Freight Management and Route Optimization: A Critical Combination

Tags: Trucking, Logistics, Technology , Supply Chain

Tom Poduch is director of logistics design, Transervice Logistics

There are significant opportunities for fleets to improve their operational efficiency with a combination of freight management and route optimization.

The definition of freight management has transitioned over time, but whether your primary method of transport is via a freight broker, third-party integrated logistics provider, or your own private fleet, the problem is generally the same — there are segments of your supply chain that are operating empty miles.

As the saying goes, the most expensive commodity to ship is a trailer full of air. When your trailer is empty on the back haul, front haul, or between leg segments, you still incur variable expenses including the driver, fuel, maintenance, etc. In essence, it is costing you money to haul nothing.

Naturally it makes more sense to fill up trailers as often as possible, and freight management, along with route visibility and optimization, affords you the opportunity to do just that.

A sensible place to start is looking for ways to fill your trailers with the resources you need to run your business. Look at the raw materials, supplies, packaging, and assets required. Instead of having a vendor, outside carrier, or parcel service deliver those items to you, could your own private fleet retrieve them after delivering scheduled loads? If a private fleet is not an option, are there other common freight opportunities from other shippers that can be reasonably consolidated to reduce line haul cost?

Of course it’s not as simple as it sounds. There’s not a lot of room for error when scheduling back, front or line hauls. You need to be certain they don’t interfere with your core shipments, or disrupt other segments of your supply chain. Missing a delivery window because you added a back haul to an existing route may offset cost, but how did it affect your customer service?

The goal is to find the most suitable and consistent freight as possible. To achieve this, you will have to nurture existing relationships, as well as source new ones, while working with both shippers and carriers to manage the process.

A common barrier for a carrier is that a shipper may be set on certain criteria due to manufacturing, floor space or end user demands. This tasks the carrier with demonstrating how they can move the load more efficiently — and perhaps less expensively — by modifying those criteria. This is often a hard sell, but mutual benefit should be identified and demonstrated.

Engineering and freight visibility tools are essential when evaluating changes to any segment of your supply chain. Capturing variables such as load size, delivery window, available capacity, and expense allows you to forecast specifics as to vehicle availability, which vehicle is the best match for the freight, and which drivers have Hours of Service remaining.

Route optimization is also a key component of this process. It allows you to model specific static or dynamic environment requirements, in addition to variables such as weather, traffic, road types, and vehicle speed. This results in a predictable availability of resources, and projects the amount of freight you can reasonably absorb while still serving your existing primary customer base.

Your engineering results, combined with both tribal knowledge and your organizations standard operating procedures, should be communicated with all stakeholders to ensure feasibility of the final design. Expectations, benefits, and expense should be clearly identified.

Finding the right partners, whether it is shippers, carriers, or both, will result in new opportunity and visibility within your network, as well as the networks of others. Over time, your network will resemble more of a net, or a web, with limitless dynamic opportunity, as opposed to a linear chain.