A country-wide driver shortage has become one of the biggest challenges in today’s transportation industry. Driver satisfaction, route efficiency and network optimization all play a role in how impacted a particular shipper or 3PL is by a shortage of drivers. While there isn’t one overnight fix for this type of challenge, there are a few techniques that can help shippers and 3PLs maintain driver satisfaction and help alleviate the driver shortage.
What is it? A detailed supply chain network assessment, during which organizations consider suppliers, distribution centers (DC) and customer networks, is critical in optimizing transportation operations. As standards for speed and execution of delivery to the customer increase, this step ensures that all segments and locations are strategically aligned to provide a more efficient operation.
When performing a network analysis, shippers should focus on creating shorter routes. Shippers can accomplish this effectively by realigning their shipping layout in closer proximity to the overall customer delivery location. Identifying service levels, focusing on the various transportation modes used in your logistics network, and performing a shipping consolidation modeling exercise will help mitigate overall transportation costs as well.
Reduce transportation costs – It is no secret that transportation costs have been rising. Optimizing routes with an effective network analysis is key for minimizing unnecessary transportation costs, including capacity and fuel charges.
Meet service level agreements – Customers increasingly want faster delivery times and more order visibility, and a well done network analysis will enhance your ability to make and keep those promises.
Freight Term Optimization (FTO)
What is it? Freight term optimization helps shippers determine which lanes provide the most value and risk. Evaluating freight lanes will uncover how shipments are being consolidated or routed and enable assessment of who should own that lane. The shipper will ultimately determine who will take full control of that origin-destination (OD) pair based on costs and capacity constraints. Lanes that are closer to the shipping location may want to be kept in-house, while lanes that provide less value based on service level and cost could be better handled by the vendor.
Optimizing transportation costs - FTO is a long-term process that can help shippers optimize their freight costs to gain a more competitive advantage in the current overwhelming transportation market.
Enhance efficiency - FTO ensures that the most efficient lane is used during the shipping process, allowing product to be shipped more quickly and efficiently to the customer.
Transportation Management Systems (TMS) – Route Optimization Configuration
What is it? Transportation Management Systems are vital in managing shipment coordination and the transportation network. One critical feature for any TMS is route optimization configuration, which provides a better understanding of how many shipments are being leveraged on a daily and weekly basis. Shippers and 3PLs should compare their actual plan to the plan that is being generated within their TMS.
TMS-managed route optimization does not consider per diem cost, delays or road closures, so comparing your actual route optimization plan would identify gaps within your load planning process.
Optimal route selection – Route optimization tools within a TMS enable a driver to take the more efficient route rather than alternative routes that may cause delays.
Improved SLAs – If drivers are consistently taking optimized, more efficient routes, they are more likely to meet customer promises regarding delivery times.
What is it? Relay driving is an efficient approach to shortening a driver’s route that involves two drivers meeting at a midpoint to swap loads. During the delivery process, the driver will not have to conduct a live unload at the destination facility which will prevent any sort of detention at the consignee.
To avoid system configuration problems and ensure that this process runs smoothly, shippers must have certain parameters in place within their TMS. Shippers and 3PLs can maximize driver utilization hours by leveraging the TMS data to confirm they are choosing the correct relay points. One strategic approach is setting the relay point at the delivery facility to avoid unsuitable touchpoints that may potentially lead to unexploited utilization hours.
To increase the value of this process, shippers and 3PLs should stay away from deadheading – hauling an empty trailer with no cargo - which provides no benefits to the driver, who cannot earn additional income without hauling a load. Organizational leaders should also ensure oversight of the inventory management perspective of equipment as shippers and 3PLs must be strategically swapping trailers during a relay point instead of moving trailers solely for inventory management.
Route shortening: Relay driving allows the driver to shorten their route by exchanging midway, improving work-life balance and job satisfaction.
Optimizing equipment management: This strategy allows companies to adjust their trailer allocation based on demand in a certain area or region.
Maximizing DOT hours: With relay driving, drivers will not have to spend time loading or unloading at a destination point, maximizing their hours.
What is it? Ensuring drivers are satisfied with their routes will improve driver retention. One approach to this would be shifting to a routing optimization tool versus a manual process. Implementing practices that assign drivers to more dynamic routes with an automated process will eliminate favoritism in load planning. Additionally, shippers can leverage a mobile application that connects drivers to shippers. This type of application makes it effortless for drivers to secure loads while selecting specified lanes, load types, review pricing, and obtaining payment in a timely manner.
Driver satisfaction – Giving drivers more power over their routes will increase satisfaction, decrease turnover, and avoid further challenges of a driver shortage.
Effectively manage service hours - Drivers can review the closest backhaul based on their delivery location to ensure they are managing service hours effectively.
The driver shortage has impacted shippers and 3PLs across the country, and many have been unsure how to mitigate the impact. These are just a few tactical ways that organizations can ensure they consistently have the drivers, technology and processes in place to meet service level agreements and customer promises without a hitch.