In the context of constantly fluctuating fuel prices, optimizing delivery routes is no longer just an option but has become a mandatory requirement for all transportation businesses. A cleverly planned route can help save up to 20-30% of monthly fuel costs. This article will guide dispatchers through practical methods to reduce fuel costs through optimizing urban delivery routes.
Why Does Route Optimization Help Save Fuel Costs?
Many businesses still don't fully recognize the direct relationship between route planning and fuel costs. In reality, every unnecessary kilometer that a vehicle travels increases fuel costs while reducing the number of trips that can be completed in a day.
When optimizing delivery routes, you are simultaneously solving three main problems:
Reducing total travel distance: Instead of letting drivers choose their own routes or follow experience, scientific route planning helps find the shortest route between delivery points. An average truck traveling 150km/day can save 15-25km just by rearranging the delivery order reasonably.
Avoiding traffic jams and peak hours: Vehicles running in traffic jam conditions consume 1.5-2 times more fuel than when running smoothly. Smart urban transportation dispatch, avoiding crowded time frames and routes, helps reduce driving time and save significant fuel.
Increasing actual cargo load rate: Empty running distance (without cargo) is the biggest waste. When efficiently combining delivery routes, you can minimize the number of empty kilometers to increase fuel efficiency.
5 Golden Principles for Effective Urban Delivery Route Planning
To reduce fuel costs through route optimization, dispatchers need to master the following five basic principles:
1. Geographic Clustering Principle
Group orders by nearby geographic areas into the same trip. For example, all orders in districts 1, 3, 5 should be delivered on the same route instead of interspersed with other districts. This helps vehicles move within a smaller scope, reducing overall distance.
2. Stop Sequence Optimization Principle
After grouping by area, arrange the delivery order to form a closed loop or one-way route, avoiding having to return to already visited points. Prioritize the farthest points first, then deliver gradually back toward the warehouse or office.
3. Load Balance Principle
Don't just load goods onto the vehicle, calculate the appropriate load for the vehicle's capacity. Overloaded vehicles consume 15-20% more fuel. Conversely, vehicles carrying too little cargo (under 50% capacity) are also not cost-effective.
4. Major Road Priority Principle
For the same distance, major roads usually save more fuel than small roads thanks to stable speed and fewer red lights. However, traffic jam factors need to be considered to make the right decision.
5. Real-time Flexibility Principle
Even the best plan needs adjustment when there are changes. Always prepare plan B when there are sudden orders, customer cancellations, or unexpected traffic situations.
Guide to Using GPS Data and Trip History for Smart Route Combination
Effective fleet management cannot lack GPS data and history of completed trips. This is a valuable asset that helps dispatchers make more optimal decisions every day.
Collect and Analyze GPS Data
Most modern TMS software integrates GPS devices to track vehicle routes. The data you need to focus on includes:
- Total actual distance compared to theoretical distance
- Stop time at each delivery point
- Average speed on each route
- Road segments where congestion frequently occurs
Each week, export GPS reports to see which vehicles run the most kilometers, which have high empty kilometer rates. From there, you can adjust order assignment more appropriately.
Exploit Trip History for Prediction
After 2-3 months of operation, you will have enough historical data to recognize trends:
- Which routes usually have orders at the same time
- What time frame customers in which areas usually place orders
- Which pairs of locations can be combined in the same trip
Based on history, you can proactively combine delivery routes even before new orders arrive. For example, if you know that every Monday-Wednesday morning there are usually 4-5 orders in industrial zone A, arrange a vehicle dedicated to that area in advance.
Simple Formula to Evaluate Route Combination Efficiency
Route efficiency ratio = (Number of delivery points × Theoretical distance) ÷ Actual distance
If this ratio is higher (> 0.8), it proves you are combining routes well. If low (< 0.6), you need to reconsider the routing method.
How to Calculate Fuel Cost Savings Using Simple Formulas
To specifically measure route optimization results, dispatchers need to know how to calculate cost savings. Below is a simple but effective method.
Basic Formula
Fuel cost savings = Kilometers saved × Fuel consumption rate (liters/km) × Fuel price
Real example:
- Before optimization: Vehicle runs 180 km/day
- After optimization: Vehicle runs 150 km/day
- Kilometers saved: 30 km/day
- Consumption rate: 0.15 liters/km (15 liters/100km)
- Diesel price: 19,000 VND/liter
Daily cost savings = 30 × 0.15 × 19,000 = 85,500 VND
In one month (26 working days): 85,500 × 26 = 2,223,000 VND/vehicle
If the fleet has 10 vehicles, the savings amount to over 22 million VND per month!
Track Important KPIs
To manage the fleet effectively in terms of fuel, track the following metrics weekly:
- Km per order: Total km traveled divided by number of orders delivered. This metric should decrease over time.
