Publication Date

Supply Chain Frontiers issue #52

In order to identify supply chain network synergies companies are looking outside their own organizations to create joint benefits in partnership with other trading partners. This is one reason why a concept that has been around for some time, co-loading, is becoming a viable option for many shippers.

Co-loading is the equivalent of ridesharing in freight transportation. It enables companies to share space on the same vehicles/containers and split the bill for their portion of the trip.

This method of transporting goods is not for every company. To illustrate its potential, let's consider a hypothetical shipment: Shipper A needs to move 10 pallets of dry goods that weighs 14,000 lbs from Kenosha, WI, to Los Angeles, CA.

If the company uses full truckload (TL), it essentially buys all of the space on the truck. This is the fastest ground shipping option, and the absence of double handling reduces the risk of product being damaged or lost. However, it is likely that the shipper will have to pay for empty space, which adds cost and increases the mode's carbon footprint. The company could opt for a less-than-truckload (LTL) shipment, where it only pays for a portion of the truck. This is a cheaper alternative, but the cargo will pass through the carrier's hub-and-spoke network that involves longer transit times and a lot of double handling. Intermodal is another possibility. This is cheaper and more carbon-efficient than TL because it includes a rail component. But again, Shipper A pays for the whole truck, including empty spaces (which offsets rail's carbon efficiency) and there is a greater risk of damage as the load is transferred between modes.

In the fourth option, co-loading, Shipper A shares truck space with other companies in a similar fashion to LTL. However, the shipment will travel via multi-stop TL with a few other shipments on the trailer. Only larger LTLs and smaller TLs are combined on the same trucks.

The co-loading option is as fast as TL or intermodal, does not require double-handling, and is generally cheaper than TL or LTL (up to 30% on some lanes). On the downside, co-loading only works for certain size shipments (larger LTLs and smaller TLs), so this transportation option might not be feasible.

Co-loading possibilities are normally determined by state-of-the-art software technology. This type of transportation requires the ability to comb through millions of shipment transactions of different companies and identify opportunities based on several criteria such as geography, cost, timing, shipment size, and compatibility. Such an operation requires tools and resources that have the capacity to handle large sets of data and to optimize algorithms.

This technology is now available. Moreover, other technological developments, such as the emergence of more advanced transportation management systems and cloud computing, also support the growth of co-loading.

A major impediment is a lack of trust between trading partners. Co-loading execution requires many parties to be aligned across various operational factors mentioned above. Again, recent developments help shippers to overcome this barrier. For example, research carried out by Dr. María Jesús Sáenz, Professor of Supply Chain Management at the MIT-Zaragoza International Logistics Program, Zaragoza Logistics Center, Zaragoza, Spain, explains how trading partners can establish mutually beneficial partnerships in co-loading arrangements (for more information see the article Removing the Roadblocks to Horizontal Collaboration, Frontiers, Fall 2012).

As co-loading gains ground, more opportunities will emerge. The greater the number of companies within the network, the bigger the benefits generated by co-loading. The network could include companies from different industries as long as their products can be physically consolidated on the same transportation vehicles.

Cross-company collaboration such as co-loading can extend supply chain boundaries to a much larger network, and open new doors to more efficient freight operations.


This article was written by Homayoun Taherian, a 2013 SCM program graduate, and Founder, Cnergistics, LLC. He can be contacted at