How Transportation Route Optimization Improves Logistics and Satisfies Customers

Most ecommerce customers care deeply about getting their orders on time. By optimizing transportation and delivery routes to avoid unnecessary movements, heavy traffic, and delays, you can facilitate timely deliveries that meet customer expectations and boost customer satisfaction.  

In this article, we take a closer look at what transportation route optimization is, how it works, and some of the key benefits of optimizing your transport routes. 

What is transportation route optimization? 

Key components of transportation route optimization 

The transportation route optimization process involves strategic delivery route planning around a few key components, including: 

• Traffic prediction – It’s important to factor in accurate traffic predictions based on time of day, road infrastructure, weather conditions, speed limits, and more when optimizing delivery routes. You should also consider real-time traffic conditions and adjust predictions accordingly. 

• Route mapping – Route optimization involves mapping out routes for each delivery vehicle based on factors like capacity, package dimensions, delivery locations, priority requirements, and customer availability. 

• Vehicle tracking – Real-time vehicle tracking is a key component of the route optimization process. With live geolocation data and real-time traffic considerations, you can quickly make route adjustments, even while your fleet is on the go. 

• Advanced software integrations – Software integrations play a vital role in providing real-time and historical data from across the supply chain to inform your route optimization. Your route planning software needs to integrate with various tools to access traffic data, customer information, driver information, and more. 

How transportation route optimization works 

Route optimization works with the help of a transportation management system equipped with route planning capabilities. The system integrates with various supply chain tools to collect a number of variable factors and determine the best route for each delivery driver. 

Algorithms and software solutions 

There are several algorithms and software solutions to facilitate route optimization. Most delivery management tools and multi-carrier shipping software come equipped with features for optimizing transportation routes.   

Vehicle routing problem (VRP) is a popular programming problem used for creating algorithms to optimize delivery routes. The goal is to find the most efficient route that a fleet of vehicles should take when delivering goods to a given set of customers. It focuses on minimizing cost and travel time, with considerations for vehicle capacity and time windows. 

The 2-opt algorithm is also popularly used in optimizing last-mile delivery paths. This is a simple local search algorithm where the edges as swapped to reduce the total distance. With a complete 2-opt search, every possible combination will be compared to determine which route reduces travel time the most.   

Tools for routing optimization 

Platforms like OnFleet and Routific are popularly used for route optimization automation. OnFleet comes with AI-driven route optimization tools to streamline your delivery operations. It considers a combination of historical traffic data, customer preferences, and other factors to automatically build routes and assign drivers. This takes the guesswork out of route planning and eliminates time-consuming manual optimization. You can also make last-minute changes based on your unique needs and preferences. 

Routific also automates route optimization by considering a number of variable factors along with historical traffic patterns. It even considers driver happiness when assigning routes, so you can assign your team to territories where they’re most comfortable. You can also add last-minute deliveries and make changes for greater flexibility. This tool even provides live GPS tracking so you can get updated ETAs based on real-time driver movement, significantly enhancing the delivery tracking process and giving you better visibility into your transportation operations. 

Common challenges in implementation 

Although transportation route optimization translates to greater efficiency and cost savings, many businesses struggle to implement it due to various challenges. 

Traffic unpredictability 

Historical traffic data can only tell you so much. While it can often help you detect patterns in how traffic changes based on factors like time of day and weather conditions, it can’t predict every single factor that could affect traffic. For instance, accidents could create unforeseen traffic disruptions, while severe weather conditions and bad road conditions could slow down traffic. 

These dynamic traffic conditions are often difficult to plan around and may result in unexpected delivery delays. You may need to make last-minute route changes based on real-time fluctuations in traffic. 

Vehicle limitations 

Variables like the capacity and storage capabilities of vehicles can also add to the complexity of route optimization. These factors will play a huge role in how many packages one vehicle can transport at a time, keeping in mind the added complexity of diverse package dimensions and weight. 

