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Substantial interest in business sector for new transport solutions 
through horizontal cooperation

A large share of freight transports are currently conducted using trucks, ships and trains that are not used to full capacity. More efficient utilization of freight carriers could result in major benefits.
Transferring from trailer to railway wagon in Borlänge. “There is major potential for developing horizontal cooperation between various flow chains,” says Per Bondemark, Vice President of SSAB.

“We would reduce environmental impact and free up capacity in the transport system,” says Sandra Nordahl, who has led the horizontal cooperation project with the ambition to study freight transport solutions that offer societal benefits. Increasingly, the discussion therefore concerns whether transport purchasers can collaborate to improve capacity use for each transport through horizontal cooperation.

The project was executed by CLOSER, the national collaboration platform that gathers together academia, the business sector and government authorities in cooperation and in concrete projects aimed at improving transport efficiency in Sweden.

SSAB is one such example of a Swedish company that through cooperation with several different players has reduced its transport costs and greenhouse gas emissions for the northern steel shuttle, rail transports of steel between Borlänge and Luleå. Its collaboration with LKAB has, in some flow components, succeeded in reducing freight costs by 60% and carbon emissions by 40%.

Delivery reliability has also improved by 20% and transport lead times have decreased from 7–10 days to 2–3 days.

“There is major potential for developing horizontal cooperation between various flow chains, which reduces transportation costs and increases sustainability,” says Per Bondemark, Vice President of SSAB and Chairman of the Swedish Shippers’ Council. “If we succeed in systematizing horizontal cooperation, it will have major positive effects on the environment while also reducing transport costs. Horizontal cooperation could change our way of looking at transports and infrastructure.”

Horizontal cooperation means companies at the same level of the supply chain collaborate and it offers companies an opportunity to reduce transport costs through economies of scale, transport efficiencies and by reducing empty transports. This cooperation between companies in the entire supply chain may also stimulate multimodality, as companies that lack sufficient transport volumes to transfer from road to rail, inland waterway vessels or short sea shipping can obtain sufficient volume through horizontal cooperation. This not only reduces transport costs but also external effects from transportation, such as congestion and emissions of greenhouse gases.

The potential for horizontal cooperation is already established through a number of research projects, but despite this little horizontal cooperation is taking place.

“There is a willingness and an interest among players in the business sector, which sees a need for more knowledge about how horizontal cooperation can be set up in practice and how obstacles can be overcome,” says Sandra Nordahl.

For many years, CLOSER has been engaged in work on horizontal cooperation and on disseminating information about how this cooperation can impact society and various players in the fields of transport, infrastructure and logistics. One project conducted in 2017, that recently ended, was financed by the Swedish Transport Administration and was a collaboration between SSAB, ICA, Hector Rail and RISE. It studied a number of Swedish horizontal cooperation projects to uncover generalizable solutions to overcome obstacles to horizontal cooperation in relation to business models and technology.

“The project produced an insight into the most important components required for successful horizontal cooperation in a Swedish context,” says Sandra Nordahl.

It also meant ICA joined the northern steel shuttle horizontal cooperation. ICA, which normally uses road freight to transport its goods northward, is now conducting a small-scale test together with SSAB to use spare capacity on the northern steel shuttle. If ICA were to transfer its entire goods flow in the future, this would reduce the annual number of trailers using the road system by thousands. And naturally have a significant impact on costs, congestion and the environment.

“Our ambition is that lessons learnt from this project can help in launching more horizontal cooperation projects in Sweden. More work and understanding is needed if players are to find each other and before projects can be initiated. We hope CLOSER can continue to make a contribution,” says Sofie Vennersten, program manager at CLOSER.