It’s a fact. We Americans are fat. (Not you, of course. You look great.)
Collectively, as a country, 70 percent of us are overweight and 40 percent of us are downright obese, according to the Centers for Disease Control and Prevention (CDC).
So, what’s that have to do with increased truck fleet efficiency – the usual focus of this blog? Well, the freight industry is in the throes of its own obesity epidemic. Only instead of pounds, we need to shed truck-miles.
Those extra miles have become a crushing financial burden for both private and commercial fleets, nationwide. Sadly, most don’t even know it.
Fat, on a body or a business, has consequences.
Let’s talk food. As far back as 2001, the US Surgeon General issued a call to action to combat an “overweight and obesity epidemic” linked to a host of diseases. What are the implications of America’s desire for fast, prepared foods? Some put the cost of obesity-linked healthcare as high as $315 billion annually.
From a strictly business point of view, America’s need for a truck-mile diet is similarly compelling, but largely ignored. Truck-miles, like calories, are the root cause of a host of supply chain cost drivers. More miles mean:
Thanks to the American Transportation Research Institute’s annual study, we know that each extra truck mile we drive is costing us $1.69.
Let’s look at some numbers. The Federal Highway Administration tells us that the average truck travels 68,000 miles a year. Using the American Trucking Association’s (ATA) estimate of 3.63 million Class 8 trucks in operation, that adds up to 246.8 billion truck-miles driven per year.
In Paragon’s experience across hundreds of private fleet evaluations, poor truck routing practices can reduce truck fleet efficiency by 10–30 percent. Since the ATA numbers include both private as well as for-hire fleets, let’s assume a very conservative 5 percent efficiency gain is possible across America’s fleets. We’re still talking about 12.3 billion preventable miles and $20.9 billion in preventable costs.
Why aren’t we paying attention to this?
To understand how we got into this mess, we first need to appreciate the daily whirlwind within which fleet managers operate.
Customers want faster, more frequent deliveries made to tighter time windows and with more precise ETA data. Add in internal pressures to support growing order volumes, and the good intentions about running lean habitually take a back seat to simply getting everything there on time. Without the aid of technology, fleet managers simply can’t rise above the whirlwind to generate an optimized truck routing plan. Precision is replaced by educated guesses that build slack into route plans, adding extra trucks and drivers that aren’t really needed – and draining company profits in the process.
This is the crux of the excess truck-mile dilemma. When you don’t give route, or load, planners the tools to balance service and cost factors, they will do whatever is needed to meet service requirements and avoid delivery failure.
Luckily, truck routing optimization software exists to help. In the same way that Fitbits and calorie-counting apps are helping people fight the flab, routing software can help keep excess truck-miles to a minimum.
This software uses sophisticated algorithms to assess dozens of factors that could impact delivery time and distance – things like average road speeds, unloading time for each stop, and meal breaks. It does this across hundreds of stops in a fleet’s daily delivery plan. But despite the millions of resulting permutations, the software kicks out a highly accurate, multi-stop route plan within minutes, minimizing time and miles. To accomplish the same task in a manual planning environment, it would take multiple route planners hours, with far less accurate results.
In planning America’s truck routes, we need to stop asking humans to do the work of a powerful computer.
Private fleet operators, in particular, have been slow to adopt technology to improve fleet efficiency. Instead, they rely on rudimentary systems, even spreadsheets, to manage highly complex route planning. Fleet managers see the daily miles driven and certainly want to identify ways to cut slack, but there’s no simple “bathroom mirror test” to suggest action is required. No equivalent to “ideal freight BMI” to serve as a point of comparison with current delivery performance. So businesses stick with “the way we’ve always done it,” particularly when orders are being processed and deliveries are being made without glitches or customer complaints.
Why fix something that doesn’t appear to be broken?
The answer, of course, is that it’s costing a bundle. But, even to the savviest business owners, route inefficiencies don’t stand out on a P&L. Identifying them requires some detective work.
At most small to mid-sized distribution businesses, delivery route planning processes lack the sophistication to precisely plan routes down to the minute and the mile. What’s the upside of investing in leading-edge systems? Let’s do an exercise – right now. Multiply your total miles by 10 percent and 30 percent, then multiply those figures by $1.69 to arrive at a range of savings.
These savings drop straight to the bottom line once routing software is paid for (typically a 3–12 month ROI).
According to the CDC, about 50% of Americans have been on a diet in the last year, supporting a $33 billion weight loss product industry – much of which centers around counting and controlling calories. These dieters have gotten the very well-publicized message: too many calories lead to health problems, a degraded quality of life, and a shorter lifespan.
For fleet operators, the truck-mile is as obvious an enemy as the calorie is to dieters. It’s the common denominator for a host of ills that are driving up your fleet operating costs and carbon footprint. We need to start counting truck-miles like dieters count calories.
Remember when the makers of Special K cereal asked us if we could “pinch an inch?” America’s fleet owners urgently need to figure out just how many unwanted, unnecessary and expensive miles we could eradicate.
Frankly, it’s time for a good, hard look in the mirror. The simple truth is that more miles equate to less profit, and the country’s fleet operators are missing a golden opportunity to boost their bottom lines.
Want to know how much fat can be shed from your current private fleet delivery operation? Routing software providers like Paragon can model your fleet’s efficiency, using your own transport data, to provide the answer – and a savings estimate. To learn more, check out these customer success stories or contact Paragon to arrange a discussion.
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