Schneider Logistics has launched a new product that is designed to provide an online marketplace for long-term freight contracts. SUMIT CVA (the CVA stands for "combined value auction") will help both shippers and carriers build efficiencies into their distribution networks. Paul Schneider, general manager of SUMIT CVA, says it will link the procurement function with other planning, execution and payment tools offered by Schneider Logistics. The product is aimed at shippers that spend $1 million or more a year on truck, rail or ocean services.

According to Schneider, the new offering differs from online auctions and similar products because it enables collaboration between shippers and carriers. "We're not trying to drive down margins," he says. "We bring together people and processes." Schneider Logistics, a third-party logistics provider, has been using SUMIT CVA to manage its own $2.5 billion annual transportation purchasing for about a year.

SUMIT CVA provides tools for conducting network analyses and creating bid packages that allow carriers to aggregate lanes, which increases efficiency and reduces costs for both shipper and carrier. The process begins by extracting information about the current carriers' performance from the shipper's own database. The network analysis, which examines the shipper's freight volumes and traffic lanes, may take three to six months to complete.

In the bid process, shippers can set business rules such as how many and which carriers are allowed to bid on their business and how many rounds of bidding will be permitted. The bid setup allows multiple rounds of bidding and permits carriers to see the results of each round. It also lets carriers create their own lane combinations and conditions.

Brent Weinbar, bid process manager at Schneider Logistics, reports that one customer that used the system to procure truckload services was able to reduce its carrier base from 104 to 22. The winning carriers, he says, gained more predictable business volumes on the awarded lanes, which helped the shipper cut its spending on truckload transportation by 8 percent.

SUMIT CVA also allows different modes to compete for freight, Schneider says. In one example involving inbound shipments destined for three distribution centers, he notes, the analysis and bid programs helped the shipper reduce transportation costs by 29 percent, in part by shifting some traffic from trucks to intermodal transportation.