Collaborative logistics – where multiple companies cooperate to share freight capacity – holds the key to dramatic reductions in freight emissions and costs. Unfortunately, most consumer packaged goods (CPG) companies continue to manage discrete lines of supply to retail customers, passing up these opportunities.
- Partially full trucks today run side-by-side on the highway, even though they are travelling to the exact same retail distribution center (DC), and freight could have been combined.
- Outbound deliveries of full trailers ride alongside empty trailers returning home to the same destination after a delivery, even though the outbound shipper could have leveraged the opportunity presented by the empty trailer for an aggressive backhaul rate.
- Heavy and light products cause trucks to weigh out before they’re full and cube out below the truck’s weight capacity has been reached, even when the solution could have been as simple as combining shipments of cotton balls and hammers traveling along the same route.
Examples of collaborative logistics at work
More and more companies are recognizing the value of collaboration in meeting their sustainability goals. It turns out that when shippers climb out of their silos, good things happen. These are just a few examples of solutions being employed by companies:
- Ocean Spray and Tropicana. Tropicana shipped orange juice north from Florida in refrigerated box cars, which often travelled back empty to Florida. Ocean Spray trucked its juice products from New Jersey to Florida along the same route. By shifting most of this TL volume to utilize Tropicana’s rail backhauls (CSX), Ocean Spray cut freight costs 40% for this lane and reduced greenhouse gas emissions 65%.
- Whirlpool and Daltile. Both of these large manufacturers have factories in Monterrey, Mexico and ship product into the U.S. via rail. Daltile’s heavy ceramic tile reach a rail box car’s 200,000 pound weight limit with enough room for a 53-foot trailer. Meanwhile, Whirlpool’s appliances were cubing out box cars at just 35,000 pounds. The solution? Put four truckloads of tile in each box car (160,000) and fill the rest with refrigerators. Each company now pays just 50% of the cost for the trip, but gets 80 percent of the maximum cube or weight capacity. Daltile’s complete freight collaboration program, generates $3 million in annual freight savings and reduces diesel fuel usage by more than 600,000 gallons per year.
Here are some tips to help your company get started on collaborative logistics:
- Leverage your 3PLs. They service many companies and are in a good position to identify collaborative logistics opportunities and partners.
- Look to competitors. Your freight is likely going to the same customers and DCs.
- Share cost information. When lo-loading freight, mutual trust is critical to determining an equitable cost-sharing arrangement. Both companies must be transparent about what they are paying now.
- Dedicated the required resources. The right collaborative logistics projects can have a huge payoff, but they require significant time and resources to pull off. Don’t underestimate the time required to make these inter-company projects work.
Find more tips on collaborative logistics and other green freight initiatives in EDF’s comprehensive Green Freight Handbook – a free guide to helping you achieve your sustainability goals.