To meet customers’ demand for faster, cheaper shipping, e-commerce giants and businesses of all kinds are revolutionizing the way we think about deliveries. Increasingly, this means they’re are employing independent contractors instead of traditional carriers to move goods to consumers.
Much like their last-mile counterparts, carriers and shippers are seeking ways to reduce inefficiencies at scale, and as a result, transportation collaboration is gaining traction. Opportunities to share shipping lanes can encourage the unlikeliest of partners to put aside competitive differences for a supply chain win-win. And the benefits, both financial and environmental, can be significant.
When companies bid on specific lanes to move their goods, they may have more control over their routes and fewer risks of sharing competitive intelligence. However, by operating in silos without visibility across shipping lanes (or the supply chain overall) businesses often forego positive financial and environmental benefits.
In traditional operations, a company loads a truck once and then gradually unloads at each stop along its route. As the truck’s empty container space grows, the route becomes increasingly inefficient. According to a 2023 Uber Freight whitepaper, the fraction of empty miles traveled by U.S. truckload fleets is approximately 35%, not even counting the waste involved in carrying reduced loads after a truck’s first drop-off.
As logistics-minded businesses are reconsidering the balance between complete in-house control and collaborative efficiencies — not to mention their balance sheets — collaborative efficiencies are beginning to tip the scales.
In transportation collaboration, two or more businesses work with a third party to establish shared transit lanes based on where the participants’ supply chains are running parallel or overlap. That could mean a truck leaves a distribution center with goods, drops some off at a store, then picks up another business’s shipments nearby with the newly freed space. This network collaboration reduces the chance that a truck navigates the highway with empty space. And using the third party’s data, collaborators can ensure that the truck is only picking up goods from locations it was already going to travel near, so the arrangement isn’t adding a burden on the driver or adding unnecessary miles.
The benefits of a transportation partnership are apparent in each partner’s bottom line: The truck owner earns revenue from the additional cargo, and the business paying to lease truck space can reduce its fleet and, therefore, its operational costs.
Additionally, when suppliers, shippers and carriers work together, there are increased efficiencies across operations, routing, scheduling and the overall flow of goods. Through improved network visibility and shared best practices, businesses may also mitigate common delivery disruptions, errors and delays.
There are also sustainability gains. Collaborative companies reduce their carbon emissions by taking inefficient or empty truckloads off the road. This is important because many leading organizations have set ambitious carbon emission reduction goals to meet increased expectations of sustainability from consumers, investors and regulatory bodies.
While there are many ways a company can reduce its carbon footprint, transportation is often a significant focus area, with abundant opportunity for improvement. The Environmental Protection Agency estimates that medium- and heavy-duty trucks are responsible for a fourth of transportation greenhouse gas emissions.
Organizations that are ready to explore transportation collaboration will need to identify potential partners, align routes and lanes for mutual benefit, and engage in reporting to understand what’s working and what isn’t. One of the most efficient ways to facilitate this process is by using a third-party resource that has the network density and visibility to strategically connect companies. There are also new technology platforms that can assist with logistics management.
Ultimately, every partnership is unique, based on its collaborative and operational framework. Investing in the right partnerships is worth the effort to maximize the financial and environmental benefits that result from successful transportation collaboration.
As more and more customers expect their deliveries to arrive quickly and on time, businesses must re-evaluate their strategies to meet these ever-evolving demands. While many transportation challenges are complex, through collaboration, companies operating in the supply chain are better equipped to solve them.
Dan Ahrens is director, customer solutions at CHEP North America.
