Shippers can save money and optimize transportation by collaborating with one another to share truck space. Robert Garner, vice president of supply chain with Republic Plastics, explains how it works.
SCB: How can you use technology to create value for carriers, shippers and related participants?
Garner: Transportation has always been kind of a one-sided transaction. Third-party logistics providers deploy technology to get green lanes and matching freight. Now some of that technology is leaking out for a collaborative process, whereby shippers are getting together and taking a holistic look at how they can leverage the information on their networks and do business with one another directly.
SCB: For what purpose are they leveraging that information? Are they optimizing truck capacity? Why are they coming together in this way?
Garner: It's not so much the shared-space aspect. It from a lane-density and backhaul perspective. We’re not big enough to run a private fleet, so we rely on asset-based 3PLs to move our freight. But you've got some very large Fortune 500 companies that have private fleets, and a lot of that equipment is running empty. There’s a need, with the sprinkling of DCs around the country, for regional service. My average length of haul is about 400 to 450 miles. That fits somebody's network, where they're running multiple trucks a day empty, either with their own fleet or people they've hired on a dedicated basis. I’m able to bring them a backhaul opportunity, where I can potentially reduce both my costs and some of theirs. It's a collaboration without having a 3PL or someone else in between.
SCB: If you leaving out the 3PL, you're leaving out a certain amount of cost, are you not? Is that the play — the reason why you'd go direct to other shippers?
Garner: We're not going to match up 100%, but if we can get 10% or 15%, you've potentially reduced the empty miles. As a manufacturer, we're challenged by our customers to do what we can to reduce and improve packaging. They want us to drive as much cost out of the supply chain as possible. This is just another tool in the toolbox for adding value for our customers.
SCB: The moment that you partner with another shipper, are you giving up a degree of optimization? Do you sometimes have to de-optimize your transportation in order to take advantage of these collaborative opportunities?
Garner: No, because at the end of the day, you still have to live within the parameters that your customer has set, and we've already got a network in place for that. This is just an opportunity to drive additional value and collaborate.
SCB: How do you build the necessary trust between partners to make this work?
Garner: It's a challenge. I might be dealing with carriers I've never heard of. So you kind of piggyback off of that trust, and realize that it's not necessarily just a one-way relationship now. I've got my customer to worry about, plus I've now got to focus on someone else's carrier, or they could be utilizing mine. Nobody wants to fail or have a late delivery or a missed shipment. It adds a different dimension of complexity.
Enjoy curated articles directly to your inbox.