Moreover, certain products may require special handling and transportation. For instance, you may need refrigerated vans when delivering food or beverage products. You’ll need to strategically consider vehicle availability to accommodate these orders during the route optimization process. 

Complex delivery constraints 

Besides these, there are various delivery constraints that could add to the complexity of your route optimization. For instance, you may need to consider if orders need to be delivered within specific time frames. These are common for orders with an office delivery address, since you’ll need plan your routes that deliver them during regular operating hours. 

Delivery priorities also add to the complexity of planning routes, since you’ll need to prioritize certain orders over the rest. There are also additional complexities created by other customer service considerations, like specific delivery instructions and delivery preferences. These all play a vital role in determining optimal routes to make timely deliveries during the specified delivery time windows, which could enhance the customer experience. 

Measurable benefits of transportation route optimization 

On-time delivery is just one of the many reasons to optimize your transportation routes. Here are some other big benefits of route optimization for ecommerce businesses. 

Cost savings and efficiency gains 

Route optimization aims to reduce the total distance that your delivery vehicles have to travel and the number of stops they have to make. This reduces the time spent on transportation, which helps shorten your lead times. 

It also translates to better cost savings, as shorter travel times help you cut down your fuel usage and reduce transportation costs. Shorter travel times also typically means lower fuel usage, enabling you to save significantly on fuel costs. 

There are also indirect cost savings associated with route optimization, as it allows you to strategically reduce delays and missed deliveries as well as minimize other inefficiencies. This helps to ensure that your drivers make as many deliveries as possible while providing fast and affordable shipping. As such, you can even save on labor expenses in the long run. 

On top of this, vehicles that aren’t overused are less likely to break down or have significant wear and tear, so you also end up saving on vehicle maintenance costs over time. 

Improved customer satisfaction 

When you optimize transportation routes, you can improve delivery speeds and ensure that customers get their orders on time. By making timely deliveries consistently, you increase reliability and improve the overall shipping experience. 

Moreover, if your route optimization process also factors in unique delivery requirements and preferences, it further creates an experience that’s tailored to the customer. These play a key role in enhancing customer satisfaction and loyalty. If customers know that they can count on you to deliver their orders on time, they’re more likely to keep coming back. 

Environmental impact 

The positive environmental impact is another major reason why route optimization is beneficial for businesses. When you reduce travel time for your vehicles, you not only cut back on fuel consumption but also drastically reduce emissions. This allows you to reduce your carbon footprint, getting you closer to carbon neutral shipping so you can achieve your sustainability goals. 

Future trends in transportation route optimization 

The current logistics landscape has seen massive improvements owing to technological developments and changing consumer priorities. We can expect these factors to continue shaping future trends in route optimization. 

AI and machine learning 

With significant advancements in machine learning algorithms and AI capabilities, we can expect more accurate route optimization at scale. Since AI tools can process and analyze vast amounts of data, route optimization algorithms can effectively handle increasingly complex routing problems. 

These will be capable of considering all the minute variables that could affect delivery routes and make highly accurate recommendations for diverse scenarios. With greater precision in your route planning, you can ensure increased efficiency that will add to your bottom line. 

AI tools also offer enhanced personalization. Businesses can expect tools that are capable of tailoring routes for specific users or vehicles while considering their unique requirements. This will result in more flexible route optimization solutions to cater to specific business needs. 

Additionally, these capabilities will extend to the unique delivery requirements and preferences of different customers. As such, delivery services will be able to offer more tailored delivery experiences that meet the specific needs of each customer. 

The dynamic adaptability of machine learning algorithms will also enhance the flexibility and responsiveness of your shipping logistics operations. AI route optimization tools will be equipped with dynamic routing capabilities that adapt to real-time changing conditions. This will make it easier to quickly adapt your routing strategy based on current traffic conditions and unexpected events. 

The rise of sustainable logistics 

There’s a growing demand among consumers to make sustainable buying choices. As a result of this, route optimization efforts will continue to focus on finding eco-friendly shipping solutions. Beyond eco-friendly packaging and smaller package sizes, businesses will also increasingly turn to optimizing delivery routes to minimize travel time and reduce their carbon emissions. 

