Report

Teaser, summary, work performed and final results

Periodic Reporting for period 3 - NEXTRUST (Building sustainable logistics through trusted collaborative networks across the entire supply chain)

Teaser

Freight transport logistics is an industry sector responsible for managing the flows of goods and information between a point of production and a point of destination in order to meet the requirements of clients and consumers. As regards the supply chain, logistics focuses on...

Summary

Freight transport logistics is an industry sector responsible for managing the flows of goods and information between a point of production and a point of destination in order to meet the requirements of clients and consumers. As regards the supply chain, logistics focuses on the planning, organisation, management, control and execution of freight transport operations. In the EU freight transport was close to 3.9 trillion tonne-kilometres (tkm). Currently, only 5% of internal EU freight traffic flows through intermodal routes. Eurostat surveys estimate that 24% of good vehicles in the EU are running empty and that the average loading of the rest is 57% giving an overall efficiency of 43%. Flow imbalance can only explain half of this loss. The total volume of logistics expenditures in the EU was estimated at EUR 930 billion in 2010. A 10% to 30% improvement in efficiency in the EU logistics sector has been estimated to give savings of between EUR 100 billion and EUR 300 billion per year.

The challenge is to find the right business models for a number of separate activities that when brought together can foster synergies. This can be done by horizontal collaboration between retail, distribution, logistics, traffic management, vehicles and their users whilst exploiting synergies from the vertical integration down-stream to the customer in a more intelligent chain.

NexTrust wants to increase efficiency and sustainability in logistics by developing interconnected trusted collaborative networks along the entire supply chain. These trusted networks, built horizontally and vertically, will fully integrate shippers, LSPs and intermodal operators as equal partners and overcome current obstacles in supply chain collaboration. To reach a high level of sustainability, we will not only bundle freight volumes, but shift them off the road to intermodal rail and waterway, with an expected reduction of greenhouse gas (GHG) emissions by 50%. Within a consortium of 31 partners, NexTrust will build these trusted networks ideally bottom up, with like-minded partners, adding multiple layers of transport flows that have been de-coupled and then re-connected more effectively along the supply chain.

Work performed

NexTrust carried out during the reporting period of the first 18 months important reasearch activties. Most importantly is the validation of the positive effects of trusted collaborative networks with pilot cases. The supply chain actors need first examples and validated positive results of the innovation of trusted collaborative networks, before applying them to the market. The core of the NexTrust research and innovation activities are the setup of 23 pilot cases in different supply chain scenarios. The objective is to have for each defined scenario, e.g. full-truck-load, avoiding empty backhaul trip (pilot 2.1), one pilot case. In the evaluated project proposal, the NexTrust consortium has foreseen to achieve at least 18 pilot cases to be able to validate the innovation. During the contract negotiations with the INEA, the pilot case leaders committed to a higher target of 23 pilot cases. Now, at the first interim report period (31/10/2016), the pilot case leaders achieved to set up 33 pilot cases within the defined pilot categories. This is already a remarkable achievement, almost doubling the expectations of the presented project at application stage. This positive development, will further improve the opportunity to test the innovation of trusted networks on wider and larger scale and therefore can bring even more learnings to the project consortium.

In the whole process of the 33 pilot cases, the new and innovative “trustee business model” plays an important and crucial role in the management of the supply chain. The key prerequisite of NexTrust is that horizontal and vertical collaboration in the supply chain requires trust in order to become a sustainable practice. Facilitating the process is the “neutral trustee” function, which is absolutely required to guarantee anti-trust compliance with EU law, to ensure that companies’ own legal compliance rules are respected and that confidentiality is in place. This trustee business model makes sure that there is no collaboration in place which restricts competition between two or more independent market operators. In this way, the innovative business model guarantees that for example any price fixing, market sharing or other kinds of anticompetitive behaviour which would impede effective competition is going to happen.
Furthermore, the trustee is responsible to ensure that the collaborative network will be constructed in such a way that a fruitful long term, sustainable relationship between partners can be maintained on a flexible, community basis.

The trustees are coordinating and supporting the entire collaboration life cycle of the potential FTL pilot cases, building the business case outlined herein required to “package” the collaboration in a sustainable way. Some trustees out of the 14 have a dedicated role (e.g. legal, ICT or audit), allowing them to leverage their expertise to bring a clear added value to the management of the trusted collaborative networks. In order to make sure all pilot cases’ progress can be measured and make progress in a structured manner, the tried-and-tested 3-step methodology is used throughout the NexTrust project, with the big building blocks from a project management point of view: identification, preparation and finally operation.

Final results

NexTrust has succeeded in proving, that for the first time ever in the European logistic supply chain, parties on such large scale are pro-actively cooperating to reduce together the environmental impact and create logistic efficiency gains. And, it is also the first time ever in the supply chain history that the innovative Trustee Business Model is introduced and that horizontal and vertical aspects together are addressed properly to significantly change the way the supply chain is managed today.

NexTrust is now on the “tipping edge” of the first breakthrough of horizontal and vertical collaboration in the European logistics and is about to add an innovative business model to the management of the supply chain. NexTrust has done very good progress in setting up pilot cases and could already go beyond its originally foreseen plan. Some of the pilot cases are already in operation and achieved promising first results. In the next coming months the pilot cases will be validated. The first learnings and once confirmed, the results, will be published on the NexTrust website and then disseminated to the European logistics arena.

The methodologies for calculating the Green House Gas emissions savings are being further developed and the discussions on the sharing of any benefits are progressing well. The latter is not an easy topic but collaboration is about sharing both risks and benefits. As part of the NexTrust project an innovative “trustee business model” has been introduced which will play a crucial role in facilitating supply chain collaboration. It is the first time in the supply chain that such a concept has been implemented on large scale. It is significant that horizontal and vertical collaboration aspects together are addressed properly to significantly change the way the supply chain can be managed today and in the future.

Website & more info

More info: http://www.nextrust-project.eu.