Collaborating Competitors

Logistics provider launches freight collaboration program for Monsanto, BASF

St. Louis  August 27, 2002  Logistics Management Solutions (LMS), an information-based third party logistics provider, recently launched a freight collaboration program designed to benefit Monsanto, a provider of agricultural solutions, and BASF, a chemical company. The program uses Web-enabled technology to safely combine agricultural-chemical shipments from BASF and Monsanto to help both companies significantly cut transportation costs.

LMS said it developed the Web-based program to capitalize on the fact that BASF and Monsanto utilize the same third party warehouses and ship to like destinations. By combining LTL (less-than-truckload) chemical shipments into full truckloads, Monsanto and BASF can share efficiencies. Additionally, as a third party facilitator, LMS said the companies' proprietary shipping data remains confidential.

"This is the first time BASF is participating in a freight collaboration program with a competitor and within the same marketplace," said Dan Pigott, director of transportation for BASF. "But it's a win-win situation for everyone. Through the efforts of LMS, both companies save on transportation costs without exchanging confidential information or sacrificing on-time service."

LMS transportation planners work onsite at BASF and Monsanto to review agricultural-chemical shipping queues and pinpoint LTL shipments. The LTL data is then entered into LMS' Web-enabled optimization program, TOTAL, to create load matches. TOTAL is programmed with freight compatibility standards to ensure loads are matched safely. In addition, TOTAL incorporates service parameters set by BASF and Monsanto. Ultimately, LMS said loads are matched according to each company's specifications and only when both parties can benefit.

Mark Baxa, U.S. logistics package operations manager for Monsanto, said, "There is only so much freight consolidation that can take place within one company. Working in a collaborative environment expands Monsanto's options to reduce logistics costs beyond conventional means." He added that, with the LMS solution, the companies' freight is handled less and transportation efficiencies are maximized.

LMS transportation planners execute all shipping activities and determine cost savings by comparing truckload rates to LTL rates. Savings are then distributed according to a ton/mileage formula, which takes into consideration each company's freight weight, as well as miles traveled in moving that freight. As a result, BASF and Monsanto earn savings based on their individual shipping activities.