How Centralized Marketplace Capacity Could Result in Lowering Carbon Emissions

If we can reduce the number of trips freight carriers take each year to deliver their goods, a significant quantity of would-be emissions may never be generated. The key to this strategy is taking advantage of centralized marketplace capacity.

Miha Creative Adobe Stock 484607009
Miha Creative AdobeStock_484607009

All-electric semi-trucks and buzzy alternative fuels paint an exciting picture for a future shipping landscape that’s gentler on Mother Earth. However, that “future” state is certainly a ways off. Meanwhile, scientists deliver damaging report after damaging report, warning of serious environmental consequences of not lowering carbon footprint and emissions.

Make no mistake, the logistics sector is an outsized contributor to these emissions. The international shipping industry has grown in CO2 emissions dramatically in recent decades, from 280 million metric tons of CO2 emitted in 1983 to nearly 700 million in 2021, and greenhouse gas emissions from transportation account for about 29% of total U.S. greenhouse gas emissions, making it the largest contributor.  

Ultimately, we don’t have the luxury of time to wait for exciting EV truck headlines to hit critical mass. Instead, lean on the time-tested “Reduce, Reuse, Recycle” approach for addressing and reducing CO2 emissions in the immediate-term.

Reducing the world’s current shipping volume is an obvious solution, albeit one that initially may seem unrealistic given more goods are shipped today than ever before and that number continues to rise.

But what if cutting back shipping emissions meant NOT reducing shipping volume, but instead reducing the number of truck trips delivering the same amount of goods?

If we can reduce the number of trips freight carriers take each year to deliver their goods, a significant quantity of would-be emissions may never be generated. The key to this strategy is taking advantage of centralized marketplace capacity.

What is Centralized Marketplace Capacity?

The shipping landscape is still largely decentralized. For example, dryvan driver Bob travels from Boston to Arizona with 30% excess capacity, meanwhile dryvan driver Jill makes the same trip at full capacity. But Jill’s customer needs additional goods moved, so an additional truck makes an extra trip. Centralized capacity means Bob may have been able to take those excess goods on a trip he was taking anyway.

Every day, tens of thousands of tractor-trailers, flatbeds, sprinter vans, box trucks, and other transport vehicles make trips independently, with varying amounts of excess capacity, or make empty backhauls (something which happens roughly 35% of the time).

This is textbook inefficiency. This carrier decentralization doesn’t just tax the environment in emissions, but also impacts shippers in both transport costs and in the time it takes to get a load where it’s going.

The notion of centralized capacity is to use a marketplace to connect all of these disconnected carriers. Shippers put out a request to haul a load to a large group of carriers at once, and the ones already making trips with excess capacity are able to offer the lowest quote, empowering the goods to be moved more sustainably and more cheaply for the shipper. It’s efficiency through competition, and transparency. 

The shipping industry has always been marked by opaqueness. To even get a quote from one carrier is often time-intensive, so it’s no surprise shippers don’t go around gathering 10 to compare every time they have a load to move. Luckily, we’re in a different era today and, thanks to technology, leveraging this marketplace environment is feasible.   

But while the mechanism now exists to eliminate these industry inefficiencies, process and human habit haven’t fully caught up yet. Many shippers still rely on their go-to carrier, who obviously isn’t incentivized to have them consider a competitor, even if their routes and capacity might offer a more efficient option for the load to be transported.  

What Will Propel the Use of Centralized Capacity

Even though these long-held habits are hard to break, the good news is, the most universal motivator – money – is acting in favor of the use of centralized capacity in a few ways.

First, as costs rise, shippers are comparing their carrier options more often. According to the American Transportation Research Institute, trucking expenses – fuel, insurance, repairs, operations – all climbed to a new high last year, continuing the trend from 2021.

As those costs passed in part to shipper’s freight bills, there grew a drive to compare options and find carriers who could offer lower rates made possible by excess capacity. Shippers also saw firsthand the danger of placing all their eggs in one carrier basket, with the bankruptcy of less-than-truckload carrier YRC Freight, a subsidiary of Yellow, leaving thousands of small businesses unable to move their goods.

Second, carriers also benefit from joining shipping networks that aggregate load opportunities and new potential customers. For transporters moving loads with excess capacity, being part of these platforms gives them an opportunity to pick up extra jobs and revenue for trips they’re already making, increasing their profit per trip and taking the bite out of empty backhauls.

Finally, consumer pressures are coming to bear on the industry. Being a sustainable company, or at least trying to be, is no longer a benefit to doing business, but an expectation of consumers. Consumers want to know the businesses they are buying from aren’t passing along any carbon guilt, so to speak, along with the goods they’ve purchased.

So, while we should be excited about all-electric semi-trucks and the newest in fuel technology, we should also be a little more impatient, and make the system we have today as efficient as possible.