NexTrust is an EU-funded project that brought together 31 partners to promote collaboration within the logistics industry. NexTrust’s objective is to increase efficiency and sustainability in logistics by developing interconnected, trusted collaborative networks along the entire supply chain. Projects that had shippers collaborating lead to a sometimes-stunning reduction in cost and carbon dioxide emissions – even for companies working with fast moving consumer goods (FMCG).
The initiative to start and fund such a project stems from the fact that 21 per cent, just over a fifth, of all trucks on the road in Europe, are empty, while the load factor of trucks transporting cargo averages a mere 43 per cent. Taking into account the growing number of traffic jams in Europe, the pan-European shortage of truck drivers and, on average, low returns, the European road transport sector still enjoys an impressive three-quarter market share of the total transport market.
Consulting partners within the NexTrust project calculated that the number of trucks on European roads is actually growing, but the transported volume isn’t. The average age of the European truck driver is 50, and the number of fresh-faced youngsters eager to become international truck drivers is small.
Even with a dominating market share of 75 per cent, consultants in NexTrust think that productivity in road transport would increase already by simply using more trailers that are suited to both rail and road transport. Only 18 per cent of the European trailer park is suitable for both rail and road transport. Should this percentage increase dramatically, European road transport would be much more efficient, according to the initiators of NexTrust. To achieve this, more equipment and space would be needed on terminals where freight is transferred from road to rail and vice versa.
More cooperation is key to address the driver shortages, which the NexTrust parties agree is the major cause of insufficient capacity at present. An untold number of trucks is said to be standing idle in Germany for lack of qualified drivers. That makes this the moment to test whether shippers can combine their loads in the trucks that are still moving. This would increase productivity. The German consultants at GS1 investigated the shippers’ willingness to consolidate loads with other shippers in the same branch or in other branches. According to GS1, shippers underestimated the benefits. These were expected to be in the region of around fifteen percent.
However, when shippers really started to cooperate intensively to load trucks as efficiently as possible, benefits shot up to as much as 45 per cent. According to GS1, 90 per cent of those involved appeared willing to continue the trial and to combine loads and freight with colleagues.
Shippers can actively cooperate with external haulage companies. This can be achieved in a way that doesn’t violate any law and doesn’t cause any liability with regard to anti-trust legislation. A number of trends pave the way towards common horizontal cooperation between shippers, according to consultants organised within NexTrust. They see a significant awareness of responsibility with shippers when it comes to the output of CO2 reduction. To optimise the flow of cargo, shippers agree to report to so called ‘control towers’ to centralise and optimise the flow of goods. These ‘control towers’ overlook the flow of goods from different parts of a company or from different companies. To increase efficiency even further, shippers also consult with other companies from other branches to see if they can increase the load factor of the trucks.
In the past three years, 45 trials were organised under NexTrust direction, which involved 80 industrial companies and about 50 haulage companies providing logistics services. According to GS1, in various projects, CO2 reduction percentages of 20 and up to 70 per cent were achieved. Everybody is used to newly produced goods being delivered to warehouses. A network of smaller trucks distributes the goods to retail points, such as shops. This is done in a high frequency, with small volumes. Here’s one cause of the low load factor of trucks.
NexTrust seeks to combine loads from several producers, and send them to one warehouse. The owner of this warehouse is a so-called trustee. From this warehouse, trucks loaded with goods from several producers destined for the same region drive to several retail points.
Sweets and electronics
An example of two shippers operating in different markets in the same geographical area, is Mondelēz, owner of well-known brands of chocolate bars like Toblerone and Milka, and electronics giant, Panasonic. They carefully determined which routes they could use to combine their truck loads. It became apparent that on routes between the Czech Republic and Great Britain, a CO2 reduction of 36.1 per cent percent could be achieved, as well as a reduction of driven kilometres of 43.3 per cent.
NexTrust covered another 23 projects from 92 locations where 20,000 trips could be bundled into just 60 routes. In a second effort, shippers succeeded in bundling 100,000 trips into 575 routes. Here, some 36 per cent in kilometres could be reduced which in this specific case adds up to 37 million kilometres less, resulting in a CO2 output reduction of 27.7 per cent. With this specific case, 39 haulage companies were involved. In the past year, another 90,000 trips were bundled in 410 routes with fifteen haulage companies. Many more possibilities are being studied right now.
To enable horizontal cooperation between shippers, legal advice is required to prevent legal action against forbidden forms of cooperation. A significant part of possible problems can be prevented by working with a trustee. The key is that the trustee is the only one to know what tariffs are being used between shipper and transport company. So, the shippers do not know each others’ tariffs as this is illegal from a cartel point of view. In a number of cases, the trustee played a key role in finding possible partners among shippers and to see which haulage company suited parties best.
Shippers by the way, have to draw up a contract among themselves where cooperation is defined. NexTrust consultants stress, however, that a contract may be required, but success usually depends on the way in which parties involved appreciate and like each other.
Meanwhile, more well-known parties in the business investigate the possibilities of combining truck loads. In Belgium, four producers of sweets are piloting possibilities, encouraged by their end customer, a supermarket chain. The intention is, after a period of trial and testing, to alter their processes permanently. NexTrust expects more success in other branches and modalities in the future.