Thursday, January 29, 2009

Can software applications alone make a LTL trucking company "Green"?

I have been messing around with the idea that software alone can help a trucking company go "Green". An interesting concept when considering how your company can get the positive press of being "Green" without the massive capital costs of retooling your entire fleet. Margins are tighter and access to capital is nearly impossible in this market. However, if the trucking companies are willing change a few operational processes, embrace the technology required, and apply it to their business then it is possible to get the optimization and reduced costs of a fleet of "Green" vehicles without the costs associated.

Consider this, if I have a fleet of trucks doing my P&D or Line Haul routes and they are not utilizing the technology available to optimize those routes then I have a fleet of non-green trucks running poorly planned routes. If I then go and speed the massive amount of capital to retool my fleet to a newer more efficient MPG version but still running poorly planned routes then my gains on reduced operation costs are very marginal and a my ROI gets really stretched out. But If I use some of the newest technology to track and optimize my fleet then I am no longer running poorly planned routes.
Big deal, right? Wrong! Well considering that companies that are beginning to utilize these cutting edge services offered by a few GIS (Geo-Spatial Information Systems) companies are seeing reductions in associated fleet costs has high as 40% although the median average is around 15%. That can affect the OR of some of these LTL companies by 10% or more.

Quiz time!
Is it more efficient and less damaging to the environment to?
A) Send a truck down the road half loaded.
B) Send a fuel efficient truck down the road fully loaded.
C) Not send a truck at all.

The answer is not as evident as you might think. If you are always in a reactive mode with the freight on the dock then your foresight and total freight planning drastically drops off the charts. However if you have real time visibility into your fleet your ability to see the effects of the freight changing outside of the four walls of the dock gives you a strategic advantage when it comes to load planning and line haul routing. If you can plan the loads knowing what freight you have to account for before it even hits the dock that gives you the ability to load your trailers just like you have docked every piece of freight and can then use only the absolute necessary space to load everything that needs to be moved on down the road. So if you can tell that a 52' trailer is all that is necessary to cover the outbound freight you will not have to send that 32' trailer with a few pallets at all.

It is amazing the how much less impact on the Earth you have when you don’t have to send a partially loaded truck at all. Plus you save a couple of bucks too.

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