How routing software impacts overhead fuel costs

Controlling fuel costs is one of the biggest issues facing the transportation industry with today's increasingly volatile fuel pricing. Aside from switching to alternative fuel vehicles, delivery routing software programs have tremendous potential to help fleet managers remove wasted mileage from daily trips that directly impacts total fuel consumption and overhead costs. 

The increasing importance of effective fuel management is based on a variety of factors. For example, oil prices have been prone to volatile shifts in recent years, making it difficult for transportation businesses to accurately predict future costs. Even the wide-spread use of fuel surcharges to adjust commercial carrier rates for such volatility is not something that private fleets or distribution fleets can always employ. Another issue contributing to a greater interest in fuel efficiency has to do with government regulations. Both federal and state government agencies have taken significant measures in recent years to draft regulations that limit greenhouse gas emissions from fossil fuel-burning vehicles.

The shift to more fuel-efficient trucks in the transportation industry hasn't been a smooth one in the U.S., with industry battles over different diesel engine technologies to reduce emissions causing headaches for fleet buyers. In fact, a recent article from The Wall Street Journal highlighted the challenges California regulators have faced in achieving their emissions reduction goals. State government officials had previously announced a goal of reducing emissions to a level 80 percent below 1990 measurements by 2050. However, an analysis performed by the U.S. Department of Energy's (DOE) Lawrence Berkeley National Laboratory found that goal is more or less unattainable given the existing regulatory infrastructure.

More time for truckers to comply with emissions regulations
California also recently eased a rule regarding pollution limits on low-use vehicles, which may have positive implications for many freight management companies. According to Trucking Info, an online industry news publication, the California Air Resources Board amended its Truck and Busing regulation that previously allowed vehicles that run less than 1,000 miles each year to wait until 2020 to replace existing engines with more fuel-efficient alternatives. However, the agency decided to extend these allowances to trucks running no more than 5,000 miles within the state each year. This amendment will come as positive news for many fleet managers.

"They get six more years of running their in-use equipment," Joe Rajkovacz, director of governmental affairs and communications for the California Construction Trucking Association (CCTA), told Trucking Info. "All they have to do is manage their fleet."

Most fleet operations use their vehicles heavily on a year round basis. With routing software programs, some companies can reduce the total amount of miles driven in the state and perhaps buy more time to comply with emissions regulations. 

Location efficiency
Another major issue at the center of many fuel conservation discussions is the concept of organizing cities in ways that are more conducive to short-distance transportation. According toThe Atlantic Cities, an online publication covering urban planning news, the U.S. Department of Housing and Urban Development (HUD) recently partnered with the U.S. Department of Transportation (DOT) to create a Location Affordability Index tool that pairs housing price data with transportation costs.

While the two organizations created the index for everyday citizens, it brings up an important issue for shippers, distributors and transportation service providers. The ability to limit fuel costs depends on a variety of factors. However, companies that build warehouses, factories or transportation depots closer to their customers have unique opportunities to reduce operational costs in meaningful ways. The benefits of this concept of "location efficiency" are apparent in the creation of shorter delivery routes. With the additional help of a delivery routing software program, fleet owners can cut hundreds of miles from daily routes and transport products while consuming less fuel. As a result, these organizations can reduce their overhead costs even while expanding operations to satisfy any potential increase in demand.