Can we put a stop to empty freight?
Increasing vehicle fill rate to increase transporters’ profit margins and reduce carbon footprint is a recurring item on today’s agenda. Solutions do exist, even for the last mile!
«If all goods vehicles in circulation were filled to 90% of their full capacity there would be 2 or perhaps even 3 times less lorries on the French roads» estimated Jimmy Bils, CEO or the transport and logistics group Bills-Deroo(1) in a recent interview. Increasing the fill rate of lorries is an ongoing concern among road transporters for an obvious reason: given fixed costs, the higher the fill rate, the more profitable the intervention. This is the more true since, in a highly competitive market, long distance transport operators cannot – to the benefit of another – easily pass on excess costs associated with journeys that are under-loaded on the way out, and perhaps empty on the return journey. Nor can they afford to refuse to provide the service or impose additional delays on their customers just because their lorry is not full. For last mile logistics services the problem is even more acute, with fluctuating demand, and variation in the number and location of delivery points as well. But whether the lorry or utility is full or not at the start of the route, each package has to be delivered according to the stated contractual terms and conditions, respecting ever more stringent timescales.
The implications of all this provide us with the underlying explanation of why empty or under-capacity freight represents 15% of domestic traffic, and 30% of international traffic in Europe (source: Eurostat). To the direct economic impact of this, we can naturally add the environmental one! Whether full, partially loaded, or empty, lorries are fuelled by diesel for the most part, and are therefore inevitably responsible for high levels of greenhouse gas and polluting particle emissions.
Freight sharing: indispensable, but not so simple…
For more than a decade, transport sharing occupies a central place in literature published by the profession. To cite just one example, of 66 issues of Supply Chain Magazine published between January 2011 and August 2017, 65 raise the issue of sharing and present it as «THE solution to develop(2)». Today, the messages being received are unanimous: to reduce the number of journeys and under-loaded or empty trucking runs, load sharing would suffice. And certainly this would appear to be plain common sense: if you cannot manage to fill your lorry with the merchandise of a single customer, you can nonetheless complete the load with that of other customers.
And yet, is it really possible for every transporter to share their loads? This remains to be proved. It is not completely by chance that this solution presented year after year as a remedy for all evils remains «to be developed». For this to happen, a certain reticence on the part of some transporters needs to be addressed. In the first instance, those of shippers who are apprehensive about their merchandise being convoyed with that of other companies that don’t necessarily have the same final delivery point, so perhaps giving rise to extra detours and longer journeys overall. It is clearly a lot simpler when one loader taking the initiative is in charge of the routing organisation. This is what PepsiCo has been doing for ten years now at departure points from its factories in, admittedly, quite a particular context. In some of its factories, PepsiCo manufactures distributor brands alongside its own. Instead of leaving these distributor customers to manage transport on their side, PepsiCo offers them a shared transport option: lorries leaving their factories carry both categories of merchandise, and channel them without any intermediate stop on the journey, to programmed distribution points or the distributor’s depot.
While not all configurations can be this ideal, we need all the same to recognise that sharing or mutualisation is making progress, notably thanks to the multiplication of LTL networks (Less Than Truck Load) and some platforms enabling transporters to find carriers who can fulfil their load requirements, and shippers to send small quantities without being penalised in terms of price or delivery timescales. On what condition? They have to accept their requirements are being made public so their information is shared on platforms and sites that are potentially frequented by competitors. Not everyone is prepared to go down this route…
Massify: an illusory answer
As the interest for all concerned is of course a logistics chain where all vehicles are loaded to the maximum, massification is the other buzz word in the world of transport. Like mutualisation, massification a priori means that less lorries need to travel, and that they can do so profitably – on condition they can be filled! which brings us full circle back to the question of mutualisation… and the desired result of a reduction in CO2 emissions and fuel consumption. Less lorries conveying more merchandise is also a way of meeting the challenge of the current shortage of lorry drivers. According to the International Road Transport Union (IRU), in 2018 one lorry driver vacancy in 5 remained unfilled in Europe (20,000 posts unfilled in France).
