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Shared shipping is slowly gaining ground between market rivals

 

Collaborative Shipping

Companies already collaborating on shipping are saving money and cutting their carbon footprints. Photograph: 145/Ocean/Corbis

 

Powered by Guardian.co.ukThis article titled “Shared shipping is slowly gaining ground between market rivals” was written by Justin Gerdes, for theguardian.com on Monday 11th August 2014 12.08 UTC

When Ocean Spray opened a new distribution center in Lakeland, Florida in 2011, the facility’s proximity to a rail yard used by a competitor created a behind-the-scenes opportunity to work together.

Ocean Spray wanted a cheaper and more efficient way to ship its products from a New Jersey facility to Lakeland, while rival juice company Tropicana was paying to send empty rail cars south on a “back haul” from New Jersey to Florida.

Working with an existing logistics partner named Wheels Clipper, over the course of a year Ocean Spray shifted 80% of its shipping along the New Jersey–Florida route off trucks and into Tropicana’s empty rail cars. The change reduced carbon emissions by 20% and slashed transportation costs by 40% – about $200 per load – on that route, according to a 2013 analysis by the MIT Center for Transportation and Logistics.

Over the last year, Ocean Spray has ramped up to 100% rail on the New Jersey-Florida route.

In a similar move, competing confectioners Hershey and Ferrero announced a partnership in 2011 to reduce costs and cut carbon by sharing facilities and creating one North American supply chain. The alliance has removed 584 trucks from the road according to Hershey and prevented the release of 6.5m pounds of carbon dioxide over the past two years.

These seemingly oddball examples of cooperation between market rivals are examples of “collaborative shipping”. Proponents say the practice could help make the global goods movement system – which has not changed much since the introduction of the standardized shipping container more than a half-century ago – more sustainable.

“It’s not broken – literally – product does still get to where it needs to go,” says Alex Stark, marketing director at Kane Is Able, a third-party warehousing and logistics company. “But it’s broken in the sense that it can be done much better”.

Too big to change?

Global shipping is a $60bn-a-year industry that makes it possible for companies of nearly all sizes – from small-hold coffee farmers in Brazil to multinational tech giants like Apple – to move between countries and continents with remarkable speed and at relatively low expense.

But the system is riddled with inefficiencies that cost manufacturers and consumers money, waste fuel and dump planet-warming emissions into the atmosphere. Just one link on the chain – road freight carried by medium- and heavy-duty trucks – creates nearly 6% of all global greenhouse gas emissions (pdf) according to a 2012 analysis.

In the United States 15% of those trucks run empty while the remaining 85% run on average at just 64% capacity, according to Jason Mathers of the non-profit Environmental Defense Fund (EDF). The group – which sponsored MIT’s study of the Ocean Spray-Tropicana shipping partnership – is encouraging collaborative shipping as a means to lower costs, save fuel and wring carbon out of supply chains.

“If we could only capture half of that unused capacity, you’re talking about 100m metrics tons of carbon savings annually, and billions of dollars of savings”, Mathers says.

In a 2012 report called “Smart Moves,” EDF documented the most effective ways for shippers to cut freight costs and improve the efficiency of their supply chains. It distilled from them “five rules of greener freight”: demand cleaner equipment and practices, choose the most carbon-efficient mode of transport, collaborate internally and externally, redesign logistics networks, and get the most out of every move.

Since the report came out, says Mathers, “The place where we’re seeing most momentum is this concept of getting the most out of every move – making sure that the trucks that are on the road are as full as possible”.

Inertia, tradition and risk aversion

But collaboration in shipping faces some of the same barriers confronting most ideas that challenge convention: inertia, tradition and risk aversion. With the economy still recovering “the temperature of the business world is such that people don’t want to take risks,” says Kane Is Able’s Stark.

 

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