Recover margin with cost-saving tech in transportation

Some of the biggest inefficiencies for transportation companies include unplanned maintenance needs, inefficient route planning and unused capacity.

Unplanned maintenance needs

Companies can use predictive fleet maintenance technology to minimize unplanned downtime, avoid unnecessary services, improve cost planning and lower maintenance costs. This predictive planning can even add up to extended asset life for lower maintenance expenses overall. “Preventative maintenance technology can track and analyze data points like the miles traveled and types of roads, to better understand when you need to do maintenance on either fleet vehicles or trailers,” explained Grant Thornton Technology Modernization Senior Manager Dwight Moore.

Inefficient route planning

Transportation companies can use various solutions to factor in real-time traffic, weather and delivery windows for dynamic route and load optimization. This can improve delivery speed, reliability, fuel efficiency and vehicle utilization. “There are tools doing this today, and applying AI to them will definitely add even more benefits,” Moore said. “There’s a lot of opportunity, and there will soon be more.”

Unused capacity

Load optimization can be a complex equation, Moore said. “To make sure that a load is maximized, you have to take into consideration the trailer size, type of product, dimensions of the product and the weight of the product that’s appropriate with the laws and regulations for the roads.” Load optimization technology can help companies balance that equation on demand, while also streamlining the recordkeeping, reporting, compliance documentation and inspections for the DOT, EPA and other authorities to help avoid fines and penalties. This technology can also help identify where you have capacity for unplanned opportunities on the road.

“If you’re able to maximize your capacity and get more into a truck, that ultimately results in a lower freight cost,” Moore said. When you have better clarity and flexibility to adapt your route planning, capacity and more, you can also open up some profitable opportunities. 

Efficiency pays, but so do flexibility and responsiveness. Data can give you the insight to quickly respond to dynamic tender offers. “Those happen anytime someone needs product moved, and knowing where your vehicles are, their capacity and their current schedules can be a difficult problem for a company with manual processes,” Moore said. “If you’re going to respond to real-time tender requests, automation is a big advantage.”

“Most of our distribution clients that use transportation carriers have a mix of large and small sized carriers,” Davied said. For common interstate routes, larger carriers usually offer lower prices and have technology that helps them quickly respond to tenders. “But, for some of the transportation routes that are less traveled, independent trucking companies are not as technology enabled. When someone’s trying to find the right carrier for the right shipment at the right time, speed is everything — especially if they’re looking to turn around a shipment tomorrow.” 

Transportation companies need to respond quickly, but first they need to know how to respond. They must consider the locations, availabilities, capacities and schedules of everything in a fleet, how potential new freight would affect existing commitments, and the final delivery deadlines on other shipments. 

“It’s important to know when the customer needs the product,” Davied said. “At what point in time did you take a snapshot of how many shipments are going out, where they’re going and how many products are on the trucks? When you have that, you can run a load building and optimization exercise to figure out what’s going to make you the most profit — while still maintaining each customer’s confidence that you can get their product to them when they need it.”

When companies consider the range of automation options, it’s important to set brand names aside until you know what you really need. “You need to consider your requirements and be able to decide if you need a custom-built solution, or if there’s a product that already solves your problem,” Moore said. “That’s a good starting point, and then data is a big aspect.” 

Having the data to track performance can be important for any transportation or distribution company that works with other carriers. Data provides a deeper understanding that helps companies go beyond a price comparison. “They might have the cheapest rate so that I could make the most profit, but then they’re frequently not on time or there’s damaged product — my customers get frustrated and that leads to a loss of business,” Davied said. When companies capture ongoing data about carrier performance, they can create carrier scorecards, or profiles, to use when choosing carriers and negotiating contracts. “That helps you balance other factors against their rates. The unknown is what you’re trying to eliminate,” Davied said.

Transportation companies can also use data to track lost time and other expenses they might not be billing. “They can turn that data back around to optimize the appointment time and minimize downtime,” Davied said. “Often, a trucking company shows up at a warehouse to load, but the warehouse isn’t ready and the driver has to sit there, maybe for two hours. You could say ‘I’m going to charge for that because my driver should be making money moving down the road.’ When you talk about trying to minimize costs, it’s about the just-in-time processes to pick and pack  product and loadout the truck or trailer at the dock, in order to minimize the time that the driver is waiting to begin the haul.”

A streamlined and automated process helps companies get on the road quickly, but it also improves a carrier’s ability to meet other requirements. “Everybody wants to have the fastest product delivered at the cheapest cost,” Davied said. “OK, we get that. Now, let’s break that down and understand the environment that you’re in, your customer base and what’s important to them. That’s where we can further evaluate quality, accuracy, and speed to determine what is most important.. There are a lot of different things that you can do to improve your overall transportation and distribution performance. At the end of the day, it’s very hard to say you’re going to be the best at all of it.” 

When transportation companies measure multiple factors, and use automation to optimize quickly, they can be more effective, precise and profitable in delivering service that matches the latest customer priorities. “Find a good mix of what your customer base is, what’s important to them, their rules and service level agreements, to provide a structure so you can optimize within those requirements,” Davied said.

Within this structure, automation can help transportation companies quickly and effectively optimize for each day’s demands. Then, AI technology can help companies move into the future — while still staying focused on requirements and data. 

“Whether it’s in yesterday’s world of becoming technology enabled, or it’s in tomorrow’s world of AI and predictive analytics on top of that, understanding your requirements and data are the two biggest priorities,” Davied said.

With AI-enabled scenario planning, forecasting and analysis, companies can gain the speed and insight to balance an even greater range of factors. But, where is the best place to start?

“What we’re seeing works best for small companies is to take small steps with a focused approach,” Moore said. “You could go out and buy a one-size-fits-all package that says it optimizes your loads, manages your tenders and optimizes your routes. But, when small companies focus on one issue first, it’s a lower cost and they get a much better product than trying to buy or build a one-size-fits-all package.”