Whatever else, we need to understand what is behind the word «massification». Are we talking about weight, or volume? Both these parameters have to be considered. If you load 30 or 33 palettes of heavy products (drink or washing up liquid, for example) in a 90m3 trailer, you are almost at the limit in terms of weight. On the other hand, half the volume is empty because you can’t build two storeys of palettes without exceeding the maximum load. In long distance transport this is an ongoing problem! The solution is to combine mixed cargoes, filling any spare volume with lighter goods, which in effect is another form of mutualisation. This is the option chosen by Proctor & Gamble in its lorries between Belgium and Greece: the lower space in the lorries is filled with palettes of heavy goods to a height of 1 metre, representing about 25 tons and the rest of the height is filled with batches of babies’ nappies, voluminous but light. Here again, it is a lot easier when there is only a single shipper involved, which is conveniently the case for regular supply chain configurations…
It is typically in this type of setup that ‘two-storey’ car transporter type trailers are of interest. While these can be efficient when the utilisation of the height is optimized, so limiting voids, they have one major disadvantage: the sites for departure and arrival have to be equipped for easy loading and unloading of this type of vehicle. Because suitable infrastructures are not available at most customers’ premises, it seems that the upper bridge is often unused…
Looking at the problem from all sides, we need to include one particular factor that is easily overlooked, and not readily soluble: that even when a lorry embarks on a route carrying a load that could be described as optimum, it will start transporting empty space as soon as the first package has been delivered.
Last mile: empty freight is not a fatality!
In view of the above, we can see that sharing and massification go hand in hand, providing answers to problems associated above all with long distance transportation. Last mile logistics – less structured, and dependent on very diverse players and subcontract chains that are not always easy to read – is much harder to optimize. Key last mile players (La Poste/Chronopost, UPS, DHL…) handle sufficient volumes to optimize vehicle fill and rationalise routes. This is not the case for «small» players, where demand is highly variable, and so difficult to anticipate… financial survival means accepting any course of action that presents itself, even to the point of loading just one package to deliver. While the larger players are effectively already sharing as things stand (because they can aggregate demand from several shippers seeking delivery services) are smaller companies really doomed to delivering using empty or half-filled vehicles? The answer of course is No, thanks to the emergence of solutions and practices brought into play as much by regional authorities as by shippers and regionally based market places for transport that coordinate local supply and demand. Here are a few examples:
- Urban consolidation centres and depots are proliferating, and will structure local markets. They will increasingly enable independent authorised carriers to access a consolidated demand, and so to load their vehicles more efficiently, with options to make choices about which customers they will deliver to based on geographic criteria to densify their routes.
- Fixed day delivery, now offered by some e-commerce players, has met with an unexpected level of customer approval. Carrefour experimented with this during lockdown for delivery of its standard food consignments in Paris. Customers received their packages at home, but just on one day of the week per district. It is of interest to note is that since 2019 Amazon offers American Prime subscribers the option for fixed day deliveries. Similarly, Picnic, considered as the rising star of alimentary e-commerce in Europe is offering its customers the chance to subscribe free of charge to a regular delivery run that includes a maximum of one hundred customers.
- A discount programme for «slow» deliveries. An increasing number of consumers do not expect or insist on all their purchases being delivered within two hours. Offering more advantageous prices if they choose a longer delivery timescale is an option that is certain to develop. There are no hidden penalties for the vendor since the choice remains with the customer. This also gives the transporter the chance to look ahead and refine schedules to build more coherent routes, with a higher level of efficiency in terms of density of delivery from a geographical point of view.
- Continuous loading. Combining delivery and pick-up in a single journey may, for some companies, be a useful way to limit empty journeys, both outward and return. There is nothing to prevent a shipper/installer of white goods or other equipment to organise the pick-up of equipment for repair on a return journey for ultimate efficiency. This is the remit of GEOCONCEPT’s Collect and Delivery API.
Ways to minimise empty or partially loaded journeys really and truly exist. Behind their apparent diversity, they are in reality complementary and have two common points: everything depends, on the one hand, on consolidating the demand for transport for a given territory, and on the other, on precise localisation of loading and delivery points. This geographic baseline is indispensable for the purpose of building realistic routes, taking the constraints of the terrain, operating realities, and strategic priorities into account. Whether the aim is to deliver to the maximum number of customers while travelling the least number of miles, or to maximise utilisation and fill rate for your vehicles, geography is the key to optimization. The issue that remains for shippers/orderers – notably e-commerce actors – to tackle themselves is the pressing problem of the «hidden void» inside packaging: the practice of using packaging that is far larger than the goods they contain needs to be addressed. Find out how our client Cdiscount succeeded in reducing the void by 30% by moving over to made-to-measure packaging.
(1) 24 June 2020, on the occasion of the SiTL 2020 conference – Green Logistics.
(2) Calculation/Analysis conducted by Kanyarat Nimtrakool in the framework of his PhD thesis(Normandy University) reiterated publicly in March 2018.