Does route optimization seem unrealistic for your fleet? If you answered yes to that question, it may be because the type of optimization you’re thinking about relies on things outside of your company’s control.
After all, your fleet’s destination and schedules depend on the needs of your customers, and that means customers are the ones who ultimately determine where your vehicles go and when — not you.
But, whatever type of business you’re in, fleet route optimization is not only possible, it’s vital for overall operational excellence. While you can’t control everything, the factors you can control can yield big benefits for your business.
This post will cover why route optimization is so important and some of the fundamental considerations that factor into the process.
Route Optimization And Your Fleet
To get the job done — whether it’s transporting freight, dropping off a home delivery, making a service call, or something else — your company vehicles have to arrive at certain places at certain times.
However, there’s much more to route optimization than simply plotting a course from Point A to Point B and making an educated guess on how much time they’ll need to make the trip.
To better understand what’s involved in route optimization, think about how you navigate on a personal road trip to a destination you haven’t been to before.
Not that long ago, planning your trip might have meant seeing what roads linked your starting point and destination on a paper map. There could be problems if your atlas was out of date, and, of course, the atlas couldn’t account for things like delays caused by construction or accidents.
Today, navigation applications like Google Maps, Waze, and Apple Maps have improved on this method in every way. Not only can we find a route from A to B much quicker, but the application can also generate a new route on the fly to account for changing conditions, like traffic jams.
If you think of doing the same thing but for multiple vehicles with multiple destinations, which may constantly be changing, then you can begin to understand some of what goes into effective route optimization.
Unsurprisingly, most businesses now utilize software tools to handle route optimization instead of putting this burden on the fleet manager.
Still, understanding route optimization concepts will help you choose from the many competing options even if you’re not going to be poring over maps.
Benefits Of Route Optimization
Effective route optimization can bring a range of important benefits to your business. Some of them are more tangible and obvious; others are things you might not be as likely to think about.
Saving Time
When you used to plan a trip with the old road atlas, you probably picked the route that would get you to your destination the quickest. Likewise, you don’t want your company fleet vehicles spending any more time on the road than they absolutely have to.
There are only so many hours in a day. The more time a vehicle spends on any given trip, the more time goes by until it can be assigned to the next task. Reducing the amount of time spent on each trip means you can schedule more trips.
No business owner would want to buy two vehicles if they could get the same amount of work done with just one. Using route optimization to pick the most efficient routes for your fleet helps you get the most out of every vehicle.
Saving Money
You’ve probably heard the adage that “time is money,” and that’s certainly the case with route optimization. Inefficient routes lead to your fleet spending more time than necessary on the road, and the more time your vehicles spend on the road, the more it will cost your company.
Optimizing routes can mean a huge savings in fuel costs, 20-40% according to some sources. More miles traveled and more time with the engine running also lead to more wear and tear on your vehicles, so efficient routes can help you save on maintenance as well.
Customer Satisfaction
Of course, you can’t underestimate the value of getting your fleet vehicles where they’re supposed to be, on time, every time. There are a lot of strategies for attracting new customers, but consistency and reliability create repeat customers.
Route optimization can give you the confidence you’ll be able to keep your commitments to your customers, even when unexpected complications, like traffic jams, breakdowns, or employees calling in sick, arise.
Employee Satisfaction
Better employee morale might not be the most obvious benefit of route optimization, but it’s one that you shouldn’t dismiss. After all, nobody enjoys being stuck in traffic. And nobody enjoys making unnecessary trips or feeling that their time is being wasted.
Route optimization can help keep your employees happy, and happy employees are easier to keep.
Vehicle Condition
Are you noticing that your vehicles are in the shop for repairs and maintenance more often lately? Part of the reason for that could be all the mileage they’re racking up traveling unoptimized routes to their destinations.
But vehicle wear and tear is about more than just total mileage. It’s also about the road conditions your vehicles encounter along the way.
Using tools from your tech stack — e.g., fleet management software and telematics — you can first analyze the impact (i.e., if the road conditions are really bad) that certain routes have on the condition of your vehicles and then find alternate paths.
Some of these alternate paths might be a bit longer but may reduce the bumps and bounces that can put your vehicles up on the lift before the scheduled time.
Route optimization takes all these factors into account and helps you decide which roads balance mileage and wear and tear so you can get the most out of every asset in the field.
Resource Utilization
It’s the bane of every dispatcher and fleet manager to discover they had to send one vehicle to a certain stop and another vehicle to a different stop nearby.
