Everyone in the transportation industry knows that there’s a lot of waste in the system. Waste in the form of under-utilized capacity and empty miles, for example, which results in added costs and inefficiencies for shippers and carriers. One way to address this problem is through collaborative shipping — that is, multiple shippers and carriers working together to create more efficient and cost-effective operations for everyone. Historically, collaborative shipping has been easier said than done, but thanks to advancements in technology and other factors, it’s gaining momentum in the industry. What are the main challenges? How is technology helping? What are the benefits for shippers and carriers? Those are the main questions I discussed with Mark Hackl, Managing Director of Lanehub at Transplace, during a recent episode of Talking Logistics.
I began our discussion by asking Mark to relate some of the challenges that have made freight collaboration difficult in the past. Mark notes that early attempts involved mostly manual processes, with a few companies trying to match loads through sharing spreadsheets or shipping schedules. Not only were these attempts time-consuming and haphazard, there was also not enough load density to create mutual benefits for all.
“Another challenge initially was that companies were looking at collaborative shipping as a one-time effort as opposed to an ongoing continuous improvement process. They would allocate resources to it, but then pull them off when resources became constrained,” says Mark. “There were also operational issues around timing, allocating costs and savings, handling truck breakdowns and similar issues.”
Mark shared some interesting perspectives on how technology has enabled companies to resolve some of the challenges to collaboration. He comments that 10 to 15 years ago, companies were very reluctant to allow employees to use social networking applications in the workplace. Now that it is ubiquitous, however, those social network techniques work very well to facilitate collaboration for freight lane matching. “It presents an easy, low-cost way for companies to get involved with the process rather than a large, costly project,” he says.
“Technology also helps in identifying synergies between shippers and networks more quickly,” notes Mark. “If you have a lot of data and a very dense network of freight lanes, technology enables you to quickly filter through all of that information to find where the real opportunities exist.
“Scaling beyond your transportation management system is another important factor. You can use your existing TMS, which you have invested in, but still have access to a large network of other shippers who are interested in collaborating through this social networking-like technology.”
While there are a number of digital freight companies focused on matching trucks with loads from a transactional perspective, Mark says that their focus is on developing longer term collaborative relationships and “overlaying networks and finding synergies that can create long term benefits. The key there is allowing companies to share drop trailers or share fleets that have drop trailer capabilities.”
Measuring the benefits
I asked Mark to explain some of the benefits of this collaborative approach and how they measure the results. He says one of the first benefits is that shippers gain visibility to capacity available from private and dedicated fleets. This helps in the procurement process as well as in lane matching. “Many times, this capacity is available at below-market rates because it would otherwise be deadheading or running empty,” Mark explains. “And it provides high quality service.”
For carriers and fleet owners, it can reduce empty miles and sometimes allow them to broaden their service areas. “It also increases asset utilization with drop-trailer loads and more predictable routes, which can help with driver retention,” Mark says. “It also provides sustainability benefits.”
Mark shared an example of a large beverage manufacturer that is tendering hundreds of loads per week to other shippers on their network and leveraging their dedicated fleets. “So it’s a win-win for both parties,” says Mark. “For the companies with dedicated fleets, they’re finding backhaul moves and for the beverage company they’re gaining high-service capacity at below-market pricing.”
As with many initiatives that involve collaboration between companies, the hardest part is sometimes knowing how to get started. Using a third-party logistics provider (3PL) can help. Mark had a number of great suggestions for getting started. He also talked about the benefits and opportunities enabled by adding collaborative shipping capabilities to a broader TMS and technology platform. Therefore, I encourage you to watch the full episode for all of his insights and advice on these topics and more. Then keep the conversation going by posting your own thoughts and questions on this topic.