” Walker said. He added that the stimulus packages have added complexity to the current situation, noting that tax season is a big time of year in the remarketing space. This year, the extension on tax returns has extended the tax season.

“But it’s been amplified by what I call almost a concurrent tax season with stimulus checks,” Walker said.

That is bringing more demand for cars, which brings demand for more drivers. Trucking companies are addressing the driver shortage in various ways. The most obvious way is to pay drivers more, Walker said.

“Everyone is trying to pay more, so I would say driver compensation will always be a foundational piece to an efficient and effective retention strategy,” Walker said.
It all comes down to how drivers are treated and supported, he said.

“That really becomes the calling card and differentiator between one transportation provider and the other,” Walker said. “So the driver shortage is still a thing; the driver shortage will continue to be item No. 1 on all of our lists of concerns in the transportation world. It’s just incumbent on us to look for ways to combat that, and really it’s going to come down to us being inventive with our customers and finding ways to approach this thing strategically instead of tactically.”

United Road alliance supports carriers

Around the first half of last year after the pandemic hit, many transportation carriers left the market as demand dropped.

“Primarily, it was because of insurance,” Walker said. About 500 carriers that United Road used declined to renew their insurance at a level that would allow them to continue hauling in finished vehicle logistics.

“That’s capacity leaving the market,” Walker said. United Road surveyed carriers, asking what their challenges were. The top two were insurance and that they did not have anyone to call when their trucks broke down late at night. Fuel cost was a third concern.

“And from that the concept of NVTA was born,” Walker said of the National Vehicle Transporters Alliance, which United Road launched in April.

“We began working with some partners of ours in each of these three different areas, saying ‘You’ve helped us in the past at United Road. Now we’re asking you to help our partners,’” Walker said.

NVTA serves as a business resource for United Road its Team DriveAway company’s 5,000-plus independent carriers. Eighty-five percent of those carriers are small- to mid-sized. NVTA connects those carriers with cost-saving resources and support services, helping them gain access to the buying power of larger carriers.

“The business premise for NVTA is simple: When our carriers do well, we do well,” Walker said in a news release announcing the formation of NVTA. One transport company saved more than $10,000 on its cargo by switching to NVTA’s insurance.

CarOffer’s dedicated transportation team

Before COVID, transportation for CarOffer used to pretty much take care of itself. The company outsources its transportation to logistics provider, ACERTUS. That company would simply pick up a car from a seller and deliver it to a buyer, and CarOffer would rarely have to engage in that process.

But around last summer, CarOffer dedicated an entire team to manage transportation.

“Our business has grown, which is great, but also with some of these capacity constraints we need more eyes to make sure these cars do get picked up in a timely manner and delivered in a timely manner that for the most part it took care of itself pre-COVID,” Johnston said.

The CarOffer transportation team works with ACERTUS and deals with exceptions such as a car not being at the location when the transport driver arrives to pick it up.

“They also help the load balance with ACERTUS to make sure that transport requests don’t age and things get addressed and expedited in a timely manner so the buyer is not impacted in any way,” Johnston said.

ACERTUS survey: More openness to purchasing online

ACERTUS in March released an independent study showing that 80% of car shoppers are now open to an online vehicle purchase. ACERTUS called that number “staggering,” stating in a news release that the number represents a 50% increase from pre-COVID numbers.

ACERTUS senior vice president of global strategy Alisha Buelt said in an interview with Auto Remarketing that the jump in interest in buying online places a great deal of pressure on dealerships and anyone else selling vehicles to make sure they have the online capabilities to meet those needs. Insecurities related to the pandemic are a main reason for that, Buelt said.

She mentioned the “Amazon effect,” saying consumers have become convenience-focused. Ever since Amazon developed the ability to deliver just about any product in around two days, that has become the new norm in the consumer market, she said. That same expectation is taking place with the car-buying process.

“Why would that be any different than purchasing a pair of socks online? With that being the case, we started seeing a drastic shift in this direction and interest from our customers coming to us saying ‘We need help. We can sell our vehicles online, but then when it comes to trying to get the vehicle actually delivered to the customer, we’re running into some challenges that come along with that,” Buelt said.

She said ACERTUS can help its dealer and OEM customers sell online and also help coordinate delivery to their customers’ driveways.

The study showed “Top Concerns with online car shopping,” and the top three car-buyer concerns were “I can’t test drive the vehicle before I buy it,” “I can’t see the vehicle in person,” and “I can’t evaluate damages in person.”

“Top concerns with shipping” was another part of the study, with 49% of respondents saying they were worried the vehicle could be damaged during shipping. Forty-seven percent said they were worried shipping will cost too much, and 31% said they did not understand the process of how delivery works.

“Shipping vehicles, at least still currently, is a pretty foreign idea to a lot of end consumers,” Buelt said. “It’s definitely a minority of the consumer base today that has experience shipping vehicles. So there’s a big unknown element around the shipping cost component. It isn’t shipping a pair of socks. It’s shipping a multi-thousand-pound vehicle that has to deliver to you.”