Most ecommerce customers care deeply about getting their orders on time. By optimising 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 optimisation is, how it works, and some of the key benefits of optimising your transport routes.
What is transportation route optimisation?
Transportation route optimisation is the process of finding the most efficient route for delivering customer orders.
It is a key aspect of delivery management and involves determining the optimal delivery sequence for an order based on various factors, including weather conditions, traffic congestion, road infrastructure, and more.
Key components of transportation route optimisation
The transportation route optimisation 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 optimising delivery routes. You should also consider real-time traffic conditions and adjust predictions accordingly.
- Route mapping – Route optimisation 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 optimisation 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 optimisation. Your route planning software needs to integrate with various tools to access traffic data, customer information, driver information, and more.
How transportation route optimisation works
Route optimisation 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 optimisation. Most delivery management tools and multi-carrier shipping software come equipped with features for optimising transportation routes.
Vehicle routing problem (VRP) is a popular programming problem used for creating algorithms to optimise 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 minimising cost and travel time, with considerations for vehicle capacity and time windows.
The 2-opt algorithm is also popularly used in optimising 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 optimisation
Platforms like OnFleet and Routific are popularly used for route optimisation automation. OnFleet comes with AI-driven route optimisation 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 optimisation. You can also make last-minute changes based on your unique needs and preferences.
Routific also automates route optimisation 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 optimisation 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 optimisation. 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 optimisation process.
Complex delivery constraints
Besides these, there are various delivery constraints that could add to the complexity of your route optimisation. 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 optimisation
On-time delivery is just one of the many reasons to optimise your transportation routes. Here are some other big benefits of route optimisation for ecommerce businesses.
Cost savings and efficiency gains
Route optimisation 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 optimisation, as it allows you to strategically reduce delays and missed deliveries as well as minimise 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 labour 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 optimise 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 optimisation 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 optimisation 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 optimisation
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 optimisation.
AI and machine learning
With significant advancements in machine learning algorithms and AI capabilities, we can expect more accurate route optimisation at scale. Since AI tools can process and analyse vast amounts of data, route optimisation 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 personalisation. 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 optimisation 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 optimisation 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 optimisation 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 optimising delivery routes to minimise 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 optimisation process. With carbon footprint tracking and load planning features, these AI-powered tools will help to streamline transportation to minimise environmental impact.
Why ShipBob is your ideal partner for transportation route optimisation
ShipBob’s powerful supply chain tools and fulfilment expertise empower you to make informed routing decisions and achieve logistics excellence. From advanced supply chain analytics to distributed inventory solutions, ShipBob helps you optimise your logistics operations at scale.
Minimise transit times by locating stock closer to you shoppers
With ShipBob’s global network of 60+ fulfilment centres, you can strategically allocate your inventory across multiple different ShipBob locations. This can significantly improve your route optimisation process by letting you ship out orders from the stocked fulfilment centre 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 fulfilment centre also helps you reduce your shipping distances and, in doing so, reduce your brand’s shipping costs.
“Delivery speed is of huge importance for us. ShipBob not only delivers quickly but also delivers across the UK the next day.
Customers love the delivery experience we’ve built with ShipBob, and it shows. When we first launched with ShipBob in the UK, we had a relatively conservative order volume estimate of a few thousand orders per month. But within just 4 months, we were receiving over 30,000 orders per month. It all just worked seamlessly.
Our Trustpilot reviews are a testament to ShipBob’s speed. They’ve proven to us that ShipBob can easily scale to match large fluctuations in demand and still maintain high-quality service. They’ve really helped us unlock our UK growth.”
Kevin Lammers, International Business Manager at TopBuxus
Optimise packaging to reduce costs
ShipBob fulfilment centres are equipped with sophisticated technology to optimise 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 minimise 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 fulfil 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 exactly what one of our bottles is going to cost us 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, fulfilment, shipping, and more. You can closely monitor your fulfilment 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 fulfilment 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 optimise your shipping strategy, click the button below to get in touch.
Transportation route optimisation FAQs
Below are answers to the most commonly asked questions about transportation route optimisation.
How can small businesses benefit from route optimisation?
Route optimisation allows small businesses to efficiently distribute their delivery fleet and workforce, allowing them to reduce costs while boosting efficiency.
Does ShipBob offer transportation route optimisation?
ShipBob comes with built-in tools to automatically route orders to the nearest fulfilment centre. It also makes recommendations on how to distribute inventory strategically and reduce transit times. However, it doesn’t have features to plan and optimise transportation routes for deliveries. ShipBob also has partnerships with leading couriers who use transportation route optimisation to streamline last-mile delivery.
What metrics can you use to measure route optimisation success?
Transit time, on-time delivery rate, and average shipping cost are some of the key metrics to measure the success of your route optimisation.
How can artificial intelligence be used in transportation route optimisation?
Artificial intelligence can analyse huge volumes of historical and real-time data from across the supply chain. As a result, it’s capable to recommending optimal transportation route recommendations based on key variable factors.
How does weather impact transportation route optimisation?
Weather conditions can create delays and disruptions that affect delivery routes. As a result, transportation routing tools need to consider real-time weather conditions to adjust optimal delivery routes to minimise delivery delays.
