Synchromodality or a situation in which the choice of the appropriate means of transport is made by the logistics operator instead of the shipper can be a very advantageous solution. All because synchromodal networks allow reducing transport costs by up to 40 percent on a single order.
Price competition is no longer possible
The increase in carriers’ expenses caused, among others, by a minimum pay or a ban on accommodation in cabins valid in Western Europe, contributed to the fact that domestic transport companies are no longer able to compete against each other by reducing their prices.
This has a negative impact on the entire TSL market, including logistic operators whose customers are more and more aware of the transport processes taking place on the market. Logisticians are forced to offer such services that will provide tangible benefits to shippers.
Logistics companies must become partners for the client, anticipate trends and propose innovative solutions. A simple reduction of rates by reducing the margin is no longer possible because apart from the growing requirements of customers, the environment in which transport companies operate also changes” – says Aleksandra Kocemba, intermodal transport manager at Raben Transport.
According to Aleksandra Kocemba, carriers can no longer reduce their margins, because over the last few years their expenses have grown drastically, i.e. due to minimum wages in some EU countries and due to the lack of professional drivers.
The law of demand and supply encourages wage increases for this professional group. If we add new provisions on the minimum wage introduced by individual European Union countries, the ban on spending a weekend break in the truck cabin and the EU bill on the posting of workers, the increase in costs on the part of the carrier is inevitable” – says Aleksandra Kocemba.
Synchromodal solution can reduce costs for shippers
One of the solutions that can reduce transport costs for shippers without the need to lower rates is synchromodal logistics networks.
We have been using the intermodal transport offer for about a year. In relation to traditional proposals, this is a very attractive offer, because synchromodal solutions allow us to achieve real savings. Especially with a large volume of cargo, which we talk about in our case” – says Agnieszka Pawłowska-Ogrodnik from the logistics and customer service department at waterproofing in Renolit Polska.
What is synchromodality about?
A synchromodal solution has been successfully used in Western markets for many years.
A traditional transport order consists of ordering the shipper to transport and contracting a specific means of transport, delivery time, and possibly other additional conditions, i.e. a specific route.
However, in the case of a synchromodal solution, the logistic operator decides on:
– an appropriate means of transport (uses intermodal capabilities),
– the most optimal transport route.
To some extent, the synchromodal solution is not much different from traditional, intermodal cargo transport. The main difference is that the ordering party only indicates the delivery point to which his loads are to reach. It does not interfere with what means of transport the logistic operator will use. Of course, the shipper is informed about the transport process.
The advantages and disadvantages of a synchromodal solution
1. Generating real savings
The market trend is always such that the shipper – in a situation when there is no shortage of transport means on the market – will benefit from the possibility of intermodal transport only if it is actually cheaper. For this reason, operators are to some extent forced to propose lower rates. Of course, it is done at the expense of delivery time. However, with constant, pre-ordered shipments, the most important thing is a low rate.
The lower cost also results from market behavior. With more loads available on the market, transport rates for shippers are increasing, with fewer loads, they are decreasing.
According to experts from Raben Transport, an entrepreneur offering around 400 cargoes to 118 delivery locations in 22 countries during two months could reduce costs by up to 20 percent, while maintaining 100 percent on-time delivery. It is interesting that thanks to the possibilities of synchromodality, the client can save up to 40 percent on a single order.
Synthos from the chemical industry implemented the intermodal marine solution. As a result, it generates savings of up to 40 percent compared to road transport” – explains Aleksandra Kocemba.
Intermodal transport is much slower than road transport. For example, a truck from Poland to Spain will travel in about 2-3 days. In the case of a synchromodal solution, the transport duration will extend to twice as much. For this reason, the company that orders loads must be informed about the method of transport in advance so that it can plan and prepare for a longer transit time. In return, the operator gets a lower rate. Both parties benefit from this: the shipper saves money, while the carrier has an assured order and more time for transport operations.
2. Additional cargo space
Savings is undoubtedly the main factor for which companies decide to use synchromodal solutions, but not the only one. No less important is the additional cargo space and a greater availability of means of transport. Why is it playing such a big role?
Imagine a company that commissions 40-50 loads a day to various regions in Europe. At any given time of the year, let alone peaks, finding such a number of trucks is rather difficult. In addition, the implementation of such a number of orders would be extremely burdensome due to multiple crossing of borders and customs clearance, not to mention organizational issues and management of the logistics department.
Synchromodal solution is the most beneficial in this case. And for two reasons: due to an easier transit of such a large amount of cargo and lower transport costs.
Environmentally-friendly intermodal transport
Lower CO2 emissions are another advantage of intermodal transport.
According to the European Commission, road transport is the main source of greenhouse gas emissions. It represents about one-fifth of the total CO2 emissions in Europe, of which around 1/4 comes from trucks, buses, and coaches.
For Renolit corporation, the environmental aspect of intermodal transport is very important. We appreciate the fact that we use a solution that has a lower negative impact on the natural environment, does not use roads so much and improves transport safety” – says Agnieszka Pawłowska-Ogrodnik from Renolit Poland.
European Union qualified road transport, together with air transport, as the two branches that are responsible for the biggest CO2 emissions. On the other hand, maritime transport is included in the EU program for reducing CO2 emissions. Therefore, using intermodal transport has a significant impact on environmental protection.
Synchromodality in road transport
Synchromodality is not only a free choice of route or type of transport. In a simplified way, it is primarily a flexible use of carriers’ services, which are automatically matched to currently available loads.
The transport industry is already working on IT solutions that will eliminate unfair, worthless forwarding and automate logistics processes from the very beginning of the cooperation between a producer and a carrier. How?
Above all, thanks to the platform (system) for managing logistics processes, dedicated to cargo companies (shippers). After issuing the order, the advanced algorithm is to recognize the needs of the shipper and suggest the appropriate carrier. The system will select the carrier in accordance with the order requirements: type of cargo, tonnage, direction, the obligation to have the appropriate certificates and current capacity of the company (the algorithm will take into account, among others, the location of trucks).
Photo: MAN