Shared capacity reduces transport and wasted logistics resources

We asked Kristoffer Skjutare a few questions about what horizontal cooperation is and what it involves:

What is the objective?
'To improve transport efficient through cooperation in the transport and logistics system – simply put, reduce waste of resources.'

How would you describe the work?
'The focus area is launched based on a request from our partners and emphasises increased knowledge about sharing of resources and optimisation in the transport and logistics system through cooperation between operators.

In order to develop knowledge, CLOSER has participated in the initiation and coordination of three research and feasibility projects. The projects have contributed to an increased understanding of how increased shared use of existing resources can help to achieve social objectives and support the competitiveness of the commercial sector. 

Can you describe the research and feasibility projects?

• CLOSER Starfish (2014) is a research project headed by the Faculty of Engineering LTH at Lund University, which studies how companies can utilise existing and available infrastructure more efficiently through horizontal cooperation of the objective of reducing the influence on the environment and cutting down on transport costs. The companies involved in the project shared transport data (e.g. O-D matrices, volumes and costs), which made it possible to design a single supply chain based on a larger transport network. This approach can contribute to establishing new, more efficient solutions for, e.g. distribution, transport between warehouses or internal warehouse activities. 
   
• The CO3 project (2014) is a collaborative European project in which CLOSER participated. The cooperation was initiated against the background of the European Intermodal Research Advisory Council's (EIRAC) ambition to improve utilisation of resources in the European freight transport system for the distribution of goods. 
   
• The aim of Horizontal cooperation for increase transport efficiency (2017) was to increase knowledge about how to handle obstacles related to business models and technology. Four Swedish cases were studies. One of them was a potential cooperation between SSAB and ICA involving possibilities for joint freight transport with existing railway solutions on the route between Borlänge and Luleå under the management of SSAB.

Who are the participants?
'In general, possibilities for increased cooperation are applicable for all types of operators within the transport sector – there are virtually no limitations except for those imposed by existing competition law. By means of joint negotiations and procurement of transport, cargo owners can share common logistics resources. 

This also involves cooperation within terminal operations. There is great potential to strengthen the logistics offering for the transport and logistics sector and to create incentive for increased transfer through consolidation of freight.

What is happening now?
'We are preparing for more projects within the area – through the clear link between horizontal cooperation and other focus areas within CLOSER. Right now we are studying the possibility of new collaborations between terminals in order to exchange knowledge about coordinated flows of freight. This can lead to volumes that are large enough to create incentive for transfer from the road to the railway or waterway. The work will be coordination with another of CLOSER's focus areas, multimodal solutions.

What is needed to achieve future results with horizontal cooperation?
'The desire is there, but there has to be better support for operators who want to utilise the possibility of horizontal cooperation in the form of concrete recommendations for scope and content in the cooperation.'

Per Bondemark, Deputy CEO of steel producer SSAB is a strong proponent of horizontal cooperation.

'First, there has to be a desire and sustainability on the part of the cargo owners. Horizontal cooperation is not easy and there are many obstacles. But if the desire and endurance are there, obstacles can be overcome. Research shows that lack of a durable business model is one reason that horizontal cooperation is not sustainable. Therefore, there is a need for durable business models where profits are shared between the parties involved in a transparent and fair manner. Last but not least, in order to achieve a national breakthrough on a large scale, access to information about the flow of goods is required. In many, cases, the collaborations that are in place today are the result of ad-hoc cooperation,' says Bondemark. 

As of 1 January 2019, Magnus Swahn is the Swedish Transport Administration's head for thegovernment mandate to draft a proposal for horizontal cooperation and to provide data in order to increase utilisation of loading capacity in transport.

'The basis for all cooperation is trust between participating parties. In order to stimulate sustainable horizontal cooperation, it is important to provide a neutral arena that the operators can rely on. Then it is also easier to agree on goals and measures which improve the efficiency of logistics. This, together with a long-term approach and collaboration, is a prerequisite to achieve good results. In order for these solutions to work in the long term, there must also be profit for all participating parties. The conditions for the logistics change constantly, which means that successful cooperation must be established in order to survive. In certain cases, there will also be a need to discontinue collaborations, but that will hopefully provide an opportunity to establish new collaborations,' says Swahn.