Transportation costs have become a line item highly scrutinized by company finance departments. With corporations seeking ways to squeeze every dollar to save costs, today they are putting transportation under the eye glass and shaving every which way they can. One way, companies are finding, is by collaborating with other companies on transportation services. While collaboration, in the corporate sense, has been around for a long time, Tim Feemster, managing principal at Foremost Quality Logistics in Dallas, Texas, stresses that collaboration has become more difficult in today’s world due to the fact that companies see sharing information as proprietary. “Company A does not want to tell Company B what product they are shipping and to where because Company B may be a competitor,” he explains. But the reality is Samsung, Hewlett-Packard and Dell (companies we’ll use for sake of example) today ship to basically the same establishments – big box retailers. “Companies still want to make sure they are not collaborating with competitors,” Feemster says. “But the reality is, this is one of the untapped opportunities today and in future for companies to tap into transport cost savings.” Consider this case study example: Dal-Tile Corporation, the largest ceramic tile manufacturer in the US and one of the largest tile manufacturers in the world, employs collaborative schemes in its logistics operations. The company was spending huge sums of money to transport its heavy ceramic tile products from its manufacturing site in Mexico to its customers. Because the shipments were heavy, yet did not fill an entire truck because of weight limitation, the company had to pay the expensive rate for less-than-truckload shipments (LTL). “We were not utilizing much of the container cube due to weight limitations,” recalls Sonny Jones, division director for Transportation of Dal-Tile Corp. Jones felt that if Dal-Tile could collaborate with another company whose products were light weight but could fill out the rest of the truck, both could absorb some of the cost and save money. Working with a director in the Mexico office of Transplace, a non-asset, North America-based third party logistics (3PL) provider, a scheme was put together whereby the company could cross multiple shippers on the same conveyance and satisfy customs processes required by both US and Mexican customs officials. A good match was found with General Electric and Whirlpool, companies that need significant box car capacity to move product. “It has been a good marriage in terms of cube and weight utilization,” Jones remarks. “By co-loading shipments, not only is Dal-Tile and its collaborative partner able to lower costs per unit, they fully utilize the transportation asset.” Another example is Ocean Spray and Tropicana, competing juice companies. Thanks to a collaboration scheme suggested by Wheels Clipper, an Illinois-based third-party logistics service provider (3PL) that specializes in intermodal, truckload, and refrigerated shipping, both companies share boxcar freight expenses on CSX, thereby giving both companies substantial savings in both transportation costs and carbon emissions. Here’s the scenario both companies were facing. In 2011, Ocean Spray opened a distribution center (DC) in Lakeland, FL from which it sent empty trucks to its manufacturing factory in New Jersey to bring full truckloads of products south back to the DC. Meanwhile, Tropicana was shipped fresh fruit by boxcar rail on CSX from Florida to New Jersey – then returning the empty boxcars back to Florida. John Langley, Clinical professor of supply chain management, Penn State University, points out that manufacturers and shippers are also realizing greater advantages by collaborating with 3PLs for warehouse and distribution center operations. “There’s a growing willingness by clients to involve their 3PLs in making operational and strategic decisions,” he comments. One good example is Penske Logistics, which manages and optimizes a combined network of 10 major warehousing and distribution centers across the United States for Whirlpool Corp. “Penske’s investment in a collaborative relationship and continuous improvement culture continues to pay dividends for both Whirlpool and Penske,” says Dan Iddings, director of Whirlpool Corporation’s North America distribution operations. Shipping Scenarios Transport collaboration is particularly successful today thanks to Big Data capabilities. “Big Data offers the ability to convert your order electronically because of sophisticated warehouse management (WMS) and transportation management system (TMS) software programs. “If you can convert to a mock bill of lading indicating how many pallet locations you have and the cube and weight size of that order, you can theoretically tag it with bar code or RFID chip that tracer can read and send the shipment with anyone, anywhere,” Feemster says. “No one can tell from the electronic tag or label what the product is.” For sake of example, Feemster points out that any shipment of 8 pallets weighing 6,000 pounds would qualify for a company collaborating with carriers and others companies. “And the faster a shipper can do it on the front