Truck Optimization to Reduce Cost of Logistics
Transportation cost is one of the most expensive parts of logistics. It’s made even more expensive with the rising cost of fuel and equipment, customer expectations, and the unstable global market.
Plus, the multi-faceted cost variables in the trucks (route efficiency, labor cost, regulations, audience, etc.) and last-mile challenges make cost optimization more complex.
But all hope is not lost. Logistic automation marketing is growing at a 12% CAGR and will likely hit the US$ 158 million mark by 2032. And despite the rising complexities, the transportation and logistic services market will reach US$ 1,804.49 billion by 2029.
It’s good news because this trajectory sets the stage for new innovative solutions to skyrocket efficiency and reduce costs, especially in the transportation niche.
Now that we have a glimpse of a promising future of logistics, here are five proven ways to reduce the cost of logistics with truck optimization–the smart way:
Truck Route Optimization
Truck route optimization is about determining the most efficient route for trucks to take based on all the variables that can impact transportation (size of trucks, number of stops, international borders, time, etc.).
Practically optimizing your truck routes can help cut each fleet’s operating cost by 10% to 30%, with the added benefits of improved customer satisfaction.
And while it might seem like a great idea, don’t try to use Google Maps for commercial truck routes. Apart from the fact that it doesn’t support trucking routes, you’ll have to add stops manually, translating to more work for each route.
Instead, use commercial-grade route planner or truck route optimization software. Most compatible software allows you to plan:
- Mandatory driver breaks and overnight stops
- Optimize fuel breaks for the lowest-priced fuels
- Choose a route for decreased mileage
- Live track the freight.
Therefore, use good truck route optimization software to plan the most efficient route for deliveries. Even better, integrate the route optimization tools with Business Process Management software (BPM) for more cost-effective logistics operations that’ll consider all variables to drive down costs while enhancing your service reliability. It’ll do wonders in reducing the transportation cost!
Optimize Truck Load Utilization
Every time you deliver a suboptimal truck (80% – 60% full, for example), you are still paying for a full freight. With truckload planning, you can ensure all the available space within the truck is used effectively and efficiently.
Truck load planning is also crucial for maximizing productivity, reducing logistic costs, and ensuring the timely delivery of the shipment.
When planning truckload, several factors come into play:
- Weight distribution: By distributing the freight weight-wise, you minimize the chances of damage or accidents caused by imbalance.
- Space Utilization: Strategically arrange the truckload to minimize gaps and wasted spaces. This means adapting your loading techniques according to the shape and size of the shipment. Fortunately, there are various load planning tools to help you with efficient space utilization.
- Freight Compatibility: Not all loads are handled, stored, and transported equally. For example, if the loads need temperature-controlled transportation, they can’t be paired with other loads. Determining this freight compatibility beforehand can help prevent load damage or similar issues.
- Legal Requirement: Truckload planners have to comply with transportation regulations across the world, like dimensions, weight limits, etc. For truck deliveries across borders, you should also consider sales tax for the physical products in different jurisdictions when optimizing routes.
Using load planning solutions, you can get comprehensive reports regarding the freight weight and dimensions. This will allow you to choose the most suitable containers for every freight– preventing any costly delays or penalties.
Also, leverage efficient stacking methods, like interlocking, block interlocking, or pyramid stacking, to eliminate wasted spaces.
Above all, load planning requires transparent communication between shippers and carriers. Therefore, collaborate with your supply chain partners and share information about storage capabilities, product type, delivery schedule, and inventory levels for best truckload optimization.
Partner with Multiple Carriers
Working with only one carrier’s truck can limit your ability to reduce the cost of logistics. Moreover, different carriers come with their unique strengths, such as geography-specific shipping, express shipping, consignment nature, and more.
All this together can help you save significantly on overall transportation logistic costs while also ensuring faster and safer deliveries.
Saloodo!, for example, lets you choose multiple carriers for your shipment. Our smart shipment wizard on the digital freight platforms shortlists the transport offers from verified carriers.
Next, depending on your requirements, you can choose different carriers to ship your load off to various locations–thus enabling you to reduce transport costs drastically.
