Environmental and social benefits
The approach – called Digital Freight Matching (DFM) – is based around apps that match companies who need to transport goods, with small trucking providers who have spare capacity. It then automatically arranges, tracks and reports on the shipment.
As well as making our deliveries more agile and efficient, it’s better for the environment. Often a truck will make a delivery, then return to base empty. But by matching goods ready for shipment with available space, the software reduces the number of empty trucks travelling, therefore cutting traffic and CO2 emissions.
According to The Economist, every year American trucks run empty for 50 billion miles, or 28% of their total distance travelled. Studies show that this software could reduce ‘empty miles’ by 10%.
The technology is also enhancing livelihoods. Drivers generally get paid per load they carry, so this helps them to avoid running empty. And because pay is improving, it could encourage more people to enter – and stay in – an industry which currently has a high staff turnover.
We started piloting this approach in January last year with three companies in the US. After evaluating the results of the pilot, we’ve continued working with two of them: Convoy and Transfix. In November 2016, we that will see the company connect us with trucks for tens of thousands of shipments a year.
In addition to scaling up across North America, we have also started expanding globally. We now have operations in 15 countries, which are at different stages of maturity. The ultimate aim would be to roll this out everywhere, but the service isn’t yet available in all countries and some of our specific requirements aren’t currently met through the technology.
A model for the mainstream
"Our partnership with DFM providers allows us to jointly shape the future of on-demand trucking while adding flexibility into our supply chain," says Reginaldo Ecclissato, SVP, Supply Chain Americas. “And we want other suppliers to adopt the DFM model too. We want this approach to become mainstream across the industry.”
When Convoy started in 2015, it was mainly focused on ad hoc deliveries for companies needing a truck here and there. It has since added deliveries scheduled ahead of time and on a regular basis.
“Unilever has been a tremendous partner and catalyst for supply chain innovation,” says Dan Lewis, Convoy CEO. “By being at the forefront of a transformation in trucking, they've improved their ability to serve their customers, as well as the lives of drivers that help Unilever benefit millions each day.”
How the process works
Local freight shipping is a fragmented market, with lots of small owner-operators. Currently, the process of finding a carrier to handle a shipment is labour-intensive, typically involving several phone calls between brokers and carriers. Traditional brokers act as go-betweens – to find a carrier with capacity, determine the price and book the business – and can charge around 20% of the cost of the job.
DFM technology automates that process, giving the customer direct visibility of the status of their shipment, with the carrier using a smartphone app on the front end and a back-end system to gather and analyse data.
Based on the characteristics of the load, the technology selects and notifies the most appropriate available carriers, determined by criteria such as proximity and having the right equipment. Carriers can then accept or decline the offer, before it goes to another company in the DFM network. The first eligible carrier to accept is assigned the load.
Customers pay lower fees because DFMs charge a smaller percentage than brokers.