​Unlikely tie-up delivers the goods 

• Strategic transport partnership between a flower business and a pet-food maker
• Cost savings of up to 50 % achieved thanks to combined transport
• Improved business opportunities and environmental gains

Strategic partnerships are an excellent way to save resources, even between businesses in seemingly very different markets, such as a flower delivery specialist and pet-food producer. What they have in common is the need for refrigerated transport. Take, for instance, the florist TarmacTulip which operates a delivery service at around € 5 000 per month, including driver, fuel and maintenance costs. The driver delivers six days per week, his truck operates on average at only 20 % capacity. The nearby pet-food company (FreshMeat) operates in the same geographic area, but its delivery needs differ. FreshMeat has a more regular delivery schedule, but only three times per week. As a result, it has a slightly higher fill rate (around 35 %) and lower operating costs of around € 4 375 per month.

Combining their delivery services made good economic sense. For example, at a cost € 5 000 per month, the two companies were able to use the florists' logistics service in the following breakdown: TarmacTulip required 120 % of the truck's total capacity per week, while FreshMeat required 105 % (combined capacity of 225 %). They shared the costs of logistics on a 54/46 basis with TarmacTulip paying € 2 700 per month and Freshmeat the remaining € 2 300.

Key benefits

The cost savings for the two companies came to around 50 % because the deliveries take place in the same area and the fuel expenses are effectively halved. At first, FreshMeat’s owners were sceptical about sharing the costs according to the proposed breakdown because their delivery schedule was only half that of TarmacTulip's. However, the increased delivery rate improved customer satisfaction and resulted in new clients. The arrangement also reduced the extra carbon emissions generated when undercapacity delivery vehicles are on the road. 

Other costs may need to be taken into consideration when setting up a partnership of this kind, such as the time spent administering the partnership (e.g. ~5 days for setting it up, ~1 day a month for management). Based on those estimated mandays at an average cost of € 200 per day, the total set-up cost reaches € 1 000 and management € 200 a month.