The world of logistics and managed transportation is continuously evolving. Transportation professionals are tasked with reducing costs while increasing customer satisfaction levels. However, market forces such as higher fuel costs and decreased capacity work to undermine these goals.
Transportation management optimization can help, provided shippers know a few things about its value and where to start.
When shippers have a significant number of LTL-sized orders that are destined for the same geographic area, they can be combined to create a full truckload shipment out to a pool distribution facility that serves the geographic area. From this pool point, orders are shipped via LTL to end customers.
Using a pooling strategy does not increase handling costs as it substitutes pool point costs for an LTL carrier’s terminal distribution costs. Transit time should not be impacted in this model. Shifting modes from LTL freight to truckload freight on the initial outbound leg of the shipment consolidates all of the orders into one master bill of lading, reducing costs.
If a shipper uses straight pooling with the flexibility to extend the transit time, then going intermodal may be another option. Shipping by rail compared to OTR modes can offer double-digits savings. Earlier this year, intermodal versus truckload savings hit an all-time high, rising to nearly 35%, reports Ari Ashe of The Journal of Commerce.
Aggregation is creating a single shipment of multiple orders, originating from the same shipper to the same destination on the same day, that would otherwise be released as separate shipments.
For instance, shipper A has two shipments, one that is 4,000 pounds and another is 2,000 pounds. Both of these shipments are destined for Customer B and routing via an LTL carrier. Aggregated together, these orders can ship via a more cost-effective LTL rate. Finding the best rates is only part of the equation; finding the right service level for each shipment and knowing how to aggregate shipments are essential to overcoming supply chain disruption.
Shipment Consolidation is an option when multiple LTL orders can be combined with a truckload-sized order that is not at full capacity if they can be part of a stop-off in route to the final truckload destination. In building this multi-stop route, several things must be considered:
The out-of-route miles that will be incurred.
The impact on delivery times due to the stop-off and pick-up requirements and constraints.
The stop-off charges that will be incurred.
Other routing opportunities include aggregating freight to take advantage of intermodal transportation or even leveraging long-haul LTL when shipments have some slight variation within delivery timelines. For instance, if the stop-off occurs near a rail ramp, it’s possible to leverage intermodal, while also still meeting the long-haul LTL needs and leveraging the benefits of consolidation along the way.
Up until now, the strategies discussed have focused on maximizing vehicle capacity or improving asset utilization. If no further optimization can be obtained, the shipment must go out the door, and the truck must move as loaded.Continuous move solutions allow for minimizing empty miles. To deploy this strategy, individual shipments are combined into legs of a continuous moveDepending on the type of freight, it may further be possible to leverage that pick-up option for reverse logistics, eliminating wasted space and maximizing carrier efficiency. Efficiency gains among carriers will always trickle down into benefits for shippers in the form of total freight savings.