Shippers are working together to control rising transportation costs much more than is widely realized, a survey of more than 100 companies shows.
More than half the companies surveyed, 54.9 percent, told NASSTRAC they collaborate with other shippers as well as carriers to control transportation costs.
NASSTRAC’s first annual shipper survey found 32.4 percent of respondents collaborated with their trucking partners and third-party logistics companies.
“I was quite surprised to see so much collaboration, not only with carriers but other shippers,” said Brian Everett, executive director of the National Shippers Strategic Transportation Council or NASSTRAC. “This could be an emerging trend.”
That trend, spurred by tightening truckload capacity and higher rates, takes shippers beyond a purely transactional relationship with their trucking partners. “Shippers are working to make freight more palatable to their carrier partners so they can collaborate on keeping rates and costs down,” Everett said. Shipper-to-shipper collaboration often is a byproduct of working with carriers or 3PLs.
At one end of the scale, collaboration may mean sharing tractor-trailers to secure capacity. “Collaborative shipping” helped Kimberly-Clark and Colgate improve service to a common retail customer, CVS Caremark, while reducing truck miles.
A Kimberly-Clark/Colgate pilot project realized line-haul and fuel cost savings of 18 percent or more, but finding and keeping those savings wasn’t simple, said Scott DeGroot, director of supply chain strategy and development for Kimberly-Clark.
“The cost of bringing the freight together can eat into savings very quickly,” DeGroot told The Journal of Commerce last November. “It’s not a big cost savings story yet.”
The NASSTRAC survey underscored how difficult shipper partnerships can be. Only 13.9 percent of the shippers surveyed saw no barriers to collaboration. Respondents identified several obstacles, lead by corporate cultural barriers, existing opportunities to improve efficiencies in-house, and legal and non-disclosure issues. “You have to be cognizant of what you can share and what you can’t,” Everett said.
One thing most shippers share is the expectation trucking costs will rise. Forty-seven percent of those surveyed said they expect less-than-truckload rates will rise this year and 46 percent anticipate higher truckload pricing. A smaller group, 33 percent, expects intermodal rates to rise and 29 percent said they expect ocean rates to head upward. Only 24 percent expect air cargo rates to find much lift.
“We see cost creeping back into the supply chain, threatening gains we’ve made over the past decades,” Everett said. “That’s continually on the minds of the shippers. People are looking at whether they’re going to have to shift modes or change their supply chain, renovating their DC network. Those are long-term heavy investments that corporate management may or may not buy into.”
Executives attending the NASSTRAC Shippers Conference in Orlando April 21-24 will be able to join Collaborative Learning Labs run by shippers that delve into these issues, Everett said. “Sharing best practices has real potential value.”
More than a third of the shippers surveyed by NASSTRAC, 38 percent, shifted some freight from trucks to intermodal rail or railcars over the past year. Looking beyond that intermodal exchange, there are even greater signs multimodal shipping is growing. NASSTRAC said 66 percent of the shippers surveyed transferred at least some freight to a different mode last year, led by manufacturers at 78 percent, retailers at 54 percent, and wholesalers and distributors at 44 percent.
Intermodal rail was the prime choice, followed distantly by truckload at 13 percent, ocean at 5 percent and LTL at only 4 percent. Fifty-eight percent of the shippers said they expected to shift to “more cost-effective means of transportation” in 2013.
Those numbers support the belief multimodal shipping strategies are gaining ground. “I don’t know if I see a huge shift coming, but ‘tweak’ may be too weak a word” when talking about intermodal strategies, Everett said. “Supply chain executives are looking at the big picture and asking if shifting their going-to-market strategy can reduce transportation spend.” The technology available to shippers, often through carriers and 3PLs, is helping to propel that modal shift.
“There’s so much more data that’s available and so much more visibility in the supply chain, it’s easier to find those opportunities” to shift modes, Everett said.