That’s double the fuel consumed to get both vehicles to the same area! With route optimization, you can utilize your resources more efficiently and effectively.
In this case, it would mean directing a single vehicle to both stops — one after the other — instead of sending a second vehicle into the area. That second vehicle can be better utilized answering another call or two in a different part of town.
If you’d like more information on resource utilization and managing fleet vehicles, take a few minutes to read this article from the Coast blog: Managing Fleet Vehicles: A Comprehensive Guide.
Carbon Footprint
Did you know that route optimization can help reduce your carbon footprint?
As we mentioned earlier, one of the biggest, most immediate benefits of route optimization is the money you can save on fuel — the fewer miles traveled, the less fuel your fleet will use.
But, fewer miles traveled and less fuel used also means less engine exhaust (i.e., carbon dioxide) emitted into the air.
So, not only does route optimization help you cut and control costs, but it also helps you reduce the impact that your fleet activities have on the environment.
Longevity
If two vehicles are maintained the same but one travels 100 miles per week and the other travels 1000 miles per week, which one do you think will last longer?
All things being equal, the vehicle that travels 100 miles per week will likely last longer than the vehicle that travels 1000 miles per week.
Route optimization can impact long-term activity and savings in the form of vehicle replacement and acquisition. By extending the use of each vehicle as long as possible, you increase the return on your investment (ROI) and give yourself more time to save for a new vehicle.
Competitive Advantage
All of these benefits can add up to an even bigger benefit that you may not have seen coming: a competitive advantage within your niche.
Here’s how it works: Route optimization leads to cost savings (time, money, resource utilization, etc.) within your business. Cost savings within your business gives you the option to price your goods and services below those of your competitors.
Even if you choose not to lower your prices, optimizing your routes can help you improve service and operate efficiently — two things your competitors may be lacking. That, in turn, can distinguish your business from the rest and translate into increased profits.
The Three Basic Route Optimization Strategies
In analyzing route optimization, experts sometimes break the subject down into three different basic strategies. Choosing the correct one depends on the type of business you’re in and the particular characteristics of how your fleet operates to meet customer needs.
Static Routing
Static routing assumes that your destinations, loads, and timetables are just that: static, or at least only change rarely.
Under these conditions, companies can generally schedule their routes on an annual or semi-annual basis. If you had to, you could probably get away with actually planning these routes the “old-fashioned” way with a road atlas. However, most businesses don’t have this luxury.
Dynamic Routing
For businesses with more complications and variables in their fleet operations than just making routine deliveries to fulfill long-term contracts, dynamic routing offers much greater flexibility. But it’s also more complex.
In a dynamic routing system, fleet routes are typically determined on a daily — or even trip-by-trip — basis. Dynamic routing can include regularly scheduled trips, but with adjustments to route and timing based on current conditions up to the time of departure.
Real-Time Dynamic Routing
Real-time dynamic routing is the next step up in optimization complexity from dynamic routing and is most useful for businesses that receive new delivery or service calls throughout the day.
With real-time dynamic routing, new destinations are added to the routes of company vehicles already in the field based on proximity and expected job completion time.
By dispatching vehicles directly from one job to the next, real-time dynamic routing cuts down on response time for customers and prevents company vehicles from making unnecessary trips back to the company hub only to immediately be dispatched on another trip.
Route Optimization Factors
Effective route optimization is a matter of considering and balancing many different factors. Here are some of the most important.
Deadlines
If your fleet can’t reach their destinations in time to satisfy customer needs, nothing else really matters. Good route optimization starts with accurate scheduling and properly setting customer expectations.
Driver Proximity
Generally speaking, if a call comes in requiring you to send a vehicle to a new destination, you’ll want to use the driver who’s already closest. However, this requires having an accurate up-to-the-minute picture of where all of your vehicles are while they’re away from the hub.
Fuel
Of course, all things being equal, you’d prefer that your fleet vehicles take paths to their destinations that are more fuel-efficient.
Another layer to the fuel efficiency puzzle is considering what happens if a fleet vehicle needs to refuel on the way to its next destination. Fleet gas cards can help. But if your card doesn’t use an open loop merchant network, drivers might have to go out of their way to fill up.
Number Of Stops
Ideally, every trip should check multiple items off of your fleet’s “to-do” list. But customer needs may mean this doesn’t always happen. Still, if at all possible, you want to avoid vehicles making trips to destinations far from the hub without making other deliveries or calls along the way.