This is another area where AI algorithms can make a huge difference. These will incorporate environmental factors and employ green routing strategies in the route optimization process. With carbon footprint tracking and load planning features, these AI-powered tools will help to streamline transportation to minimize environmental impact. 

Why ShipBob is your ideal partner for transportation route optimization 

ShipBob’s powerful supply chain tools and fulfillment expertise empower you to make informed routing decisions and achieve logistics excellence. From advanced supply chain analytics to distributed inventory solutions, ShipBob helps you optimize your logistics operations at scale. 

Minimize transit times with inventory distribution 

With a distributed inventory network, you can strategically allocate your inventory across multiple different ShipBob locations. This can significantly improve your route optimization process by letting you ship out orders from the stocked fulfillment center closest to each order’s end destination. That way, you can speed up transit times and make timely deliveries.  

Shipping out orders from the nearest fulfillment center also helps you reduce your average shipping zone and, in doing so, reduce your brand’s shipping costs. 

“Moving to ShipBob’s Inventory Placement Program (IPP) and having them manage multi-location inventory process for us has been huge. As a self-funded company, driving profitability is a top priority. We couldn’t deny the numbers that were being presented to us about IPP. The cost savings, the reduction in transit time, the improvement to the customer experience – it was too good to pass up.  

Before IPP, we were only shipping from California. That meant a customer in New York had a transit time of 7 days. Now that we’re shipping from the Northeast with IPP, we’re seeing just 2 to 3 days in transit. And that rarely even increases during the holidays. We’ve had customers reach out with surprise that their order has arrived so quickly. I remember someone saying, ‘Wow, that was Amazon-fast,’ which I’ll take as a compliment.”

Lizzie Vance, Sales Director at P.F. Candle Co. 

Optimize packaging to reduce costs 

ShipBob fulfillment centers are equipped with sophisticated technology to optimize packaging. Packing stations rely on Cubiscan machines that recommend the ideal packaging size for each order using a box selection algorithm. 

This allows packers to easily select the best packaging for each order, so you can reduce package dimensions and avoid oversize fees. Moreover, when you ship out items in the right boxes, you minimize empty space and ensure that goods arrive safely to your customers. This also means that you need fewer packing materials, allowing you to reduce packaging cost and waste. 

“One of my favorite things about ShipBob is the visibility, one example of which is receiving a breakdown of how much it costs to fulfill each of our items.  ShipBob uses a Cubiscan, so they have the correct measurements of each product. From there they say, “Based on these dimensions, this specific product mix will be packed in this specific box size. Here is the rate.” So, by that system, we know that one of our bottles is going to cost us let’s say $4 to pick, pack, and ship.”

Cesar Contreras, Head of Supply Chain of Wholesome Goods 

Get real-time analytics to inform routing decisions 

ShipBob’s extensive analytics dashboard provides you with real-time and historical data across inventory management, orders, fulfillment, shipping, and more. You can closely monitor your fulfillment performance and shipping insights from a single, intuitive platform, and keep track of your transit times, popular shipping methods, average shipping costs, and top-selling states. These insights can inform your supply chain decision-making, especially when it comes to transportation routing. 

“At a senior level, there are certain metrics that we need to look at to manage the business. At Arrae, we take the approach to ‘manage by metrics.’ ShipBob gives us a really clear view on the data that we need. We’re looking at these fulfillment metrics on a weekly basis. We can quickly go into the ShipBob dashboard and see ‘What are we shipping? How long does it take to ship? What is our time from order to door? Is there a breakdown there? Where do things get stuck and why?’”

Nish Samantray, Co-Founder of Arrae 

For more information on how ShipBob can help you optimize your shipping strategy, click the button below to get in touch.

Transportation route optimization FAQs 

Below are answers to the most commonly asked questions about transportation route optimization.