The need for co-distribution in rural areas—a study of Pajala in Sweden

Abstract

To be a part of a supply chain network a company competing on the global market must mostly show short lead times and deliver at the right time. Is this really possible for a company placed in a rural or sparsely populated area? Pajala, a village and a municipality in the north of Sweden, has 7500 inhabitants in an area of 7900 km 2 which means one inhabitant per km 2. The number of inhabitants in the municipality of Pajala is decreasing. To stop this problem, Pajala needs more work opportunities and therefore they need more successful companies. Approximately 20 different conveyers/suppliers transport goods to and from companies in Pajala. But most of the conveyers/suppliers transport goods only once a week. Companies in Pajala, to be able to compete and be a part in a supply chain and a chain that competes with other supply chains, should have the opportunity to send and receive goods any day they want for shortening the delivery times to customers. One solution to this may be co-distribution. Co-distribution means that different conveyers/suppliers transport their goods in only one truck that goes for example in this case to and from Pajala. A preliminary study has been performed in Pajala to investigate if co-distribution has any benefits in rural areas. We find that the companies receive and distribute goods with a low frequency and that the trucks carrying loads to and from Pajala are often loaded less than 50%. This implies that to lower transportation costs and increase delivery services some sort of co-distribution is necessary to strengthen the capability of competing for the companies in Pajala. We have here studied specifically Pajala but we are convinced we would find almost the same result if we had studied other municipalities in rural areas of Sweden.