Trucking Companies Reduce Costs and Improve Service

Trucking Companies Reduce Costs and Improve Service

Many less-than-truckload carriers operate with a fixed consolidation and routing plan that they typically repeat every day. But Savelsbergh, along with associate professor Alan Erera, and graduate students, developed a different tactical plan for each day of the week for Duluth, Ga.-based Saia.

“Our results have shown that there is the potential for 5 to 10 percent reductions in line haul costs, which equates to savings of $10 million to $20 million per year, simply by executing a different plan each weekday,” said Erera.

Taking it one step further, the researchers are developing real-time dynamic plans for Saia based on freight information collected each day. While the goals of dynamic planning are to reduce the time required for freight in the system to arrive at destinations and to cut costs, the models developed also consider the future operational cost impact of decisions made today.

For YRC Worldwide, which operates both the Yellow Freight and Roadway carriers, the researchers initially focused their efforts on driver management issues. They developed a computer program that could plan a week’s worth of driver schedules in a matter of minutes, while considering driver constraints and costs.

“Our software can be used to tell companies how many drivers they should have, where the drivers should reside and how they should be dispatched,” noted Erera.

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The researchers have also recommended ways to manage YRC’s equipment to minimize the tractor and trailer resources required by the company to effectively serve its customer demands. Results indicate that fleet sizes may be reduced by 10 to 15 percent if resources are moved geographically to where they are needed most at any given time.

“The optimization techniques we’ve developed are applicable for any less-than-truckload carrier and are going to become increasingly necessary in the future to maximize profit and service based on the fixed resources available,” explained Savelsbergh.

Funding for this research was provided by the companies through the Leaders in Logistics program, which is part of the Georgia Tech Supply Chain and Logistics Institute, and by the Alfred P. Sloan Foundation’s Trucking Industry Program.