Chattanooga’s US Xpress Technology Leverages Technology to Enhance Driver Experience with Variant Model
When Eric Fuller took over US Xpress from his father, Max, in 2017, the young Fuller began taking steps to improve freight efficiency and reduce driver turnover at Chattanooga’s largest trucking company and the one of the nation’s largest long-haul trucking companies. But Fuller quickly became convinced that a whole new approach was needed, and he decided to start a new company in the Atlanta tech hub to help build it.
Fuller created US Xpress Ventures, an internal business unit focused on developing and implementing new asset-based business models and technology strategies. In April 2019, Fuller hired former UPS-owned Coyote Logistics chief technology officer Cameron Ramsdell to build Variant, which quickly grew into the burgeoning digital cargo business that, according to Fuller, will become US Xpress’ primary growth platform.
In its first year, the Variant test model proved impressive, with its short-lived run of about 20% more loaded miles per week and driver turnover rate about 70% lower than the overall industry average.
“The ultimate goal would be the complete cannibalization of our legacy model, whether we’ve built a model far superior to anything we’ve ever had or perhaps even the industry has had,” Fuller said during an interview. an investor conference organized by the investment bank. Stephens Inc. in December 2021.
But building a new business approach to shipping and logistics is not without setbacks. While Variant has grown to more than 1,500 tractors in 2021 and the company invested $34.2 million in the subsidiary last year, early results haven’t held up well either.
Two weeks before Christmas, US Xpress laid off Ramsdell and integrated the previously independent division into the US Xpress operations team after Variant’s sales, usage and revenue per tractor began to deteriorate in the second semester. Variant’s operational issues led to disappointing financial results for US Xpress in the fourth quarter of 2021 and drove the company’s stock lower. The company reported an operating loss of $5.1 million compared to an operating profit of $15.1 million in the same quarter of 2020.
“We purposely built Variant outside of US Xpress with a team that had technology expertise, but not necessarily trucking expertise, and gave them a mandate to build a technology-based fleet,” Fuller said. “For most of Variant’s history, this frame has been successful as the fleet has grown rapidly and produced a better experience for drivers and customers while improving usability, safety and revenue per tractor.However, as Variant began to achieve significant scale, we found that the team needed to focus on idea generation at runtime to ensure the fleet was running smoothly while maintaining its upper operating parameters.”
New Road: US Xpress Leverages Technology to Enhance Driver Experience with Variant Model
In early January, Dustin Koehl, senior vice president of sales at US Xpress who has been with the company for 15 years, was named to lead Variant. Koehl typically spends Mondays through Wednesdays at Variant’s facility near Georgia Tech in central Atlanta, where Variant has approximately 150 technology specialists recruited primarily from outside the trucking industry to help develop new ways to optimize freight optimization.
Koehl says the trucking industry, which is worth $800 billion a year, including the $400 billion a year in the trucking market, remains highly fragmented, with no major market leader. Variant seeks to use technology to improve the efficiency of truck shipments and to improve both revenue and driver schedules.
“I’m really excited to embrace the opportunities, or what I would call the breaking, in our industry,” he says. “We’re really trying to rethink the human side of our business so that we can use technology to bring consistency to this free market to enable drivers to have a better quality of life by being home more often.
“Our industry, since its inception, has truly treated drivers like cattle or commodities and we are committed to treating our community of drivers as people and involving them in technology to achieve greater success and better work.”
Optimized driver efficiency
At Variant, US Xpress has developed a new suite of machine learning and artificial intelligence algorithms called Variant Optimizer, which is designed to reduce operating costs and increase driver satisfaction through “Operations Specialists” rather than fleet managers. Variant’s fleet orchestration platform known as Vector uses interconnected algorithms to analyze current and predicted truck positions, telemetry data, and current and predicted driver hours of service to better connect and use shipper orders. Vector is connected to live freight markets through application programming interfaces (APIs) and other middleware that help strategically position Variant trucks to better meet demand.
Vector also helps re-orchestrate the Variant fleet in response to weather delays, mechanical issues, shipper order changes, and even driver behavior. In the process, Variant drivers enjoy greater mileage and paycheck predictability and get home more on the dates they choose.
“Our promise to our driver community is to get them 2,500 miles a week,” Koehl said. “That’s about an annual compensation offer of $75,000.”
Variant’s fleet managers have been replaced by operations specialists who are free to provide drivers with more personalized one-on-one contact while the company’s Optimizer software takes on the heavy load of route planning. Driver response times are typically handled in less than two minutes. Drivers interact with Optimizer through a multi-function app.
Variant has also launched an ambassador program to help create a more connected driver community. Long-haul trucking can be a one-person job, but through the Variant Ambassador program, drivers share their Variant experience with other drivers and invite them to join their squad. As the Variant Squad grows, driver paychecks will also grow, as will other multi-level marketing concepts.
* Started: 2019
* Owner: US Xpress Companies
* Location: Midtown Atlanta office develops technology and new systems
* Cut: Over 1,600 tractors currently and Variant expects to have 2,500 drivers by the end of the year
* Some products: The Variant Optimizer is designed to reduce operating costs and increase driver efficiency through the platform known as Vector which uses interconnected algorithms to analyze truck positions and controls, among other factors in real time.
Already about a quarter of Variant pilots have joined the Ambassador program “and we are working hard on ways to expand this program over the next two years,” Koehl said.
The Variant operation has grown from a startup to more than 1,600 tractors in just two years and Koehl says he expects to have 2,500 drivers with Variant by the end of the year. Within the growing company, there are now about 250 drivers helping to improve connections and services to keep drivers on the road and limit driver turnover, Koehl said.
“Most of our competitors are reducing their on-road vehicle fleets, but we are committed to growing them even with strong headwinds,” says Koehl. “I think we’re now in this second season of Variant where to some extent it’s been said that we’ve over-indexed on technology. But now we’re bringing this humanization of technology and people together to really us. allow this operation to evolve.”
Koehl is deeply connected to innovative technologies that are transforming the trucking industry, including partnerships with the Massachusetts Institute of Technology and its FreightLab program, which finds solutions for greater efficiency in logistics. He also oversees strategic partnerships with self-driving vehicle developers to bring self-driving technology to market and currently serves as Vice Chair of the American Trucking Associations (ATA) Self-Driving Trucks Committee.
“We will continue to operate, develop and enhance Variant from our Atlanta location and expect Variant to continue to be the primary driver of growth for our truck fleet in the years to come” , Fuller said.
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