For the purpose of this blog, an ideal route is defined as:
1. One pick and one drop
2. Multiple of 550 miles (legal transit time based on 11 hours of drive time at 50mph) from origin to destination
pickup/delivery times that minimize driver idle time. For example, if a load will require five hours to deliver and the consignee closes at 17:00, do not engineer the load to pick up after 12:00. Why? If the load picks up after 12:00 the driver will arrive to the consignee after closing time, which will in turn force the driver to wait over night until the consignee opens the next morning.
3. Full trailer utilization.
4. Most cost effective for your customer
5. Stable and dependable
What is a successful route? A route that is first and foremost legal, easy to cover, economical, and expedient. The number one trick? Utilization. Utilization is used in two distinctly different contexts when discussing route engineering:
1. Driver/equipment hours (carrier perspective)
2. Percent of trailer that is utilized (shipper perspective)
Carrier perspective: Carriers are happiest when they do not have to worry about their next load. If we can build routes that allow a carrier to fully utilize their equipment for an extended period of time, they will gobble up that load and frequently reward us with a nice rate. This can be accomplished by utilizing milkruns/connecting many different routes together for the same carrier as well as multi-stop routes. Additionally, carriers do not want their equipment/drivers to sit idle; therefore, we should try to build routes that minimized waste and use a driver’s hours to the fullest extent whenever possible.
Milk runs/connecting multiple routes together for the same carrier. At LeanCor we have successfully designed multiple milk runs that are run weekly and when tied together require roughly seven days of transit for one truck. In this case, the carrier knows that they have business for that asset and provide their service at a reduced rate as a result.
Why is this important? In addition to saving money, milk runs of this kind also develop consistency. Frequently, the same driver hauls the same load each week allowing them to become familiar with the material, the highways, and byways they will take along the way, as well as all of the idiosyncrasies that shippers and consignees might have.
Unfortunately, we do not always have the freight to build routes that fit together as well as this example illustrates. So what do we do when we do not have an ideal load? What do we do if we have a little bit of freight scattered throughout the country? We build multi-stop routes that are as economical as possible.
Multi-stop routes. Ensure that you are using a driver’s hours to the fullest extent. Try to minimize any down time within the route. One way to minimize downtime is by taking calculated risks. Sometimes you aren’t able to adhere to conventional rules that say all stops on a multi-stop route should be close together. Build a route that originates in Houston, TX, makes a stop in Memphis, TN, and finishes in Cincinnati, OH. Houston to Cincinnati is roughly 1,100 miles – a two day point 1,100 miles / 550 miles per day = 2 days -- and Memphis is about half way or 550 miles (one full day of legal driving). By using this method, you have fully utilized a driver’s driving hours, the extra stop did not add any out-of-route miles, and the driver will still deliver to Cincinnati in the two days it would have taken - even without an extra stop.
Why is this important? Just like every other business, carriers live by the motto: “time is money.” Using a carrier’s time effectively and minimizing waste will often lead to a more attractive route and therefore, one that is easier to cover. Without waste, you will often not be left with accessorial fees such as layover charges.
Avoid building a route that would leave the driver with wasted hours – for example, waiting over night to get unloaded while the driver is still on duty and/or has remaining driving hours available that are not being used. Carriers do not like this because hours that they could have spent on the road making money are wasted waiting on an inefficient route to be completed.
Customer (shipper) perspective: The customer will often think of utilization as percent of the trailer that is used during a given transit. For example, in the multi-stop load from Houston to Cincinnati via Memphis that is described above: if each leg occupies 50% of the trailer, the trailer will be 100% utilized on the way to Memphis and only 50% utilized on the way to Cincinnati, an average of 75% utilization.
What percent utilization is acceptable? We should always strive to reach 100% trailer utilization because that will give us the best “bang for our buck.” Yes, this is in contrast to the previous example of taking calculated risks; however, if in the pursuit of building a route that has 100% utilization we create a monster of a route that is not economical, we will lose money and all the hard work we performed will have been for naught.
While, driver utilization and equipment utilization are sometimes conflicting principles, we must balance them to get the overall lowest cost and highest level of service for the customer.
What does this all boil down to and which approach is best for you? Answer the following questions:
Do I have enough freight to fill a trailer without adding stops?
A: Yes. If I can do this then the route is easy: one pick and one drop.
A: Yes, but it would take a long time for me to accumulate enough freight to fill a trailer for a one-stop load.
Can I hold on to inventory for an extended period of time waiting for that perfect load?
A: Yes. Some shippers have the luxury of allowing inventory to build before they ship a load, but we are lean practitioners and know that the gains we perceive from batching (waiting for inventory) are generally well out-matched by the cost of holding on to that inventory as we wait.
No. I cannot wait. I do not have space. I have customer deadlines. I must ship my product by "X" day, even if the load is not perfect.
...This situation is the one that most of us live in and is the one that requires the most creative load building – for example – going to Cincinnati via Memphis.
What do we do?
A: We do the best we can. If we build routes with some of these tips in mind to increase carrier utilization, it might not be the “perfect route.” However, it is a route that we know we will cover at a good rate and our customers will get the service they need. We will have created freight "lemonade" when all we have is lemons.
Written by Ryan Kennedy, Lean Logistics Specialist at LeanCor
Posted by LeanCor Supply Chain Group
LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.Facebook LinkedIn Twitter Google+