Freight transport: asset sharing and digital platform
Sharing assets (information flows, vehicles or warehouses) can promote efficiency in resource management for logistics activities. One individual enterprise, or several of them, can benefit from the sharing of assets. Information and communications technologies (ICTs) have facilitated asset sharing by decreasing information costs and providing platforms where various actors can share and trade their assets.
From an environmental point of view, sharing assets can increase logistic efficiencies, for instance by increasing the occupancy rate of vehicles. Mode shift towards less carbon-intensive modes is also a possibility where the bundling of several companies’ freight creates a viably sized traffic flow for a rail/intermodal service. Ultimately, improvements that lead to load consolidation can reduce the number of trips required to deliver products, thus reducing the amount of emissions linked to logistics activities.
Asset sharing can bring additional benefits. Costs for enterprises can be reduced by increasing efficiencies, for instance by decreasing fuel consumption and requiring less infrastructure (e.g. warehousing). Improvements linked to asset-sharing measures will be dependent on the types of activities led by the enterprises that decide to share assets. As an illustration, it would be harder to share transport assets between one enterprise transporting food and another one transporting industrial goods because of the difference in stocking needs for these products. Though combining products of different density could also be desirable to make it possible to reach vehicle weight and volumetric limits simultaneously.
Governments may need to consider appropriate competition regulation to facilitate such asset sharing and may need to consider how such actions could be enabled (for example through third parties’ digital platforms).
Asset sharing and collaboration taken to its maximum potential could lead to the Physical Internet (PI): an open, shared global logistics system based on a physical application of the principles of the digital internet. In this scenario, there are would no longer be individual logistics networks each operated by one transport service provider, but rather one global transport network using shared hubs. Competition among companies is focused on products, not logistics and supply chains. Such a system would require new standardised modular packaging units, common protocol and tools and shared logistics and digital assets. The migration path from logistics systems as they are currently structured, financed and regulated to the PI is still uncertain.
Asset sharing for the pooling of freight resources has been linked to CO2 mitigation benefits. In one study in the United Kingdom (UK), reductions of up to 40% were observed.
The European Union CO3 project generated case study estimates of CO2 savings from horizontal collaboration above 15%. UK Starfish projects modelling impacts of multilateral collaboration on CO2 emissions to be around 14%. In Bogota, a collaborative network of shared delivery routes and depot infrastructure is seen to be linked to a reduction of travel distances and related CO2 emissions of more than 25% compared with a non‑collaborative scenario. In Belgium, a study estimated that sharing information and assets between three firms could lead to reductions of around 25% in their operating costs and the number of delivery trips (Vanovermeire et al., 2014).
A study that analysed cooperation between service providers and the location of urban consolidation centres suggests that sharing logistics hubs can reduce each firm’s operating costs by almost 50% and contribute to efficiency improvements resulting in lower vehicle kilometres travelled and CO2 reductions of up to 40% (Nataraj et al., 2019). More considerable cost reductions were associated with higher levels of collaboration.
The cost linked to asset sharing depends on the type of asset that is being shared. Sharing infrastructure, like consolidation centres, entails costs for the construction of logistics facilities, as well as for their maintenance. However, most of this infrastructure to be shared is already in use and sharing would imply a decrease in the amount of space and respective costs each company now has to bear.
Costs can be borne either by local/national authorities or by enterprises. Beyond vehicle purchasing and maintenance costs, transport costs can also include the costs linked to reallocating shipments from various routes to fewer ones in order to increase efficiency. Actions aiming at increasing truck load factors by sharing truck space for various deliveries can come at the cost of delivery times i.e. may have to relax just-in-time replenishment which might increase inventory levels and reduce manufacturing productivity. This can entail costs for enterprises. Collaboration among different enterprises can also be linked to costs for restructuring internal operations structures and processes. This can be linked, for instance, to an increase in staffing numbers and space for inventory.
In an example in Luxembourg, the mutualisation of freight assets led to an increase in 3% of staff in participating enterprises to be able to adapt to the inner logistical changes. Additional staff was also recruited to run the logistical “control towers” that major companies now use to centrally manage their transport operations. Unilever’s Ultralogistik control tower in Katowice, Poland, is such an example, with reported CO2 savings.
For digitally promoted platforms, as for infrastructure, the creation of the application comes at the cost of the creation and the maintenance of the platform. A final cost could be linked to the need to be ready to share inner enterprise information on systems that are not fully controlled by the enterprise itself. This might be linked to security issues. Unwillingness to share operational data has traditionally been one of the main barriers to logistics asset sharing. Cloud computing and the use of third-party “trustees” or “supply chain orchestrators” can help to overcome this barrier.
The sharing of assets can be linked to a decrease in transport costs for participant enterprises. In Lyon, distance savings linked to the pooling of resources have led to an average fuel savings of 18%. Also in Lyon, productivity has been increased by the optimised routes linked to shared data. Average time gains in the city have been around 11%. Other, hard-to-quantify benefits are linked to regulation benefits. For authorities, data exchange provides a new regulation tool, enabling the diversion of a sizable portion of traffic outside of congested areas.
Sharing can also lead to cost reduction; the Starfish project estimated this to go up to 17%, while in the EU CO3 project transport cost savings would be around 10-15%.
The most common concerns about horizontal collaboration/logistics asset sharing have to do with unfair distribution of the costs and benefits, infringement of competition rules and antitrust regulation, logistic service providers fearing “cartelisation” by shippers, and longer-term stability of the sharing arrangement.
Optimising freight activities by sharing multimodal routes can also be environmentally viable, in some analysed cases, but overly expensive. In France, using trains as a form of asset sharing for groups of enterprises that have major flows in the country (more than 600 pallets per week), could be almost twice as expensive as not having collaboration. At the same time, setting a platform in an area where there was none before could disrupt local logistics. Platforms with enterprises of different sizes which were not used to work together in the past can be particularly difficult for smaller enterprises. These would have less agency to affect optimal route choice than bigger enterprises with a larger fleet.
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