- Empty km ratio: (Empty km ÷ Total km) × 100%. Target to maintain below 15%.
- Actual consumption rate: Liters of fuel consumed ÷ Total km. Compare with manufacturer's standard.
Simple Excel Spreadsheet
Create a spreadsheet with columns: Date - Vehicle Name - Starting Km - Ending Km - Total Km - Liters Filled - Number of Orders - Fuel Cost. At the end of each week, calculate totals and compare with the previous week to see improvement trends.
Tips to Avoid Peak Hours and Reduce Empty Running Distance for Urban Trucks
This is the most practical part that every dispatcher needs to remember to effectively reduce fuel costs.
Peak Hour Avoidance Strategy
Know the traffic jam time frames for each area:
- City center: 7am-9am and 5pm-7pm
- Industrial zones: 6:30am-7:30am (shift start time) and 4:30pm-5:30pm (shift end time)
- Wholesale markets: 4am-7am (wholesale delivery time)
Plan to depart earlier or later: Instead of having vehicles leave the warehouse at 8am (peak hour), have them depart at 6:30am or wait until 9:30am. Although it may seem later, faster travel speed will compensate for waiting time.
Schedule distant delivery points during off-peak hours: Delivery points in suburban areas should be prioritized in early morning or early afternoon. Points near the warehouse can be delivered at the end of the day when traffic is smoother.
Reduce Empty Running Distance
The distance vehicles run without cargo is the biggest "enemy" of fuel savings. Below are specific tactics:
Combine pickup and delivery: If the last point of route A is near the first point of route B, have the driver pick up goods for the next trip right there instead of returning to the warehouse.
Two-way delivery: When planning routes, find ways to deliver in both outbound and return directions. For example, going from a warehouse in District 12 to Binh Duong for delivery, on the way back stop by District 6, District 11 to deliver additional orders.
Schedule return goods collection: If there are returned goods, schedule collection on the same day to utilize vehicles already running near that area, avoiding having to create a new trip just to collect returns.
Coordinate with other vehicle teams: When vehicle A is in area X but has no more deliveries, while vehicle B is overloaded in area X, transfer some orders from B to A so both vehicles are optimized.
Small Tips from Practical Experience
- Call to confirm 30 minutes in advance: Ensure customers are present at the delivery point to avoid having to return, wasting both time and fuel.
- Utilize traffic apps: Ask drivers to turn on Waze or Google Maps to receive traffic jam alerts and automatically choose alternative routes.
- Create small collection points: For areas with high order density but far from the warehouse, consider renting small collection points to reduce travel distance.
Tools to Support Dispatchers in Route Optimization
Technology is a powerful ally that makes urban transportation dispatch easier and more accurate. Below are the most practical tools.
Transportation Management Software (TMS)
This is the most comprehensive solution for delivery route optimization. A good TMS system like DeliTMS will provide:
- Automatic route combination: Software analyzes all orders and automatically suggests optimal route combinations based on distance, volume, and delivery time.
- Real-time GPS tracking: See exactly where vehicles are, how many orders remain undelivered, and estimated completion time.
- Fuel cost reporting: Detailed statistics on fuel consumption for each vehicle, each route to identify areas needing improvement.
- History and analysis: Store all trip data for you to analyze trends and continuously improve.
Investing in professional TMS software usually pays for itself in just 3-6 months through operational cost savings.
Google Maps and Map Tools
For small businesses without a budget to invest in TMS, Google Maps is still a useful free tool:
- Google Maps Direction API: Calculate distance and travel time between multiple points.
- My Maps: Mark all delivery addresses for the day on the map for easy visualization and grouping by area.
- Traffic jam alerts: View real-time traffic conditions to adjust routes promptly.
However, this tool requires dispatchers to manually plan routes and lacks comprehensive fleet management features.
Excel Spreadsheet or Google Sheets
Don't underestimate the power of spreadsheets! With a well-designed template, you can:
- Input order list and addresses
- Use formulas to calculate distance (combined with Google Maps API)
- Group orders by area using pivot tables
- Track fuel cost history and kilometers traveled
This is a good solution for startups, helping build processes before upgrading to specialized software.
Dedicated Routing Applications
Some apps like Route4Me, OptimoRoute, or Routific are designed specifically for route optimization. They can automatically arrange the optimal delivery point sequence with just a few clicks, saving significant planning time.
Optimizing delivery routes is not merely a technical issue but also the art of combining data, experience, and technology. By applying the principles, methods, and tools shared in this article, dispatchers can completely reduce 20-30% of fuel costs for their fleet. Start with small steps: analyze current data, test route combination for a few vehicles, and gradually expand to the entire fleet. When route optimization becomes a daily habit, your business will not only save fuel costs but also improve operational productivity, increase the number of deliveries, and enhance customer experience – sustainable benefits that help businesses develop long-term in the highly competitive logistics industry.
