Online exchange helps trim shipping costs

By Emily Kay, Computer World |  Business

With empty truck space a huge cost concern for companies like butter maker Land O'Lakes Inc., the ability to share transportation costs with other shippers is very attractive.

"We spend $300 million a year on carriers," says Jim Lord, director of strategic initiatives and alliances for the dairy group at Arden Hills, Minn.-based Land O'Lakes. "If trucks are coming back empty, it adds up fast."

That's where Nistevo Corp. comes in. A provider of
Web-based collaborative logistics networks in Eden Prairie, Minn., Nistevo enables Land O'Lakes to pool carrier resources with Minneapolis-based General Mills Inc. and 14 other shippers through Nistevo.com, its private, Web-based freight and logistics exchange.

The Capacity Game

Throughout the logistics supply chain, shippers are looking to collaborate with partners to save on transportation costs. Shippers tend to buy truck capacity in one direction. When the truck returns empty, it costs shippers more while carriers earn less. In fact, almost 19% of all trucks on the road are unfilled, says Frank Bernhard, an analyst at Omni Consulting Group LLP, a consulting firm in Davis, Calif.

That wasted capacity costs U.S. firms $30 billion per year, says Kevin Lynch, founder, president and CEO of Nistevo. Nistevo attempts to fill excess capacity with its collaborative electronic logistics service, which lets shipping partners work together via the Internet to cut transportation costs and boost truckers' sales.

With the Nistevo network, they can collaborate throughout the logistics process, from managing complex contracts to loading empty trucks.

Web-based logistics management also lets companies collaborate beyond their own enterprisses with suppliers, carriers and other shippers.

"Nistevo's application allows for the reduction of empty back-haul mileage on a large scale, allowing for an average of 5% to 18% cost savings in back-haul, as well as significant savings through managing contract leakage," says Ting Piper, an analyst at research firm IDC in Framingham, Mass.

Nistevo boasts some big-name customers, including Monsanto Co., The Pillsbury Co. (now part of General Mills), Fort James Corp. and Graphic Packaging Corp.

Of the myriad e-commerce initiatives in which General Mills is involved, Web-based collaborative logistics using Nistevo's service offers the $6.7 billion company "the greatest opportunity for immediate impact," says Randy Darcy, senior vice president of operations at General Mills. "It was clear to us that unlike a lot of technology companies claiming they had product and didn't, Nistevo had it, and it was up and running."

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