Seeking effectiveness in third-party transportation: Cost structures, partnerships and increased efficiencies

The main objective of this paper is to present a rational model for cost allocation in the transportation activity as a key element for designing and maintaining partnerships between shippers and carriers. The utilization of the proposed cost allocation model for a real case situation gave rise to several conclusions. The most important of them is the fact that the cost allocation system currently used by Brazilian shippers and carriers underestimates the cost of short routes and overestimates the longer ones. This is mainly due to high levels of inefficiency in transportation, most of them observed in the operations of loading and unloading, which take six hours on average. Based on the above issue, the paper explores the development of the concept of partnership between shippers and carriers. The adoption of a productivity and quality program which includes an agreement between shippers and carriers over a common cost allocation system, provides several metrics on cost, efficiency and productivity that help to improve loading and unloading operations. The paper concludes with the description of the main causes that affect efficiency of transportation in Brazil: organization, procedures and technologies.