From time to time, some supply chain theorist, noting the persistence of wasted capacity in transportation, will ask the question: Why can’t shippers, even nominal competitors, get together and share available space on trucks? Then the idea gets shelved.
The reasons why it never seems to advance are obvious: manufacturers and retailers are, in fact, not inclined to help the competition get its products to market in a cost-efficient manner. A given route isn’t necessarily the most convenient choice for both of the parties that are sharing it. And some observers bring up the issue of potential antitrust violations.
Now, however, at a time when fuel and freight costs are soaring, supply disruptions are frequent and capacity can be challenging to secure, shippers are rethinking the notion of collaboration. Bart De Muynck, chief industry officer with project44, cites some current examples, including the Coca-Cola Company and Ben & Jerry’s (the latter a subsidiary of food giant Unilever) shipping to the same retailers, American Eagle Outfitters sharing space in both factories and FedEx trucks with other retailers and clothing companies such as Kohl’s and Steve Madden, and automotive companies producing parts in the same plants.
The practice is far from prevalent, however. “If organizations were better at collaborating with one another on transportation and supply chain functions,” says De Muynck, “they would be operating much more efficiently.”
This is hardly the first crisis to hit supply chains, but De Muynck believes the idea of sharing logistics capacity didn’t take hold in the past because companies weren’t communicating well, either internally or with outside partners. But with the development of new software for improved supply chain visibility, collaboration has become not only possible but essential.
“You need to depend on other parties because so much data is coming from outside organizations, including carriers, suppliers, customers, terminals and 3PLs,” De Muynck says. “The last two to three years have seen more disruption and challenges, hence more complexity. People are almost forced to collaborate in more ways to resolve these issues.”
With access to an unprecedented amount of data, shippers can see, for the first time, opportunities to make better use of available truck capacity — even if that means sharing it with competitors. No longer are they solely dependent for their planning on a single-enterprise transportation management system (TMS). Additional intelligence now flows from the internet of things, telematics, routing applications, sensors, traffic data and visibility platforms. The result is a new level of networking capability that allows for the sharing of logistics assets between brands, and optimization across multiple organizations.
By presenting carriers with the opportunity to make fuller use of their capacity, retailers and manufacturers increase their chances of attaining the coveted “shipper of choice” designation. In other words, in times of high demand for services, they look to ensure that carriers will favor their freight. Collaboration can even extend to forecasting transportation needs, helping carriers to plan better, De Muynck says.
He's not talking about rival shippers engaging in joint contracting with truckload and less-than-truck carriers. “From a tender perspective, that’s really difficult to do,” he says. But multiple partners can come together in a shared visibility platform on which carriers can draw when deciding how to deploy their fleets. De Muynck cites the creation by Airbus of Skywise, a data platform that serves as a single point of reference for multiple airline customers.
In a similar model applied to transportation, each shipper would see only its own proprietary data unless it expressly chose to work with another. The carrier, meanwhile, would have a broad view of the data across multiple customers, presenting it with opportunities for the consolidation of loads sharing a destination.
Another scenario for shipper collaboration arises with the concept of shared truckload, whereby LTL shipments from multiple customers are pooled and combined within a single trailer through the use of a digitized freight network. In theory, the practice lowers overall freight costs while maximizing cube utilization. De Muynck says that’s not easy to do, given the challenge of convincing shippers to work together more directly. Arguments could ensue as to whose freight gets delivered first, he says.
The better path to collaboration might lie in the sharing of data through an intermediate visibility platform, and opportunities for making transportation more efficient in that manner are on the rise. “It all comes down to asking, ‘Do I have the data to understand how I can combine some of these things?’” says De Muynck. “That’s where it goes from an idea to really making this happen.”
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