In Global Supply Chain With No Quick Fix, Companies Are Paying To Ship Air



Eric Rosenbaum | CNBC News

The global supply chain crisis is not going to end any time soon, according to top executives at key companies in the trucking and cold storage sectors, but thinking about the shipping situation as a one-time event caused by the pandemic misses a larger problem. A real fix requires understanding that the global supply chain has long been inefficient and requires a better model — one which incorporates climate change as a critical risk and business mission — and that will take years to build.

How inefficient is logistics? Oren Zaslansky, founder and CEO of Flock Freight, which creates algorithms to maximize trucking loads, recently told the CNBC Disruptor 50 Summit that as ports across the U.S. deal with long wait times for vessels, and there are not enough trucks for the loads that are coming off the cargo ships, the loads that do finally hit the road as “full” often do so with plenty of empty space inside the freight truck’s trailer.

Right now, there may be 10 truck loads ready to go but only one driver is available, and one-third of those trucks loads aren’t close to full. That means the customer is “paying to ship air,” Zaslansky said, and that is nothing new in the sector.

Flock Freight’s business model is bridging the gap between the 60%-70% that has commonly been defined as “full” in the freight trucking business, and by using proprietary algorithms getting trucks to 100% full through the concept of shared truckloads (think Airbnb for trucking). That can help to solve the truck driver shortage, but Flock Freight sees the supply chain in much bigger terms. All that air being shipped also is generating unnecessary greenhouse gases. That amounts to a lot of empty space needlessly adding to the planet’s climate change challenge from a trillion-dollar-plus freight sector. Flock Freight estimates its shared truckload solution cuts “less than truckload” freight carbon emissions by up to 40%.

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