With the size of the global logistics industry more than doubling in size since 2018, demand for effective route planning and optimization has never been greater.
Although business is booming, organizations that operate their own fleets now face more challenges than ever before. There’s an unprecedented number of vehicles on the road, with a large percentage of these providing freight and delivery services. Staff and fuel costs continue to balloon while traffic congestion increases. Meanwhile, the demand from customers for shorter lead times and better delivery slots is growing–and competition is stiff.
All in all, there’s a lot to contend with if you’re operating a fleet today, no matter what industry you’re in. While route optimization tools can’t clear the roads of traffic or change the price of fuel, they can give your business a major competitive edge.
Location platforms with effective route planning software can massively boost efficiency and profitability for your fleet, whether through redirecting live orders along faster routes or by assisting in fleet planning.
Let’s take a look at some of the problems facing fleets today–and the ways in which route optimization can help.
The price of inefficiency
Inefficient route planning isn’t just a slight inconvenience. The business consequences can be devastating, leading to poor customer and staff retention as well as spiraling costs.
According to some estimates, the last mile of delivery alone can account for as much as 50% of total delivery expenditure. This continues to trouble retailers and logistics boardrooms as well as drivers, who are forced to grapple with unpredictable traffic conditions in busy urban areas and lengthy distances between stops in rural areas.
For example, the 2022 Global Traffic Scorecard found that drivers in the UK lose an average of 80 hours per year to traffic congestion and poor route planning, including logistics firms and freight drivers. The issue is even worse in cities: drivers in Paris and London lost 138 and 156 hours per year respectively, while Rotterdam saw a 25% increase in lost hours.
The knock-on effects for companies operating road fleets is massive, with every hour directly contributing to lost revenue, driver fatigue, and missed deliveries. This is even true for shipping giants like UPS, which loses an estimated $105 million in operating costs every year for every five minutes of delay per vehicle, per day. Delays mean higher spend on fuel and staff as well as higher carbon emissions–so how can you avoid this?
Optimizing your routes
One of the ways in which effective routes are achieved is through multi-stop optimization. This common location platform feature uses intelligent algorithms to find the most efficient route possible for an individual driver or fleet. This is typically achieved by considering every possible combination of stops and then plotting the optimal route between them–minimizing costs associated with fuel, labor, and vehicle maintenance.
This can be enhanced through the use of geofencing. Geofencing involves the creation of highly customizable virtual perimeters either around customer addresses or larger geographical areas. Once drivers enter or exit these areas, their mobile device can trigger a series of automated processes such as sending delivery updates to customers, marking timestamps, and more.
As well as providing benefits to customers, geofencing gives fleet managers a huge advantage when it comes to real-time route optimization and fleet tracking. Automated alerts can help fleet managers keep up-to-date with a driver once they enter a geofenced area, as well as provide your location intelligence software with important data for dynamic route adjustments and route clustering. Meanwhile, real-time traffic updates can provide on-the-fly diversions–so your drivers can dodge any gridlock.
If used properly, route optimization tools can have enormous benefits for your business. As well as reducing both costs and CO2 emissions, it can increase your fleet’s payload capacity, ensuring no trip is wasted and every vehicle is optimally packed.
On top of that, it enables you to get the most out of different vehicles in your fleet. Trucks can be fully loaded and ready to deliver along the most efficient route possible, factoring in time for rest stops and refueling. Electric vehicles meanwhile can have their routes optimized based on factors like battery range and the location of recharging points.
Route optimization: redefining the road ahead
We’ve covered just some of the key route optimization techniques that can help your fleet on its journey to reduced costs, happier drivers, and satisfied customers.
But these are by no means the only route optimization methods available to you. Location intelligence platforms are a source of constant innovation, with many offering new features and tools to customers to help them formulate better logistics strategies.
Choosing a location platform with up-to-date maps, real-time traffic updates and live route planning can have a huge impact on route optimization. For example, one location platform TomTom introduced a new innovative tool known as Orbis Maps, a customizable map with flexible content and development tools.
Other location services offer similar tools. Contact us to get a better idea of your options.
