Collaborative Transportation Management

3. Why Collaborate on Transportation?

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The 17th Annual State of Logistics Report ®, sponsored by the Council of Supply Chain Management Professionals, showed that transportation costs consumed 6.0% of the U.S. gross domestic product in 2005. This percentage has remained in the 6% area for much of the last two decades. While many efficiency improvements have been made, there still remain significant opportunities for further improvement. Trucks still run empty approximately 20% of the time, wait times to load and unload shipments are still excessive, driver turnover ratios reached an all-time high in 2005 of 130%, and revised hours-of-service (HOS) regulations that went into effect in October of 2005 are impacting the hours available for operation and how drivers will use their on-duty time. Also, given the mandate for heightened security provisions throughout the supply chain, shippers and carriers must work closely to ensure the safe transit of goods while keeping the costs of enhanced security within reason.

Given these concerns, it is important for companies to work together to eliminate inefficiencies, reduce cost, and ensure reliability in the movement of goods. In most instances, there is only so much that a single member of the supply chain can do to resolve the problems noted above. This is why collaboration among partners in a supply chain has become a topic of great interest for many and an essential element of company strategy for others.

Collaboration is more than cooperating with one another. It requires that all engaged companies work actively together toward common objectives, sharing information, knowledge, risk, and profits/benefits in an agreed-to, consistent fashion to ensure a common unity of effort. It is critical that all parties involved realize tangible benefits.

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