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MENTAL PROTECTION AGENCY »
U.S. ENVIRONMENTAL PROTECTION AGENCY
Load Optimization for Shippers
A Glance at Clean Freight Strategies
Load planning and
optimization within
your company can
substantially reduce
shipping and fuel
costs between five to
15 percent. Co-loading
strategies with
other companies can
reduce costs and
fuel consumption by
20 percent or more.
Maximum savings are
realized when employing
optimization software
as part of an overall
Transport Management
System (IMS)1 in addition
to strategic use of 3PL
services to coordinate
with other shippers.
Proper load planning can help you manage transportation costs while reducing
the carbon footprint of your supply chain. Your company can maximize the
benefits by using optimization software as part of an overall Transportation
Management System (TMS).
What is the Challenge?
A shipper's goal is to put the most freight on a trailer and move it safely, on time, damage-free,
and at the lowest cost. Optimizing loads is a challenge because there are so many variables to
consider:
• Product weight and dimensions.
• Truck and trailer dimensions, axle load distribution, center of gravity, and allowable
weight limits.
• Special handling instructions, including temperature control, crushability, product
orientation, tarping, hazardous material requirements, and compatibility with other
products on board.
• Sequencing loads so freight moves on and off efficiently, reducing detention times
and accessorial charges at each stop.
• Identifying and collaborating with other companies (even competitors) to maximize
weight and cube utilization across routes and delivery schedules.
Perhaps the biggest challenge for shippers is the status quo: the continued use of "gut feel" and
outmoded ways of configuring loads and managing supply lines.
What is the Solution?
Optimizing loads and increasing trailer utilization involves a multi-faceted approach:
• Internal processes and policies: Review your own internal policies for lead
times, minimum order size, and how you build loads now.
• Carrier equipment: In your requests for proposals (RFPs), require carriers to use
equipment that's best suited to your supply chain demand and load planning.
• Pallets and packaging: Review pallet design and dunnage characteristics to
further maximize available space per trailer.
• Collaborative distribution and co-loading: Collaborative supply
chain logistics, utilizing empty backhaul capacity, and consolidating loads
across companies have the potential to reduce costs by 30 percent or
more and increase carbon efficiency by 25 percent2. Look for opportuni-
ties to collaborate with other shippers in warehousing and distribution.
• Technology: Load optimization software can help you build
loads more effectively. The more sophisticated products work in
conjunction with your TMS to identify underutilized trucks and
flag opportunities to fill capacity earlier in the process. They can
also complement your warehouse management system (WMS),
helping to optimize each pallet during the pick, pack, and ship
process.
Continued
U.S. EPA SmartWay | EPA-420-F-16-007 | www.epa.gov/smartway
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SmartWay*
MENTAL PROTECTION AGENCY »
U.S. ENVIRONMENTAL PROTECTION AGENCY
Load Optimization for Shippers
A Glance at Clean Freight Strategies continued
Costs
Implementing load optimization systems typically requires
a thorough review of your supply chain planning and
procedures, technology, equipment, and the capability of your
carriers, each of which has a cost in terms of dollars and time.
The cost and licensing of load optimization software will
vary widely depending on the volume and frequency of your
shipments, your existing IT infrastructure, and other factors
including the capabilities of yourTMS (although stand-alone
load optimization programs are available, most software is
offered as a module in a TMS).
Implementing successful co-loading strategies may include
purchasing the services of 3PLs and/or compiling detailed
operation data on weight and volume utilization rates, empty
back hauls, and identification of shared supply lines. Much of
this data should be obtainable through your TMS.
Savings and Benefits
Shippers recognize the benefits of better utilization. When
asked what factor most positively affects their ability to manage
freight, 23 percent of shippers said load optimization (only
"more competitive rates" ranked higher, at 34 percent)3.
Potential benefits include lower transportation costs, increased
productivity, greater control over how shipments are handled,
and the potential to reduce your supply chain's carbon
footprint. Some examples include:
• Daltile, a ceramic tile manufacturer, typically weighed
out its railcars leaving almost 4,000 cubic feet of
available volume in each car. Alternatively appli-
ance manufacturer Whirlpool consistently cubed out
railcars using the same line at less than 20 percent
of their weight capacity. By combining loads each
company improved their transportation efficiency
substantially. Co-loading lighter freight from other
shippers on top of pallets of heavy tiles enabled the
company to cut transportation costs by up to 1 5
percent per load. For example, Daltile's collaboration
with Whirlpool and other shippers reduces their trans-
portation costs by $3M per year, lowers their annual
fuel consumption by 600,000 gallons, and cuts more
than 5,300 metric tons of CO2 emissions per year4.
Wal-Mart was able to reduce the amount of lost
space per truck load simply by aligning pallets side-
ways. The new orientation of rectangular pallets
increased the number that can fit in a truck by 1 5
percent from 26 to 30 pallets. Optimizing delivery
schedules and educating local routers has also con-
tributed to the company's success of delivering "335
million more cases while driving 300 million less
miles" since 20085.
A 3PL matched Ocean Spray's outbound supply route
from New Jersey to Florida with empty refrigerated
boxcars traveling inbound along the same route to
Tropicana Products. The combined benefit of reducing
empty backhauls and taking advantage of intermodal
efficiencies reduced Ocean Spray's transport costs
for that route by greater than 40 percent, and cut
GHG emissions by 65 percent. The arrangement also
defrayed Tropicana's costs for boxcar return6.
According to EDF's Green Freight report, Stonyfield
Farms, an organic yogurt producer, changed its com-
pany policies to increase the required lead time and
minimum size per order, which ensured full shipping
containers. The company also reduced the amount of
dunnage used in cargo packing, increasing the space
available for product in every truck load7.
NI=X] STEPS
1 Audit how your loads
are built, taking into
account the dimensions
and any special handling
characteristics of the prod-
ucts you ship. Consider
procedures and require-
ments about loading and
positioning shipments on
vehicles, including
compliance with state
and federal rules.
2Based on your audit,
establish the capacity
and other capabilities you
need from your carriers.
3Load optimization soft-
ware can offer "what-
if" scenarios for loading
containers. Compile a list
of software with features
and benefits that best fit
your supply chain plan-
ning and IT needs.
4Identify 3PL services
to assist with the
development of cost-
effective co-loading
strategies.
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