has engaged a 3PL. JDA Software has one
client, a consumer packaged goods company that did not wish to be identified,
that is using a TMS to build its own consolidated shipments with a partner,
according to Brasca. The JDA customer
takes in shipment orders from its partner
and then feeds them into the TMS to
build a combined load.
BARRIERS TO ADOPTION
If co-loading makes economic sense, why
aren’t more companies using TMS applications to do this? Control over the
process has been the biggest issue, as one
party has to be the dominant partner, says
Brasca. “Only one of the two partner entities can own the decision and execution
process,” he notes.
Gartner analyst C. Dwight Klappich
says business process issues have been one
of the biggest impediments to the adoption of co-loading, as the practice requires
the shipping partners to align their
processes and activities. In addition, since
each organization has its own needs and
priorities, the parties have to put a mechanism in place for resolving conflicts.
Along with issues of shipment control,
another impediment has been antitrust
concerns. Under antitrust law, companies
cannot collude on activities that raise
prices or restrain marketplace competition. In theory, two companies could use
co-loading to reduce logistics costs, resulting in lower product prices that could
potentially be leveraged to force a competitor out of the market. That’s one reason why shippers engaged in co-loading
have turned to third-party providers. The
assumption has been that using a middleman shields them from antitrust concerns.
But a development under way in
Europe may offer another model for
addressing this problem. The business
consortium Collaboration Concepts for
Co-Modality (CO3) has begun developing a legal framework based on the concept of establishing a “neutral trustee”
that would coordinate movements
between two or more shippers. CO3
expects to complete work on that framework by 2014. If it were to become accepted legal practice, the use of a trustee
might mitigate antitrust concerns.
Antitrust and shipment control
notwithstanding, more shippers in the
United States are expected to give co-
loading a try as they face mounting
pressure to cut freight costs. Cubitt
says his company, Transplace, is cur-
rently in discussions with several other
shippers about co-loading. “There are
too many cost savings for shippers to
gain from consolidation vs. shipping
on their own,” Cubitt says.
Sechler agrees. “If you have LTL
volume going to a customer and the
other shipper is in the same geographical area, co-loading makes a
lot of sense,” he says. ;
