Collaborating with other shippers to fill empty cargo space is an effective way to cut costs and shrink transportation’s carbon footprint-providing you can identify the right opportunities.
By “right” we mean choosing collaborators that have compatible cultures and IT systems. Their businesses must also provide a viable match; a shipper of food products will find it tough to share truck space with a hazmat specialist, for example. Convincing senior management that you can green the supply chain by allowing an arch competitor to use some of your truck space to deliver product is a difficult sell.
And, of course, respective transportation networks must mesh to some degree. Clearly, a company that operates primarily on the US west coast will find it difficult to establish space sharing agreements with an east coast shipper. Even within the same geographic area there is no guarantee that cooperating with a like-minded enterprise will yield viable continuous moves that improve space utilization.
It sounds challenging, and it is, but with forethought, preparation, transportation management skills, and a lot of goodwill, it can be done.
To prove the point take a look at a collaborative relationship forged by one of North America’s leading producers of bottled juices and juice drinks, Ocean Spray.
The company worked with the MIT Center for Transportation & Logistics to develop a successful space sharing arrangement with a fruit company. The project has been published as a case study sponsored by the Environmental Defense Fund.
Ocean Spray is shipping product from New Jersey to Florida by rail using boxcar space that prior to the agreement was part of an empty backhaul. A fruit shipper was transporting loads from Florida to New Jersey, but had no cargo to fill the rail cars in the other direction.
In addition to delivering transportation rate savings of more than $200 per load, the space sharing arrangement enabled Ocean Spray to shift to an intermodal configuration on the route and save the equivalent of 100,000 gallons of fuel annually.
These are impressive gains, and the participants worked hard to achieve them. Here are some of the features that made it possible.
- Route compatibility. Ocean Spray’s NJ distribution center (DC) is located in Bordentown; only 60 miles from the rail terminal where the empty boxcars are stored. Moreover, their DC in Lakeland, Fl, is only 62 miles from the destination rail terminal.
- Willingness to change practices. An average Ocean Spray truckload shipment holds 19 to 28 pallets, but the rail boxcars carry an average of 38 pallets each. The company revised its shipping practices to accommodate the increased pallet load. Also, since shipping product between NJ and Fl by truck takes three days compared to 4 to 5 days using intermodal services, Ocean Spray adjusted its inventory to allow for the longer transit time and maintain customer service levels.
- Marrying operations. Ocean Spray and the fruit shipper agreed to employ a third-party logistics provider to coordinate the moves and manage billing. Ocean Spray notifies the other shipper of the number of loads, and the 3PL organizes the transportation legs between the rail terminals and DCs. Both the 3PL and rail operator provide in-transit information.
- Test and refine. The enterprises carried out several pilot runs to confirm that they were able to coordinate load pickups and deliveries within the required time windows.
This type of collaboration is attracting interest in the logistics community, and rightly so. But companies should be aware of the nature of the commitment, and be prepared to put time and effort into searching for prospective collaborators.
For additional information, you can download the report here.