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Route Optimization: Cutting Costs & Improving Service

March 29, 2022

Logistics for full truckload freight involves planning around carrier availability, freight requirements, delivery windows, and so much more. The complexities are compounded for less than load freight (LTL), which involves multiple stops on a route. How do logistics providers ensure that they’re creating the most efficient routes possible to save time and money while hitting delivery windows? Most turn to route optimization.

What’s the Difference Between Route Planning and Route Optimization?

Although route optimization and route planning sound synonymous to those who are unfamiliar with them, they serve distinct but important functions in logistics. Which approach a carrier takes will depend on their capacity and their clients’ needs

Route planning is also known as “route mapping” and “route sequencing.” It is less dynamic than route optimization because it doesn’t account for as many variables in real time. Instead, it sequences customers on routes based in an attempt to optimize costs without taking in day-to-day issues that might arise. This may work for companies for whom tight delivery windows are less of a concern.

For routes with more moving pieces and clients with more specific needs, route optimization is often the best approach. Companies can create the most efficient routes that account for vehicle weight limits, hours of service, delivery windows, and more. Customers have clearer expectations from the initial shipment to receipt of freight. Since unexpected changes can happen when freight is en route, the instantaneous recalculation of route optimization keeps operations running smoothly.

Route optimization can be further broken down into standard and dynamic routing. Standard routing places customers into predetermined routes. On the other hand, dynamic routing involves the creation of custom routes based on capacity, time windows, and other requirements and restrictions. Dynamic routing saves money and reduces the resources used, but customers often prefer the level of service and rapport they develop with familiar drivers in the system of standard routing.

Cutting Costs with Route Optimization

Route optimization has many benefits for carriers and their customers. From cost savings to keeping a fleet organized, route optimization makes carriers more efficient and adaptable to changing circumstances. 

One of the most obvious and appreciated benefits of route optimization is that it cuts operation costs in a number of places. Firstly, such fast and efficient route calculation frees personnel to do other tasks that a computer can’t. With a real-time picture of shipments’ locations, you can minimize the amount of staff on call since you have a clearer picture of exactly when and where they’ll be needed. The most obvious savings come in the form of fuel and time freight is en route. In the age of e-commerce, the importance of these efficiencies can’t be overstated.

Typically, route optimization software involves providing real-time tracking for freight. Not only do carriers know where shipments are at all times, but customers do too. Real-time order tracking keeps customers informed when delays arise, which decreases dissatisfaction. Fortunately, route optimization software can adjust a route should something unexpected happen, resulting in fewer delays and missed delivery windows. Carriers and customers can rest easier.

From a carrier perspective, route optimization keeps you organized across your organization so that you don’t max out capacity unnecessarily. This system helps you manage your fleet more efficiently so that you make better use of your trucks and drivers. It also distributes workloads better across a fleet to account for drivers’ hours of service requirements. Finally, route optimization is dynamic enough to instantaneously replan should a last-minute order come through or a driver calls in sick. With route optimization, shipments don’t fall through the cracks.

Advances in Route Optimization Technology

The level of precision we can achieve in route optimization would be nearly impossible without the use of route optimization software. This software determines the most efficient route and plans stops. Before this software was available, dispatchers planned routes with maps, whiteboards, and, more recently, spreadsheets. Needless to say, this automated approach is far less labor-intensive than the old approach. 

To calculate these logistics so lightning-quick, route optimization software utilizes artificial intelligence (AI) and machine learning (ML). This enables the software to account for all kinds of variables in delivery requirements and capacity. A dispatcher can enter a dozen variables, and the software will run through millions of scenarios to determine the best route for that freight. Machine learning also ensures that the software continues to improve over time.

Route optimization software has an incredible number of advantages for carriers, but the truth is that all parties benefit. Route optimization software can make adjustments in real time. This means that it can help reduce late deliveries caused by unexpected delays. This makes for happier customers. Of course, such precise route optimization leads to more efficient fleet utilization and savings on fuel.

Make Route Optimization a Reality with First Call Logistics

Looking for a new way to reduce costs, improve customer service, or to increase freight delivery efficiency? Consider First Call Logistics. Combining technology, market expertise, and carrier relationships, we’re committed to improving your supply chain and optimizing freight spend year round. Contact our team today and start planning more efficient delivery routes for all your shipping needs.

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