Pooling: a priority shared by all supply chain actors
Climate emergency, increasing fuel prices, capacity shortages… everything points to the pooling of freight transport. Supply chain actors all agree that they must move faster in this direction, notwithstanding the subject’s scope and complexity …
Pooling, everyone has been talking about it for decades in the logistics and transport world, road transport in particular. More than ever, putting several clients’ goods in the same truck looks like the common-sense solution that will simultaneously reduce transport costs, limit the number of vehicles on the road and, consequently, the transport sector’s CO2 emissions and carbon footprint.
If pooling were implemented more widely, and even across the board, the average truck’s load factor would no longer be only 67%, and unladen return journeys would be the exception! Evidently, everyone would benefit: industrialists, haulers, logistics service providers, distributors – without forgetting end customers, the climate and society!
So why is this not already the case? This is the question that was put to the representatives of several supply chain professions at the conference organized by Nomadia as part of SiTL 2022. Beyond the need to do more, dictated by environmental challenges, societal expectations and the surge in fuel prices, their responses and feedback reveal various brakes on the generalized use of pooling, but also progress where optimization technologies and data sharing have a major role to play.
Not everything can be pooled
This needs acknowledging and with it an end to the pooling of transport being touted as a universal panacea for every ill: for material reasons, not everything can be pooled. The example cited by Christian Rose, the environment, transport, and logistics manager at the CGI (wholesale and international trade confederation) is all you need to know to understand why. “It is counter-intuitive, but you cannot pool the transport of fruit and vegetables in the same truck. The vegetables emit substances that spoil the fruit. What one may believe to be self-evident proves to be impossible in reality for reasons of incompatibility. There is therefore no question of dispatching them together, even if they are destined for the same customers.” Of necessity, there will have to be two trucks. If there is pooling, it is done category by category, by a hauler capable of combining several producers’ cargoes. This is the challenge of massification and pooling, which by grouping together compatible products enable small shippers as well (SME/SMI) to benefit from pooling.
But the main impediment to the massive development of pooling remains reticence on the part of shippers. Notwithstanding the ecological arguments, many people simply do not want their goods to be carried in a vehicle that is also transporting potential competitors’ products. Some of them consider pooled routes to be less efficient because they include stops of no relevance to them such that serving these stops makes journey distances and durations longer. Finally, others who see the delivery as the extension of the act of selling, consider that resorting to pooling potentially reduces their control over the quality of the service they offer their customers. The current tensions and constraints (fuel prices, lack of capacity, driver shortages, the return of inflation) are all factors that could encourage the most reticent to reconsider their position and to turn to 3PL or 4PL service providers able to provide them with the pooling services that meet their service quality, performance, and confidentiality requirements.
Extending pooling to reverse logistics
At a time when it is experiencing strong growth, the logistics of product returns is far less structured and optimized than “classic” logistics (supplier flows to customers). Merging deliveries and reverse logistics within the same route is a form of pooling that is likely to develop, and which should be encouraged. In most sectors there are no fundamental obstacles to these hybrid routes, consisting in picking up product returns, unsold stock, pallets, packaging materials and/or waste from customers receiving deliveries during the route. Collection routes can therefore be eliminated, or their number/frequency be significantly reduced, and, above all, unladen return journeys by the delivery vehicles minimized. This is an area of improvement of particular importance when you know that the unladen return journey rate for heavy goods vehicles is currently between 17% and 30% depending on category (source: Ademe/Base Carbone®/GLEC 2020). But with this in mind, the vehicles will still have to be modified, with products to be delivered clearly segregated from returns to be collected, so that the drivers/delivery personnel do not waste time looking for the product they need to deliver amongst, for example, returned packaging material.
To be totally virtuous, this pooling solution, as with reverse logistics in general, needs to be designed in a circular economy logic, encouraged, as one is aware, by the AWCE Law. Whereas sectors such as glass or electrical/electronic waste are well organized, others still have a long way to go before it is possible to collect a significant share of the materials and packaging capable of being reused and recycled.
No pooling without suitable infrastructure!
More widespread pooling of transport, especially in urban areas for last mile logistics, requires more shared infrastructure – in other words, it too needs to be shared. As Christophe Ripert, CEO of Quartus, says “the difficulty of locating or maintaining logistics facilities in a dense urban area is that land is rare and expensive, and solutions need to be found to make this type of operation profitable”. This is precisely one of Quartus’ specialities, which is playing the vertical logistics and the pooled use of space card
“We are trying to create schedules that maintain individual bays for operators but in which the delivery and maneuvering yards are shared. We can also pool the use of cross-docking bays, because they are only used 12 hours out of 24. But because all the logistics operators work the same hours, we cannot pool between two operators. We looked for who might use these areas when the operators are not using them. We identified the night storage of buses, which is fully compatible with logistics activities, which take place during the day.” A trial is currently in progress with the RATP, which has insufficient space to park its buses, and which finds in the solution a facility capable of coping with the ground loading of its buses, their turning circle, and their electrical power needs.
Future advances will come from technology
Realizing the anticipated benefits of pooling already depends on the use of planning, scheduling, and route optimization software, whether these routes are operated by companies with their own fleet or by service providers. As Fabien Breget, CEO of Nomadia likes to point out: “attempting to pool transport capacity is absurd if you do not optimize the routes themselves. The complexity now stems from the need to incorporate ever more parameters to calculate the optimal routes: that ranges from the vehicles’ load capacity to the opening times of the delivery locations, to the location of charging stations for electric vehicles, and the weather. For our customers, our solutions’ ability to cope with this complexity thanks to artificial intelligence translates into savings of millions of euros. To take only one example, a company acquiring our solutions immediately makes fuel savings of between 15% and 25%, reducing its CO2 emissions by the same magnitude.”
Several complementary technologies will make it possible to move faster towards pooling by addressing to major supply chain actor preoccupations, in particular:
- blockchain, for the traceability of flows and for protecting information/documents on cargoes, vehicles, journeys and storage area;
- predictive algorithms for better anticipation of capacity requirements and for making it easier both to consolidate cargo volumes and look for complementary freight.
Let us leave the last word to Christian Rose of the wholesale confederation:
“We have to beware of a dogmatic position and telling ourselves that it is impossible to take optimization and pooling any further. Nowadays we are doing things that were inconceivable 3 years ago. And the same will be true 3 years hence. Thanks especially to artificial intelligence which will be increasingly widespread, joining together all the links in our logistics chains, from upstream downstream, and from downstream upstream.”