Redesigning a cargo fleet's network to save fuel and avoid new equipment
A fleet upgrade created an opening to rethink the whole distribution network. Twenty years of operating data and a hub-and-spoke redesign cut fuel use and avoided new equipment spend.
The situation
The client operates a large fleet of high-fuel-consumption cargo vehicles. While they have operated these vehicles for several years, a recent upgrade to a make and model making up more than 30% of their long-haul fleet provides significant payload capacity and fuel efficiency enhancements.
What was at stake
With increasing fuel costs and sensitivities to carbon emissions, the client hypothesized that “a better way” existed to employ their fleet in their distribution network.
What StatusNext did
The client asked for help looking at new ways to deploy the fleet to take advantage of the fleet upgrades.
Research StatusNext conducted through problem discovery sessions, client marketing presentations, and client stakeholder interviews provided a robust understanding of the client’s goals and constraints. StatusNext then conducted a deep quantitative analysis to assess the baseline, or “business as usual,” fleet deployment, using on-time delivery (OTD), fuel consumption, and crew utilization as metrics of interest. This step included analysis of historical routes operated, amount of cargo delivered, and crew and equipment hours required over a 20-year period across all vehicles in the operation.
With the baseline analysis complete, StatusNext used techniques including simulation, cluster analysis, neural network modeling, and network optimization to develop a new fleet deployment strategy, along with a planning algorithm to help logistics planners take advantage of it. The analysis showed that a hub-and-spoke logistics model would yield significant throughput enhancements while saving more than 10% in fuel consumption for the same demand. StatusNext also provided a playbook that specified payload and vehicle assignment for the most common origin–destination pairs.
What changed
The client adopted the recommended hub-and-spoke distribution model. Because the business case was so compelling, and the new model satisfied the overarching constraints such as vehicle capability and crew duty times, the client was also willing to waive additional non-safety constraints to enable it. The client achieved the projected fuel savings and avoided additional equipment investments that would have been required without the new employment strategy.