Skip to content
Search AI Powered

Latest Stories

fastlane

old concept, new justification

With prices at the pump rising by the day, distribution professionals are constantly on the lookout for fresh new ways to cut transportation costs. But they might do better to look back to the past.

With prices at the pump rising by the day, distribution professionals are constantly on the lookout for fresh new ways to cut transportation costs. But they might do better to look back to the past.

For 50 years, consumer goods companies (and food producers, in particular) have shaved expenses by consolidating their smaller orders with those of other manufacturers to create one large shipment. Although conditions at the time these programs were introduced were quite different from today's, this tried-and-true concept could go a long way toward helping our transportation system become more fuel efficient. And there's nothing magical about consumer goods; it can work for other industries as well.


The first food consolidation program was established by a public warehouse in Huntington, W.Va., a half century ago. At the time, major food manufacturers shipped most of their customer orders by rail, which raised the problem of how to serve smaller accounts that didn't purchase enough to fill a rail car. Utilizing one of the many interesting rail tariff provisions in effect back then, the public warehouse came up with a plan: It would consolidate orders from multiple clients and load the merchandise into a separate rail car bound for each individual destination (up to three), thereby allowing its clients to ship goods at carload rates (plus stop-off charges) rather than at significantly higher less-than-truckload (LTL) rates.

Not surprisingly, the concept caught on with shippers. And though consumer goods shipments gradually shifted from rail to truck, shippers continued to use consolidation programs in order to get truckload (rather than LTL) rates. Participation in consolidation programs has waxed and waned over the years, but the technique has remained a basic tactic in the distribution of consumer goods.

These days, consolidation programs are typically administered by logistics service providers (LSPs), which market their programs as "shared services," a more sophisticated term for the time-tested technique. With their large client bases and sophisticated systems, LSPs are able to combine what would otherwise be LTL shipments into truckloads, reducing freight and handling costs. The leading LSPs boast systems that combine orders into truck or container loads by customer and requested arrival date, route the shipments, and electronically tender them to the appropriate carriers. As testament to their capabilities, one food manufacturer eliminated its network of privately owned and operated DCs several years ago and outsourced the entire system to firms with sophisticated consolidation programs.

For those companies that might benefit from such a program but haven't yet given it much thought, now might be the time. The traditional objection has been the additional storage and handling costs incurred through outsourcing, but these are beginning to pale in comparison with rising trucking costs.

You don't have to be a small shipper to find value through collaboration. The Jacobson Companies recently announced the opening of a 424,000-square-foot distribution center for two big food companies.

Nor do you have to spend months locating the "right" companies to combine shipments with. Your partners need not be companies similar to your own or even companies that store their products in the same facility you use. In the 1980s, Trammell Crow Distribution Corp. operated a very successful program that combined shipments of compatible products originating in the same industrial park and delivering them in truckload quantities to LTL carrier terminals. It worked then and can work now, with even more dramatic savings.

There are several ways this cat can be skinned, and new thinking about old ideas can often be very productive. If we cannot reduce fuel costs, we can at least strive for maximum fuel efficiency.

The Latest

Artificial Intelligence

AI: Is it the real deal?

More Stories

Logistics economy picked up speed in January

Logistics Managers' Index

Logistics economy picked up speed in January

Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.

The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.

Keep ReadingShow less

Featured

Disrupting the furniture supply chain: An interview with Jay Rogers

Disrupting the furniture supply chain: An interview with Jay Rogers

As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.

In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.

Keep ReadingShow less
chart of GenAI effect on workforce

Gartner: GenAI tools create anxiety among employees

Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.

That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.

Keep ReadingShow less
warehouse worker driving forklift between racks

German 3PL Arvato acquires two U.S. logistics firms

The German third party logistics provider (3PL) Arvato this week acquired the U.S.-headquartered companies Carbel LLC and United Customs Services, saying the move would grow its client base, particularly in the fashion, beauty, and lifestyle segments.

According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.

Keep ReadingShow less
photo collage of warehouse tech

Supply chain pros are wary of inflation and labor woes

The top worries that supply chain leaders hope to address with new innovations this year include inflationary concerns (68%) and labor shortages (50%), according to a survey on innovation from the third-party logistics provider (3PL) Kenco.

And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.

Keep ReadingShow less