Value density. It can limit or expand your effective market reach. Low value density means the cost of logistics as a proportion of total product cost is high, and shipping further afield can quickly suck the profit out of a deal. That’s why the shipping range for assembled wood pallets is typically short. That’s also why transport costs can have a serious impact on the competitiveness of major Dutch agricultural products in global markets.
Dr. Walther Ploos van Amstel of the Amsterdam University of Applied Sciences has spent considerable time exploring themes such as value density and logistics. At the recent FEFPEB Congress in the Netherlands, the professor, a lecturer in City Logistics and Urban Technology, gave pallet industry attendees a glimpse into the logistics of 2030. “Transportation is of the utmost importance for your product because of its low value density,” he said. Here are some of the trends he is following:
Platooning. Platooning is an approach to driving commercial vehicles immediately behind each other to reduce wind resistance. This practice helps to improve fuel mileage by 12% and reduce CO2 emissions. “That’s good for the environment,” the professor said, “and we save a lot of fuel, too. And don’t worry, the trucks will stop.” Coordinated by digital networks, braking initiated in the lead truck will trigger braking in the following trucks.
Platooning will also help trucks run more hours each day and deliver goods sooner. Currently, drivers can only operate for 11 hours daily, he noted. Legislation is on the way that will allow the second and third vehicle drivers to sleep, meaning that trucks will not stop rolling when daily hours of service run out.
Getting trucks turned around faster. In Europe, trucks sit idle to be loaded and unloaded a shocking 55% of the time, according to studies. For truck arrivals and departures in Europe as in the United States, the process is still often antiquated. Drivers walk to the office to be assigned a door. They are directed to a location and they walk back to their truck to back it up to the correct spot. After the load is completed, there often is another hike back to the window for more paperwork.
“If we can reduce the time it takes to load and unload, we can immediately solve the truck driver shortage problem” said Professor Ploos van Amstel.
He sees technology and trading partner collaboration as being critical to seizing this opportunity. Technology allows the truck to communicate remotely with the distribution center to estimate time of arrival. A door assignment can be transmitted as the truck approaches the destination. At the dock, sensors and material handling equipment allow faster unloading and manifest verification, helping trucks get back on the road faster.
Be sure to consider the participation of your customers in your transportation plan, rather than just working around present inefficiencies. “Your customer delivery times, wait times, delays, and how they order, are more important than your own transportation strategy,” he said. “It is important to view the whole supply chain, so we can speed up the process.”
Urban logistics. Pallet companies have been dealing with urban congestion for many years through such steps as running smaller trucks and scheduling routes for off-peak hours. In Europe, Professor Ploos van Amstel noted, congestion continues to get worse. The trend has prompted the order of more small and electric delivery vehicles which can also reduce fuel consumption and greenhouse gas emissions. Small delivery vehicle orders in Europe were up 35% last year.
Mercedes Benz will be releasing a new electric van that can be almost instantly loaded with cargo as a single unit load that conforms to the inner storage compartment of the vehicle. Professor Ploos van Amstel compared loading the van to the ease of snapping a replacement toner cartridge into a printer. As a result, loading time is minimized and delivery vehicles are back on the road.
Another area he is following is the development of cargo bikes, both pedal and electric. One delivery company in Amsterdam found that when it switched to cargo bikes, it increased from two deliveries per hour to 12. “They are much more flexible, much more accessible,” he said.
A French company has recently developed a trailer attachment which can be used to easily pick up a loaded Euro pallet. It then can be hitched to the cargo bike for transport, and unhitched to manually position it at the destination.
Electronic freight marketplaces. Electronic marketplaces for freight were slow to take root in Europe, but they now account for 35% of loads. There is a need for greater collaboration to increase utilization. He sees marketplaces as playing an important role. In Europe, loads run only about 45% full, on average. One in three trucks runs empty. Part of the problem is legislation that restricts company-owned fleets from carrying freight on behalf of other companies.
The Amazon Effect. The Amazon Effect impacts more than just the consumer supply chain when it comes to ease of ordering and prompt delivery. In Europe, 50% of trucks on the road support the construction trades. Everyone at the jobsite has an iPhone, and it is too easy to order supplies or materials on an on-demand basis. The result is too many vehicles carrying too little freight, all converging at the construction location. The professor emphasized the importance of slowing down the supply chain and taking time to plan. Filling vehicles to capacity or having time to choose slower but cheaper modes of transport such as barge might help reduce cost.
Tactical planning and plan for more than one future. With near real-time availability of data, it has never been easier to learn and change. For example, software in trucks can provide instant evaluation of a driver’s performance on the last trip to help coach for improvement. For tactical planning, daily results can be quickly captured to inform the next day’s activities. Professor Ploos van Amstel explained, “You can’t change your location, you can’t change your factory, you can’t change your equipment, but overnight, you can change the way you run it.”
Finally, Ploos van Amstel emphasized the importance of planning for more than one possible future. “Do not make one single plan,” he said. “That’s the worst thing we can do.” He emphasized the importance of not planning in isolation. Be sure to include customers, freight providers and others. He asked what your plan would be if freight costs drop by 40%, which some experts believe will happen. Such an outcome would result in fewer, larger factories, he noted. How would that change your business? Then he asked how your plan would change if freight costs increased by 40%.
While Professor Ploos van Amstel confessed to not knowing what the future holds, he emphasized the importance of transportation as a key element of planning for pallet companies as well as their customers.