Traffic
Route optimization would be an entirely different ball game if your fleet was the only one with vehicles on the road. Of course, it’s not, and that means route optimization must reckon with traffic.
Good route optimization will minimize delays by diverting drivers around the worst congestion.
Number And Direction Of Turns
The shortest route between two points is always “as the crow flies” — a straight line. Your fleet probably can’t fly, but the principle still applies.
Taking into account the number and direction of turns is still an important part of route optimization. In fact, UPS plans their delivery routes to minimize left turns because left turns statistically take longer and lead to more accidents.
Road Conditions
We mentioned poor road conditions earlier, but it’s worth noting here as well.
Hitting a pothole now and then isn’t something to be concerned about. But, if your drivers travel that same stretch of road multiple times every day, the repeated abuse could put your vehicles in the repair bay sooner than expected.
Use your fleet management software to make notes about road conditions — they may not show up on GPS or map software — and then find a better, smoother way for your fleet to get where it’s going.
Weather Conditions
In areas that get a lot of snow, main arteries are often cleared sooner than secondary roads. So, even though a certain secondary road may be a bit shorter, you might be better off — and your drivers will certainly be safer — if you send them to their appointments via the main arteries.
The same logic often applies to other types of weather, including heavy rain, fog, and anything else that can affect a driver’s visibility and ability to control their vehicle.
Though you don’t always have to factor weather conditions into your route optimization, in many cases it can help make it easier for your vehicles to get where they’re going, keep your drivers safe, and get everything and everyone back to home base in one piece.
Vehicle Type And Weight
If you’re running smaller vehicles in your fleet — e.g., sedans, pickup trucks, and work vans — you may not have to worry about where you can send them.
But, if you’re running larger vehicles, like semi trucks or box trucks, it’s essential to pay attention to road and weight restrictions.
Why is this important? Because some roads can’t support large, heavy vehicles. There may also be bridges your vehicles have to drive over that are only rated for certain weights or widths.
Sending a fully-loaded semi-truck along such a route can be hazardous to your driver, bad for the road itself, and unsafe for other traffic in the area.
Similarly, some routes have low bridges that can make it difficult (and potentially dangerous) for a semi-truck, box truck, or even a high-top van to get through.
We’ve all seen those videos online of trucks trying to get under a bridge without realizing they won’t fit. You don’t want one of your company vehicles to be the next viral sensation.
Local Regulations
Local regulations also restrict what your vehicles can carry through certain areas. Hazardous waste, for example, is typically restricted to specific corridors and can’t deviate from those routes without causing serious problems for your business.
In fact, according to the Federal Motor Carrier Safety Administration (FMCSA), failing to comply with a posted route restriction can result in penalties of up to $11,000 for the company and $2,750 for the driver.
If you’re sending a driver to an unfamiliar area, be sure to review the local regulations regarding vehicle size, weight, cargo, and road restrictions that may be in place.
Driver Hours
The FMCSA limits driver hours to keep everyone safe on the road. This influences the number of stops they can make during a work day, the distance they can travel, and, ultimately, the routes they can take.
Use your fleet management software — along with ELD data — to monitor driver hours so they can be on the road when you need them to be.
For more information about driver hours and how to track them for best effect, check out these articles from the Coast blog:
- ELD Compliance: What Fleet Owners And Managers Should Know
- Electronic Logging Devices (ELD) | A Guide For Fleet Owners
Let Coast Help Optimize Your Fleet Operations
The Coast fleet and fuel card gives you an advantage in one of the most important aspects of route optimization by helping you save on efficiently filling up your fleet.
Coast’s Visa acceptance means your drivers can fill up on the way to their next job without going out of their way, and Coast’s detailed expense reporting helps you analyze your fleet operations to see where you can elevate your efficiency.
For Erin Hutson, owner of Saint Louis-based JED Transportation, Coast’s comprehensive reporting features offered unparalleled transparency and insights into the business’s fuel expenses.
That meant that she could track and analyze spending patterns, identify areas for optimization, and make data-driven decisions quickly and easily. Here’s what Erin had to say: “After switching to Coast, our level of confidence really went up because there are real-time controls that we have in place.”
With Coast’s proven benefits, JED Transportation plans to expand its usage across the entire fleet, expecting significant savings and operational improvements.
By incorporating Coast’s features into their daily operations, JED Transportation aims to minimize expenses, enhance driver satisfaction, and maintain their reputation as a leading luxury transportation provider.
To learn more about how Coast can help your fleet-based business, visit CoastPay.com today.
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