Plan out Truck Capacity for Optimal Resource Utilization
Shipment allocation amongst available trucks/drivers is another direct factor of rising logistic costs. It requires you to optimize factors such as cost per delivery, consignment nature, volume commitment, physical consignment, driver costs, and more.
Here, clubbing the deliveries for area codes or combining returns with pickups or deliveries is a resource-efficient way to save on logistics.
However, for the best results, you have to stay connected with your shipper. One great way is to connect with them on instant messaging platforms for real-time delivery updates–thus helping your batch deliveries for maximum efficiency and cost-saving.
And it’s not just a visible cost. By strategically planning out the truck’s capability, you’ll save up on factors like fuel efficiency and driver productivity.
Boost Driver Productivity
Your truck drivers’ performance and retention are key factors in logistic productivity, customer experience, and overall freight costs. After all, when your drivers follow optimized routes, use technology wisely, and manage loads wisely, it minimizes travel times and improves operational efficiency.
There are a few ways to boost your truck driver’s productivity:
- Create more feasible and realistic delivery routes
- Provide ongoing training to enhance driving and mechanical skills
- Proactively address route disruption
- Streamline their work process
If you are hiring new drivers, educate them on the pros and cons of Over-the-Road and Local drivers to help them choose the roles that align with their preferences. Then, tailor training programs emphasizing route optimization, schedule, and navigation.
This will help improve your drivers’ satisfaction while ensuring they have the required knowledge for their specific roles.
Also, make sure to prepare your drivers with the latest tech for improved collaboration and communication. However, don’t make the process too complex with multiple mobile apps. Use a centralized application for all your needs.
For example, Saloodo!’s free delivery app allows you to assign upcoming transport orders directly to the driver. Using the apps, the drivers can set customized status updates of the truck and document proofs of delivery, invoices, or any damage to the freights through a single application.
Set, Measure, and Track KPIs for Cost Reduction
Key performance metrics (KPIs) are crucial to analyze how much you are really saving with truck optimization. The top KPIs include:
- Delivery time
- Average days delay
- Truck turning
- Fuel used
- Average dwell time
- Freight payment accuracy
- Transportation costs.
Depending on your business, you can have some more KPIs. So, make sure to clearly define them before putting your truck optimization strategy to work.
Consistently measure the KPIs for individual carrier partners and in-house teams. This will help unveil the hidden inefficiencies that might be increasing the overall logistics costs. These vital insights from the research will paint a clearer picture of your transportation, thus steering your operation towards great efficiencies.
Use Preventive Maintenance
When it comes to logistics, especially transportation, disruptions are inevitable. While you can recognize every bottleneck, it’s best to be prepared to deal with unexpected issues early on.
Here are a few ways to ensure that:
Dynamic route optimization: Real-time road closure, traffic anomalies, or changes in delivery priorities can result in delayed or halted freights. However, with dynamic route optimization, you can ensure your truck adapts to the challenges without missing a beat.
Truck Maintenance: Make sure the trucks are always in prime condition with regular inspections, timely servicing, and tech updates. And since an average truck roll costs upwards of US$1000, proper truck maintenance can help save a lot in the long run. Ticket tracking and adopting visual and interactive supports are also great ways to reduce truck rolls.
Enhance Fuel Efficiency: Fuel costs make a big dent in the logistics expenditure. Regular oil changes, proper tire maintenance, and overall engine care can ensure your truck’s optimal efficiency levels.
Build a Predictable Budget: To avoid sudden financial turbulence (with unexpected repairs and replacement), make a predictable budget for truck maintenance.
Leverage Third-Party Logistic Service Provider
Managing a logistics business is no joke. You have to plan routes, optimize loading, and manage fleets, all while ensuring timely and cost-effective deliveries.
That’s why the majority of businesses partner with third-party logistic providers. This way, they can save significantly on hiring truck drivers, warehouse crew, buying trucks, and more.
Or, you can opt to partner with Saloodo!. With an established network of carriers, we can help you connect with ideal transporters for your businesses. Create a Saloodo!’s account today!