Use of Shipper Associations Would Reduce DOD's Transportation Costs

To determine whether shipper associations could provide economical freight consolidation and transportation services to the Department of Defense (DOD), GAO visited several shipper associations, met with some of their members, and compared actual less-than-truckload (LTL) motor freight shipment costs to what it would have cost had those shipments been handled by a shipper association.

DOD could save several million dollars annually by using selected nonprofit shipper associations to transport LTL freight shipments over long distances nationwide. In one comparison involving a small number of freight shipments moved by common carrier from the east coast to California, GAO found that the savings would have averaged 12.8 percent if the freight had been moved by an association. GAO also projected that an 11.6 percent savings would have been achieved for all 1981 cross-country LTL common motor carrier shipments if the freight had been moved by a shipper association. Associations reduce transportation costs for their members, because they operate on a nonprofit basis and they consolidate small shipments into trailer or container loads which move cross-country by rail piggyback and are less costly to handle. Studies indicate that the association's average shipment transit times were reasonable compared to those of common motor carriers. By not using these associations, DOD is depriving itself of an economical source of transportation that is extensively used in the private sector. The associations not only could save the Government money, but also appear to provide service equal to or better than that provided by commercial carriers. DOD has not used the services of shipper associations because some officials believed that it was illegal to become members of such associations. However, DOD officials appear willing to pursue the use of selected shipper associations, assuming that they could obtain appropriate authorization and guidance.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Henry W. Connor Team: General Accounting Office: Procurement, Logistics, and Readiness Division Phone: (202) 275-4141