To deliver on time, the driver must have enough hours available to complete the assignment. The Department of Transportation (DOT) has strict rules governing the number of hours or miles a driver can travel per day. For example, if the driver has only 20 hours left in a week and needs to drive 800 miles by then, he cannot deliver on time.
Carriers faces problems like this every day. Their strategy is to look for a rested driver who can meet the original driver halfway, switch loads, and deliver on time.
Some carriers have a full-time "swap manager" who finds swaps to get loads delivered on time by using software such as DROP & SWAP and an in-house information system. Both systems use the real-time location data from their satellite communications to identify loads that are running late. Then DROP & SWAP finds drivers who can swap to save the loads. Using these tools, swap managers routinely orchestrate dozens of swaps a week to get loads delivered on time.
- Louise Totten and Noha Tohamy
When freight tonnage is low, moving freight direct is expensive, because a truck might run mostly empty to meet delivery dates. Would you pay to move a truck cross country containing only one small shipment of holiday fruit cakes?
The carrier's alternative is moving freight through consolidation terminals. Consolidation terminals receive loaded trucks with freight destined for many terminals. Freight going to the same destination is accumulated and sorted to create a full truck to the destination. Although consolidation terminals create full trucks, freight moves farther than if it moved direct. Moving more miles costs extra money. Consolidation terminals also introduce an additional handling point where freight can be misplaced or broken. Handling is costly and time consuming. If you shipped a box of crystal ornaments cross country, how many times would you want it handled? Note that handling probably would not adversely effect the fruit cake.
The carrier sets up an advance strategy, or "load plan," on a month-to-month basis that spells out how all freight will be moved through its system. The load plan dictates which terminals will be served by expensive yet speedy direct services, and which will be served through efficient yet time consuming consolidation centers.
But when carriers know they will see a large increase in freight, as they do before the holidays, the load plan needs revision. The carriers will have enough freight to make moving direct between more terminals cost effective. But the carriers must perform extensive analysis when creating directs to avoid accidental adverse consequences.
For example, assume freight must move from Boston to Norfolk. Today you may move this freight through a New York consolidation terminal. From Boston to New York, the Boston/Norfolk freight combines with freight moving from Boston to New Jersey. From New York to Norfolk, the Boston/Norfolk freight combines with freight moving from New York to Florida. Although the unit cost for moving the freight direct is less than moving it through New York, carriers must consider the affect on the Boston/New York and New York/Norfolk trucks. If these trucks move to deliver the other freight anyway, the Boston/Norfolk freight was moving for free. When looking at the larger picture, adding the direct actually cost money. Keeping track of this interplay of freight on the same truck destined for different terminals is a complicated task.
In the past, carriers evaluated load plan changes using pad, pencil and spread sheets. Since manually analyzing a change to a freight network can take days or weeks, few opportunities are evaluated thoroughly. But operations research-based software is bringing this problem under control. Using a tactical load planning system that models a carrier's freight movement (for example, SUPERSPIN, designed by PTCG), carriers can quickly review the impact of proposed changes on their costs and service. By automating the manual process, analysis time is cut from days to hours. And since each idea takes less time to evaluate, more ideas can be evaluated, leading to better solutions.
Often the craziest-looking ideas provide the best solutions and save the most money. What would you save if someone told you to move southbound freight north? In this situation, the truck moving the freight south may be nearly empty. By moving slightly north to a consolidation terminal, there is opportunity to combine with other southbound freight from other terminals to create a full truck.
OR-based software such as SUPERSPIN can also provide network optimization capability that proposes load plan changes. It searches the entire system to determine where good directs can be added, or where existing directs should be dropped. The software quickly calculates the impact of adding a new direct service, and more importantly it considers the system-wide impact of the change. For example, when a direct between Boston and Norfolk is added, the system can determine if placing Maine to Norfolk on the new direct would further increase savings.
National carriers using these kinds of systems have saved millions of dollars annually. Multi-regional carriers have reduced costs by $15,000 a day while improving service standards. Better service standards attract more customers. Regional carriers have also seen significant savings in analysis time.