Shippers apparently are collaborating more and more to reduce transportation costs, empty miles and environmental impact.
David Heller, vice president of business development for Ashley Distribution Services, said at the CSCMP Edge 2019 conference last week that the owners of Ashley Furniture decided, "‘Why don't we go from being strictly a consumer of transportation services to taking all of that volume that we have and that density and leveraging that to become a provider of transportation services?'"
Ashley, which now has a fleet of 900 tractors and 4,000 trailers as well as a freight brokerage, is delivering some loads in the Southeast for the Kellogg Company (NYSE: K), according to Kyle Russell, its director of North American supply chain services.
"Really it's what costs can we take out of the business," Russell said. "I'm driving productivity from a transportation and distribution supply chain standpoint for Kellogg, and this is one of those opportunities that presented itself that tied into my objectives for the year. And we've seen some pretty significant value added already."
Collaboration among shippers also benefits carriers, said Rob McNeil, vice president and general manager of business development for Transport America, an asset-based full-truckload carrier based in Eagan, Minnesota.
"There's a win, win, win within the industry as you think about filling backhaul lanes and the pure waste that is there," McNeil said.
Robert Garner, vice president of supply chain for Republic Plastics, a privately held company that produces disposable tableware for private labels, said it's not easy to secure that win.
"It's now working with another shipper that's in the same boat I am. I have to get my product to market. They've got to get their product to market. You really don't have that trust level built. ‘Are we going to use my carrier or are we going to use your carrier?' ‘Are we going to use your dedicated resource?'" Garner said.
"Maybe my receiver can't handle a drop-trailer program, but that's the only way that it works for your fleet. It's ironing out those differences and trying to figure out what's going to be the best way to move forward," he said.
Heller said communication also is key.
"The onboarding process becomes absolutely critical to us to make sure those communication channels are established," he said. "It's been a fast-growing part of our business. Imagine if you will hundreds of truckloads of furniture going out every day and for a while, all those trucks were coming back empty, which was a fairly expensive proposition. So any revenue that we get on the backhaul is positive revenue for the most part and so it's been great to work with shippers of all different stripes to find out where the synergies are and be able to help each other."
Russell said Kellogg has aligned with shippers and carriers on rates and service in five lanes.
"On those five lanes, we've got over 2,500 loads a year moving through collaborative shipping with us and three other partners right now," he said. "Everyone who signed up for it has seen the benefit."
Garner said the opportunity to collaborate with other shippers has "opened my eyes to our network and how it interacts and how it overlaps with other equipment and other lanes coming into my market. I'm not looking to replace our carrier base per se, but how many of us believe we're going to be in this soft freight market 18 months from now?"
Building relationships and securing capacity now will ensure that Republic Plastics is "still going to have that capacity when things go crazy and I'm still going to have a fair rate because we built that relationship. We're looking at it more as how do you look and move forward and plan to protect yourself from the risk and the fluctuations," he said.
How do you sell the value of collaboration with other shippers within your company?
"What has been successful for me is letting the data and the visualization speak for itself," Russell said. "I show where our lanes are, what the other lanes are, where they're heading, what the volumes are. I show rates that we've talked about, agreed to. This is what I've used to sell. The hard part was the data. Everyone is very protective of their data. ... The data is key. It drives all this information.
"Showing the value proposition, I just had to hit a couple and all of a sudden everybody's talking about it. ‘When are we getting more?' ‘How many people do we need to put on this?'" he said. "Everybody's on board within Kellogg. They love it. They're pushing it. My senior VP is like, ‘I've been trying to do this for 15 years.'"
Shipper collaboration also helps Kellogg meet its sustainability goals.
"It is something we've added to the value proposition. We're reducing empty miles out there," Russell said. "We're not paying duplicate fuel for the same lane."
Heller added, "To only haul freight in one direction and come back empty burns up a lot of what I would call unproductive fuel and unproductive time. Filling the backhaul, we're treating that as a profit center."
Russell said Kellogg now is eyeing refrigerated lanes and networking at events like the CSCMP conference can help get collaboration on those lanes off the ground.
"I met someone from Dannon yesterday," he said. "We're going to link up right after this on some refrigerated lanes."
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