Logistics Route Optimization: How to Add Capacity and Improve Sustainability

Increasing efficiency to remove unnecessary miles from a logistics network delivers a powerful double benefit: it frees up capacity and advances sustainability by reducing fuel consumption and cutting carbon emissions. For supply chain leaders, finding those inefficiencies typically begins with three core actions - examining data, reviewing business rules and evaluating equipment.

"Taking miles out is about saving money, but more and more of our customers have specific carbon-reduction goals, so it is more top of mind than it used to be," said Amy Ilyes, vice president of logistics engineering for Penske Logistics.

Logistics Route Optimization

Optimization starts with gathering information on current routes and establishing a clear baseline. According to Ilyes, Penske uses a variety of tools and computer models to develop optimized routes - typically resulting in fewer miles driven and reduced driver hours. "We'll usually have different levers we can pull when we do analysis," Ilyes said.

These levers include:

• Adjusting time windows for deliveries
• Consolidating orders across days of the week
• Change trailer size to better match freight volume
• Accounting for historic traffic patterns and speed-reduction zones

Once optimized routes are developed, the process yields an ideal schedule - including the precise number of drivers, tractors and trailers needed to run those routes efficiently.

Sequencing Stops to Unlock Hidden Savings

For companies with five or more stops per route, Penske evaluates the optimal sequence of those stops using route simulation. "We have a simulation of the events that occur on the route, and we know when we need to make the deliveries and where the slack time in the route occurs. It is a puzzle. As you shift around the routes, you can reduce the number of resources," Ilyes said.

Revisiting Business Rules to Drive Greater Efficiency

Business rules - often overlooked - can be a significant source of untapped savings. A common example is in retail, where stores frequently maintain narrow delivery windows. Widening those windows even slightly can unlock more efficient routes and better resource allocation. "If the customer decides to widen their delivery window that allows a longer period to make the deliveries, we usually can come up with more efficient routes and maximize resources," explained Ilyes.

Right-Sizing Equipment for Your Network

Equipment decisions also play a major role in route efficiency. Upgrading from 48-foot to 53-foot trailers, for instance, can meaningfully reduce the number of trips required. "Usually to be more efficient, we go bigger," Ilyes said.

However, efficiency isn't always the only variable. In response to the ongoing driver shortage, some shippers are exploring routing designs built around straight trucks - enabling them to hire Class B drivers rather than competing for a limited pool of CDL-A talent. While this approach may reduce per-trip efficiency, it addresses an underlying operational constraint that can't be ignored.

Eliminating Empty Miles with Backhaul Solutions

Another ongoing priority is eliminating empty miles. Penske's backhaul solution helps shippers fill otherwise-empty return trips with freight, converting a cost center into a cost-savings opportunity.

"We have a lot of freight that we manage besides our dedicated operations, and we have a backhaul solution to help fill miles. Usually, when we're putting together any design, we look at backhaul as a cost savings for the shipper," Ilyes said.

Optimizing Inventory Location: The Network-Level Opportunity

Route optimization alone isn't enough if inventory is positioned in the wrong place. Shipping a West Coast order to an East Coast manufacturer - when a closer distribution center exists - adds unnecessary miles before a truck even leaves the dock.

Penske works with customers on long-term network design, including five-year outlooks that help shippers develop strategic plans for where to position inventory relative to their customer base.

"You don't want to be shipping an order from California to a customer on the East Coast when there is a distribution center in the East," Ilyes said.

Why Now Is the Right Time to Optimize

Supply chains have faced significant disruptions in recent years, forcing many companies to abandon strategic planning in favor of day-to-day operational survival. But as those pressures begin to ease, a window of opportunity is opening.

This is the ideal time to step back and look at your network holistically. "Companies that invest in optimization now won't just solve today's problems - they'll be better positioned when the next disruption hits," said Ilyes.

Acting now rather than waiting for the next disruption allows companies to:

• Minimize current operational challenges by addressing root inefficiencies instead of just symptoms
• Build long-term supply chain resilience through strategic network design
• Make measurable progress toward carbon-reduction goals by cutting unnecessary miles and fuel consumption
• Free up capacity without adding assets - doing more with the resources already in place

Companies that proactively assess, optimize and innovate their logistics networks will be better positioned to deliver value to their customers - and to sustain that performance through whatever comes next.

Penske Logistics brings deep expertise in route optimization, network design and sustainability planning to help shippers uncover efficiencies and build long-term supply chain strategies.

Contact us to learn how Penske Logistics can help optimize your network.