Shared Dedicated Transportation Networks Boost Efficiency
Shared dedicated transportation networks offer a creative and innovative shipping solution, providing all the benefits of dedicated contract carriage, along with high-touch deliveries, customized execution based on customers' delivery requirements and specialized equipment, all at a lower cost. The solution provides high service levels with next-day delivery, minimal freight handling and consistent delivery times.
Rising fuel costs, tighter freight capacity, driver shortages, and an interest in more sustainable delivery solutions have freight customers in a variety of industries leveraging the power of dedicated shared transportation networks.
A Shared Network Takes Advantage of Geographical Proximities
A shared network provides an alternative to less-than-truckload (LTL) shipments coupled with dedicated transportation that combines freight loads from multiple shippers going to a shared geographic area. It is a comingled freight solution that is less susceptible to damage, more cost efficient and more likely to meet scheduling timelines.
"It is a very flexible and innovative approach to optimizing deliveries that also benefits the environment using fewer and fuller trucks to make deliveries," said Ken Landego, a senior vice president, business development at Penske Logistics. "Route costs are allocated to the participants based on the space or volume they are shipping on the trailer and how far that volume is going."
Automotive Industry Sees Noticeable Impact From Shared Services
Shared services are typically beneficial to shippers who may lack geographic density, have longer lengths of haul, ship less-than-truckload quantities or who can't fill opposing backhauls. The solution has been successfully used in the automotive service parts business and can also be applied to industrial distributors, OEM heavy equipment, aftermarket distributors, healthcare suppliers, grocery convenience and retail.
"In the automotive space, a common dealership pushback was companies didn't want comingled freight running with competitors, but we always say you compete in the showroom, not in the parts room," said David Eaton, senior vice president operations, Penske Logistics.
Penske currently works with 10 brands on the automotive side, utilizing 269 relay points and 14 cross docks to serve 7,000 locations.
"These are all dedicated routes with comingled freight, going to the same stops every night," Eaton said, adding that the service increases efficiency. "Dedicated multi-client shared services networks leverage customer synergies and provide continuous movement with relays allowing for an expanded outbound delivery scope."
The volume and distance of a load can translate into a wide variety of pricing styles. Overall, shippers can take advantage of reduced miles, high service levels with next-day delivery, minimal freight handling and consistent delivery times. They also receive cost-efficient deliveries for high cost-to-serve locations and an expanded outbound delivery scope.
Moreover, unattended deliveries are made at night, which means locations have products at the ready and waiting for them when workers and their customers come in each morning.
Consistency Drives Success
There must be consistency for a multi-client shared network to work. "It is something coordinated every day," Eaton said. "As we think of new customers, whether automotive or others that come in, we work them to make these deliveries. Freight comes into a cross-dock, we sort it, segment it, and it gets on the trucks to go out."
The network compatibility of qualifying shippers is impacted by day-to-day shipment size and deviations, release times, shipping and delivery days, trailer equipment requirements, and delivery material handling equipment and needs.
Individual networks could potentially exist for smaller shipments with consistent volumes, larger loads with more significant daily size variability, heavy equipment parts with specialized handling, such as EV batteries, and perishable commodities, such as convenience stores providing healthy and fresh food products. Ultimately, the freight characteristics match the type of shipper to the kind of network that exists.
To ensure accurate deliveries, Penske relies heavily on its advanced scanning system, which ensures the right freight is loaded on the right truck. All deliveries are also geofenced and scanned, which minimizes any claims.
There are also opportunities to improve sustainability. "Typically, all trailers can load returns, so shippers can also save money on packaging through the use of returnable containers," Eaton said. "They can also send back recyclable dunnage."
Shared services networks offer several key characteristics that can benefit shippers. However, cut times need to be consistent for arrival into cross-dock locations to ensure success. Plus, there has to be consistent volume for daily reserved space on the delivery trailer. Penske can offer flexible delivery windows, attended or unattended deliveries and solutions for any needed specialized handling equipment.To learn more about multi-client shared network opportunities, contact us.