3PL providers present valuable data and technology solutions Keeping up with the dynamic transportation industry can be challenging. There are a multitude of pressures facing organizations, many that deal with freight rates and fuel. Today’s transportation professionals therefore must aim to reduce transportation costs and increase the bottom line while establishing responsible business practices and reducing overall environmental impact. In many cases, these goals align. And when they do, it becomes possible to control costs through more efficient processes and programs, transportation technology, and software solutions.
Sustainability is a significant factor in a shipper’s decision-making process. It involves transportation operations, part ners, how freight is moved, and the metrics used to evaluate performance. While the impetus may have been govern ment regulations to reduce emissions (advanced by retailer mandates), the movement has been propelled forward by companies’ own initiatives to save on fuel costs, reduce miles on the road, increase efficiency, and achieve a smaller overall carbon footprint.
The sustainability push gained momentum in 2005 when Walmart laid out company goals that included a sustainability plan. Since then, Walmart has accelerated and broadened its com mitment. In early 2009, Mike Duke assumed the helm of the world’s largest retailer, and he also took on the role of sustainability leader. By mid July 2009, Duke announced Walmart was stepping up its commitment once again, by asking sustainability-focused questions of its suppliers. Most address greenhouse gases, solid waste, and water use. Some examples of these questions include the following:
- Have you measured your corporate greenhouse gas emissions?
- What is your total annual greenhouse gas emissions reported in the most recent year measured?
- Have you set publicly available green house gas reduction targets? If yes, what are those targets?
- Have you set publicly available solid waste reduction targets? If yes, what are those targets?
- Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices, and product/ingredient safety? (To see the complete list of questions, visit walmartstores.com/ factsnews/newsroom/9277.aspx.)
Unfortunately, many executives are unable to answer even the most basic questions about their companies’ environmental impacts. It is clear that significant opportunity exists to improve upon current efforts. But how should business leaders begin? For many, third-party logistics (3PL) pro viders can play a critical role and pro vide key data and business intelligence.
Working with a 3PL company can give businesses the people, processes, and technology needed to effectively incorporate and maintain sustainable practices as part of daily operations.
SmartWay transport partnership
Partnering with the US Environmental Protection Agency’s SmartWay part nership program can significantly help companies improve their environmen tal performance. For shippers, pursuing sustainable transportation practices not only reduces energy consumption and greenhouse gas emissions, but also improves the supply chain and the bottom line. By focusing on making sustainable business choices, this collaborative program helps shippers,carriers, and logistics service providers reduce greenhouse gases and air pollution. It also promotes cleaner, more efficient surface freight transportation systems and improves overall environmental performance.
Working with a 3PL provider also can offer access to operational data and information that shippers need to evaluate their current supply chains and identify ways to incorporate SmartWay principles into their operations. A 3PLcompany can share data points that show
- the number of miles that SmartWay carriers drive in the execution of a customer’s network shipments
- the percentage of volume on SmartWay carriers
- resulting impact on the shipper’s overall carbon footprint (emissions from transportation)
- reduction in fuel consumed for the customer’s managed shipments
- the number of miles not on SmartWay carriers.
If there’s a gap in the results, the customer can see it and choose whether or not to give more volume to SmartWay carriers. 3PL providers also can help shippers become partners with SmartWay and keep the scores neces sary to maintain that status.
For example, Transplace, a 3PL and technology solutions provider, has a SmartWay-certified shippers network. Of the six shippers within that network, use of SmartWay carriers yielded a reduction of more than 1.5 million gal lons of diesel over a six-month period. This not only was a significant cost sav ings, but also made a direct impact on the carbon footprints of the carriers and shippers themselves. Sharing critical logistics data with shippers enables 3PL companies to collaborate closely and play a strategic role in strengthening relationships and sustainability efforts.
Once company leaders recognize the improvements achieved through 3PL partnerships and web-based applications, many will use these relation ships and tools to advance even further toward their sustainability goals. A 3PL provider can tap into powerful technologies to provide shippers with increased visibility into transportation operations. This enables users to achieve a more efficient, optimized sup ply chain; identify waste; and develop comprehensive strategies for driving out that waste, whether through load consolidation, mode and carrier selection, establishing more efficient routes, leveraging backhauls, or consolidating distribution centers.
Some businesses benefit from using a private fleet or dedicated-asset backhaul program, through which the 3PL com pany contracts with various manufac turers’ and retailers’ private fleet trucks. These are trucks that traditionally have returned empty; thus, being able to fill them via a traditional fleet-for-hire pro gram offers considerable advantage. By leveraging shipment-planning technol ogy and network analysis tools, a private fleet’s capacity can be matched to a 3PL provider’s network capacity needs. This opportunity also can be converted into a repetitive activity through lane assign ment automation tools. Best of all, when would-be empty trucks are filled, wasted miles are cut out, carbon dioxide is eliminated, and fuel savings are gained.
In 2010, through the use of its private-fleet program, Transplace and its participating shippers eliminated nearly 1.6 million empty miles, reduced their clients’ overall carbon footprint by 3,500 tons of carbon dioxide, and saved 290,000 gallons of fuel. Furthermore, the program dramati cally reduced the number of trucks on the road and lessened congestion on overburdened highways.
More and better options
Shippers also can expand transportation options by taking advantage of a 3PL company’s customer base and carrier network, including SmartWay carriers. Not only does this provide shippers with access to more lanes and potentially better rates, but it also enables them to take advantage of strategic opportunities to reduce their environmental impact while reducing transportation costs.
Many shippers now are willing to consider alternative modes of trans portation based on environmental impact, load size, cost, distance, and delivery timetables. In some situations, they choose to move freight using acombination of truck and rail transit. This intermodal transportation reduces costs in long-haul intercontinental transport and lessens a company’s carbon footprint by removing trucks from the road.
For long-distance moves, taking advantage of rail presents a significant opportunity for shippers. Rail helps companies counter volatile fuel prices and reduces fuel consumption and emissions by taking trucks off of the road.
Consolidation of loads
For companies shipping less-than-truckload loads, shipment consolidation is another cost-saving and environ mentally friendly approach. Bundling small shipments into trucks can take thousands of less-than-truckload shipments out of carriers’ networks and consolidate them into logically routed trucks, thus reducing fuel usage, highway traffic, and carbon emissions. Similarly, companies can eliminate or at least minimize backhaul empty miles.
This approach may be taken a step further by identifying shippers will ing to collaborate and consolidate small loads. A 3PL can assist with this strategy by leveraging technology and analyzing networks across its customerbase in order to identify opportunities that make sense for multiple parties.
For example, a leading producer of juice-based drinks reported annual savings of $500,000 from load consoli dations, as well as $400,000 by increas ing its use of intermodal transportation. Through these strategies, Transplacealso has witnessed load consolidations that remove 5,000 trucks from the road and save nearly 675,000 gallons of diesel fuel—thereby eliminating nearly 7,700 metric tons of carbon dioxide in a single year.
Sustainability is just good business
Many of today’s leading companies have recognized the importance of incorporating green practices into their opera tions and have begun taking the steps required to implement and maintain these practices. These forward-thinking manufacturers, distributors, and retailers of every size continue to take advantage of such opportunities because of both environmental and economic factors. And achieving sustainability goals can play a big role in reducing a company’s transportation costs and environmental impact.
Kyle Alexander is director of the Strategic Carrier Development Group, working with Transplace contract third-party logistics customers to improve capacity, rates, and services through the Transplace Alliance Carrier Base. Alexander worked for more than a decade at Georgia-Pacific Corporation. He may be contacted at firstname.lastname@example.org.