end, particularly in regards to cross boarder shipments, the better the opportunities for savings,” he adds. That’s because cross boarder shipments, such as those between the United States and Mexico, require longer lead times, but also mean there is a longer period of time to collaborate with another shipper and consolidate freight. But even in domestic shipments, ample lead time is critical. “Sophisticated TMS systems can combine orders to a common destination,” he adds. “The first step is to arrange internal collaboration between company sales groups. Second, shipments need to be combined into one master shipment so that the shippers can get one truckload. You cannot do this without lead time, and when you are dealing with collaborating this information outside the company, you need even more lead time.” For example, if a shipper is shipping a load, say, from Richmond, VA to Atlanta, GA with an LTL, the shipment will take two to three days, according to Feemster. “If that half truckload can be combined with another half truck load for a FTL shipment, the truck will get there the next day,” he says. “Now you gain two days in transit.” In other words, by holding that order for a day with the expectation that it can be combined with something else, the shipper can still get it to the client on time and save money. “But this can be a roll of the dice,” he adds. “If the opportunity is nixed because nothing comes about, you have to spend more money to get it shipped and to the customer on time. But by collaborating with an outside company, the savings can be realized. “You don’t even need to collaborate with a company in your area – only a shipment that is on the way,” he adds. As an aside, however, Feemster points out that such savings are detrimental to carriers since LTL shipments that carry half loads are charged more per pound than full truckloads (FTL). Big Data Meanwhile, significant work is ongoing in Europe regarding collaboration schemes. TRI-VIZOR NV, founded in Belgium in November 2008 by three partners—Alex Van Breedam, Sven Verstrepen and Bart Vannieuwenhuyse – has gained success as a spin-off company of the University of Antwerp by introducing what is billed as “the world’s first cross supply chain orchestrator.” In Europe, 24 percent of all trucks in Europe are running empty. These empty trailers, which are typically on their way back from deliveries or en route to pick up goods, are exacerbating the area’s traffic and air-quality problems while also wasting money. The idea of TRI-ViZOR is to offer specialized knowledge and solutions to create, support and orchestrate flow bundling and horizontal partnerships in transport and logistics. TRI-VIZOR helps shippers, logistics service providers, governments and infrastructure operators to bundle and synchronize freight flows and to achieve breakthrough improvements in logistics cost, service level and carbon emissions. Its website explains: “TRI-VIZOR builds sustainable logistics communities that are glued together by a fair gain sharing mechanism, an ICT cockpit or ‘logistics control tower’ and a legal framework which is fully compliant with anti-trust laws.” In April 2011, the company successfully launched its first orchestrated consolidation project with two shippers, Baxter with its facilities in and around Brussels and Kimberly Clark in Rouen, France. Working on a fully independent and neutral bases, TRI-VIZOR identified overlapping freight flows. TRI-VIZOR was able to combine shipments from Baxter going south to its facility in Boulogne-Billancourt, then send the truck just miles to Kimberly Clark in Rouen where it could pick up daily flows for shipment back to Kimberly Clark facilities in Brussels. “By closing the loop with maximum utilization, they are saving 13 to 14 percent in shipping costs,” Verstrepen adds. Since then, TRI-VIZOR has identified scores of other companies and introduced horizontal collaborative schemes. One involves short sea ships carrying goods to Spain for Ontex (private label and contract manufacturer of personal healthcare products), Baxter and Eternit (beauty products) in Belgium and picking up shipments for Ontex, Baxter and Colruyt (major retailer) to come back north to Beligum. Other examples include last mile savings being made between competitors Nestle and PepsiCo. “Legally, they are not allowed to collaborate directly,” he says. But the common denominator was collaborative inbound retail replenishment with SPAR – Colruyt throughout, Belgium. “The goal was to reduce the number of trucks they were sending to SPAR stores,” he says. Because of the way antitrust laws are written in Europe, TRI-VIZOR executives found that horizontal co-operation agreements do not violate Europe Commission competition law. Today, TRI-VIZOR software is automatically scanning for network overlap and bundling opportunities across more than 110 multinational shippers. “The idea is to build a community and share capacity of different communities and build connections,” Verstrepen says. The scheme seems to be working on a continent where transportation is very fragmented and very expensive and where there’s increasing pressure to cut C02 levels and traffic congestion.