Ride-Sharing for Freight: Is Co-Loading Right for Your Business?
Estimated reading time: 4 minutes
Thanks to companies like Uber and Lyft, “ride-sharing” has become a buzzworthy topic in the world of mobile apps. But did you know that this concept has been around in the freight industry for decades? (Psst…check out “Lie Number Four” in this article in CIO Review for more on that).
Co-loading is the equivalent of ride-sharing for freight. It involves companies sharing space on the same vehicle or container and splitting the fare for their respective portions of the trip. Under the right circumstances, this distribution method can provide significant savings over full truckload transportation.
Co-loading is an example of horizontal collaboration, a tactic that involves working with competitors to combat supply chain challenges like transportation costs, fluctuating demand, and evolving customer preferences. Increasingly, we’re seeing manufacturers share supply chain assets like warehouses, trucks, etc., with each other for mutual benefit. Co-loading not only leads to more efficient operations and cost savings, it’s a great way for a company to limit its carbon footprint.
Consider these statistics from the Environmental Defense Fund:
- Trucks in the U.S. spend 15-25% of their miles running empty due to empty backhauls and deadhead miles.
- Of the remaining 75-85% non-empty miles, only 64% of available capacity actually gets used—meaning 36% of non-empty miles are underutilized.
- The movement of goods in the U.S. accounts for 9% of greenhouse gas emissions—almost 500 million metric tons annually.
With co-loading, you can get more value out of each move while reducing total trips.
How is Co-Loading Different than LTL?
Less-than-truckload (LTL) shipping is similar to co-loading in that multiple companies share space on the same truck. LTL shipping can also provide significant cost savings over full truckload, but the tradeoff is timing. Traditional LTL involves shipments being moved through a carrier’s hub and spoke network for consolidation, which can slow things down—especially since loads often sit waiting until enough products arrive to fill up the truck.
Co-loading is a way to bypass the hub and spoke network and move products directly to your customers and vendors. Shipments are consolidated using multi-stop truckloads instead of at distribution centers or terminals, thus reducing lead time. There is also less risk involved than with LTL due to fewer touches.
Consider the following scenario, and the benefits of co-loading.
While co-loading presents some distinct advantages over LTL, ride-sharing is typically only possible if the following criteria are met.
- Products must be compatible, or handled in the same way (for example, all palletized or all transported via dry van).
- Products must all fit on the same truck. This is easiest to do when you have a mix of large LTL shipments and small truckload shipments.
- From a geographical standpoint, origins and destinations should be in close proximity of each other.
- Delivery schedules should align.
It’s also important to note that the more stops there are in a single transit, the higher the chance for delay. Companies should build multi-stop truckloads in a way that minimizes that risk, and work with third party logistics (3PL) providers and carriers that have a strong track record of handling co-loaded shipments.
Because there are so many factors involved, co-loading also requires robust technology that can comb through a large amount of shipment transaction data to identify the best opportunities. As more companies start to uncover the value behind big data, we’ll likely see more adoption of this type of technology and an uptick in ride-sharing operations in the future.
If you’re interested in co-loading, you can either take a do-it-yourself (DIY) approach, or work with a 3PL that is capable of executing such an operation. A DIY model may be best suited for larger organizations that have the people, processes, and technology in place to leverage big data and identify potential partners. A 3PL can add value by offering a more scalable co-loading network—on both the carrier and shipper sides—than what a small or mid-sized shipper may have access to.
Need help? Our team of logistics experts can help you analyze costs, schedules, modes, compatible shipments, and more to determine the most optimal shipping mode and consolidation options. Whether you’re looking for full truckload, dry or refrigerated LTL, or co-loading options, we’ve got you covered.