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.
Transportation Best Practices for Optimization
A Logistics Pooling Strategy Makes the Best Use of Capacity by Sharing Transportation Resources
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 freight pooling distribution facility that serves the geographic area. From this pool point, orders are shipped via LTL to end customers.
Using a logistics 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 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 intermodal transportation may be another option. Shipping by rail compared to OTR modes can offer double-digits savings.
Consolidate Freight to a Single Consignee Using an Aggregate Shipment Method
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.
Streamline Freight Routing With Consolidated Shipments
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 variety 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.
It is important to note that this strategy is not limited to consolidating LTL shipments with truckload shipments that have excess capacity.
For example, three large LTL orders could be combined to build a multi-stop full truckload shipment.
As long as stop-off charges and delivery time windows don’t constrain the route plan, this is a very viable option to drive cost savings. And by offloading one of those shipments to another mode along the way, the opportunities to pick up more freight to avoid empty transit space give rise to the next best transportation management optimization strategy.
Continuous Moves Utilize Network Assets More Effectively
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 moves is when a shipper is willing and able to string together multiple loads of the same freight service type for a carrier. That allows a carrier to better utilize a truck. In return, shippers will often get discounts. In the end, both the shipper and carrier minimize empty miles between pickups and destinations.
With access to more continuous moves you can effectively make those savings a reality.
Depending 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.
An Agile Supply Chain Includes Deploying a Cross-Docking Strategy
Many times LTL freight is long-haul in nature due to several network considerations, such as the following:
- Company XYX has customers throughout the country and they ship to each customer directly from all their manufacturing plants.
- They have customers throughout the country and they ship all products to a single finished goods DC, where they hold inventory and ship to customers as required.
- On the inbound side, Company XYZ has suppliers located throughout the country who all ship directly to Company XYZ’s manufacturing plants.
- These same suppliers ship materials to an inbound raw materials DC where they are then shipped to Company XYZ’s manufacturing plants.
Let us consider the scenario below:
If we deploy a cross-dock network and replace the network where the individual manufacturing plants all ship directly to the customer base at the required frequencies, plant orders would be shipped to plant assigned cross-dock facilities. All customer orders from a given plant may now be merged and shipped to a single cross-dock, from which we can mode-shift and build truckload shipments. In some cases, it may be more cost-efficient to use multi-plant milk runs to drive freight to the assigned cross-dock.
Each order can be consigned to a customer-assigned pool distribution facility. The cross docks assemble pool orders and ship full truckload to the pool points, where they are distributed to customers via LTL. The objective of this solution is to maximize the distance shipped with lower truckload rates. This is subject to customer order transit time requirements and constraints.
Increase Value Within Your Supply Chain by Leveraging These Managed Transportation Best Practices While Partnering With GlobalTranz
Efficiency is essential to keeping customers happy and controlling freight costs. Ongoing market disruptions undermine transportation efficiency and result in adverse customer experiences. Shippers need a strategic game-plan for overcoming challenges and maximizing throughput.
Applying the above optimization practices requires data analytics and tech-driven solutions powered by industry experts.
Together, it all amounts to increasing efficiency and allowing your network to flex in tandem with disruption. Learn more about how your team can put the best practices to transportation optimization to work by requesting a GlobalTranz consultation.