Shippers looking to lock down capacity are turning not just to carriers, but to each other, and logistics providers are bringing the assets they need to the dock.
Schneider Logistics, the asset-light arm of truckload giant Schneider National, is expanding in the less-than-truckload market with a service it claims consolidates shipments for multiple shippers to lower costs and create additional capacity.
Integrated Delivery Services blends Schneider’s dedicated carriage services, supply chain technology and cross-dock capabilities to provide a “shared ride” for shippers the company says can reduce their transportation costs 7 to 20 percent.
By consolidating multiple shippers’ cargo, Schneider is creating capacity by using existing equipment more efficiently without adding trailers. Shippers are demanding that kind of innovation in an era of tight truck capacity and rising truck rates.
The third-party logistics provider launched the service last month in eight regional LTL markets across the U.S., from Portland, Ore., to Winchester, Va., and plans to expand the service in the Midwest and in Texas in Dallas and Fort Worth.
“We’ve identified this as an area of opportunity,” said Todd Jadin, vice president of IDS for Schneider Logistics. “Through the consolidation process, we’re able to save drivers, tractors and trailers, and that obviously leads to cost savings,” he said.
At first glance, the LTL market might seem an odd target for the logistics arm of the second-largest U.S. truckload carrier. But Schneider Logistics already works closely with LTL carriers on outsourced transportation services, Jadin said.
Schneider also is the second-largest dedicated contract carrier in the U.S., and the largest privately owned dedicated carrier, according to SJ Consulting Group.
The Green Bay, Wis.-based company’s IDS service is aimed at a certain type of LTL shipper and a certain type of LTL freight — not the general freight pursued by carriers such as FedEx Freight, Con-way Freight or YRC. The company wants LTL shipments sent on a consistent, recurring basis to the same locations, whether industrial sites or retail stores. “By identifying consistent shipping patterns of multiple customers, we can create route density and engineer routes to provide predictable delivery times on a daily basis, which delivers cost savings,” Jadin said.
Those savings also come from more fully loading equipment and fewer claims, he said. Most IDS stops are made daily, at specific times. “Our intention is to provide an efficient route that delivers that predictability of service,” he said.
That predictability includes availability of capacity.
Shippers increasingly want to secure capacity commitments wherever they can to ensure they don’t come up short when demand rises. They’re also more willing to consider sharing capacity to fill trailers and bring down shipping costs, especially with a company that has complementary freight.
Some companies refer to the strategy as “shared dedicated” carriage. Northeastern logistics and trucking company Kane Is Able calls it “collaborative distribution.”
“More and more companies need to work together, because there are still trucks out there running with available capacity on them,” said Chris Kane, chief customer strategy officer for the Scranton, Pa., company. “With the technology out there today, the future will be more shippers aligning deliveries and sharing trucks.”
But the linchpin of Schneider’s strategy also means competitors must be willing to put pallets on the same trailer. Companies that run common routes, have similar dispatch schedules and deliver to the same customers often have competing brands. Schneider didn’t have any trouble getting competitors to work together when it tested the new service in Denver, Jadin said. “Shippers are telling us that supply chain costs are now their No. 1 cost of doing business,” he said. “That brings with it the need to be strategic and creative.
“We’ve had conversations with individual companies about the transparency of the service, and it’s their decision to move forward,” he said. “Obviously, they’ve been able to do that. Clearly, providing a more efficient service is attractive.”
IDS is most attractive to shippers in the automotive aftermarket, heavy truck and equipment manufacturing and specialty retail industries, Jadin said.
Nearly 20 shippers are using the service in the Denver region, which Schneider chose for a pilot because of its challenging geography and weather. “We felt if we could be successful in Denver we could take it to any location,” Jadin said.
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