Factors Affecting Vehicle Utilization

Factors affecting vehicle utilization, are

• Demand fluctuations – Variability of demand over daily, weekly, monthly and seasonal cycles is one of the main causes of the under-utilization of vehicle capacity.
• Vehicles acquired with sufficient space or weight to accommodate peak loads inevitably spend much of their time running with excess capacity. Companies subject mainly to seasonal fluctuations can hire additional vehicles or outsource more of their transport at peak periods, allowing them to carry a regular base-load of traffic on their own vehicles during the year. For those exposed to demand volatility on a daily basis, the efficient management of transport capacity presents a much greater challenge.
• Just-in-time delivery – The replenishment of supplies in smaller quantities more frequently within shorter lead times has tended to depress vehicle load factors. Companies have often been prepared to accept lower vehicle utilization and higher transport costs in return for large reductions in inventory and other productivity benefits resulting from JIT.
• Unreliability of delivery schedules – Where schedules are unreliable, transport managers are naturally reluctant to arrange backhauls or more complex collection and delivery routes within which higher degrees of load consolidation can be achieved. Companies understandably prioritize outbound distribution to customers and fear that a vehicle engaged in backhauling may not be repositioned in time to handle the next delivery.
• Vehicle size and weight restrictions – Some loads reach the maximum weight limit before all the space in the vehicle is occupied. Conversely, some low-density loads exhaust the available space before the legal weight limit is reached. This results in under-utilization of the vehicle in terms of either volume or weight.
• Handling requirements – Many companies sacrifice vehicle utilization for handling efficiency.
• Incompatibility of vehicles and products – It is clearly not possible to transport a return load of bulk liquids in a box van or to consolidate part-loads of fertilizer and hanging garments. The need for specialist handling and / or refrigeration and rules governing cross-contamination restrict the proportion of the truck fleet that can be used for particular loads.
• Health and safety regulations – The weight and dimensions of loads are partly constrained by health and safety regulations designed to ensure the welfare of employees.
• Capacity constraints at company premises – Often the size of load is constrained by the available storage capacity at either the origin or the destination of the trip, more commonly the latter. Tanks and silos at farms or factories, for example, may not be able to hold a full truck load, while many retailers have compressed back-storeroom areas to maximize the front-of-shop sales floor.
• Poor coordination of the purchasing, sales and logistics departments – Opportunities for backloading is seldom discussed in the context of trade negotiations between companies. Purchasing departments typically regard inbound delivery as the responsibility of the supplier and fail to explore with logistics managers possible synergies with the transport operations of vendor companies. Sales staff, on the other hand, has a habit of making delivery commitments to customers that entail transporting part-loads often at short notice.

Improving Vehicle Utilization

• Using freight procurement services – Load-matching agencies have existed for several decades, providing road hauliers with a ‘clearing house’ service for potential backloads. They relied on market knowledge, personal networking and the telephone to broker deals between shippers and carriers. With the advent of the internet, a new generation of freight exchanges has emerged, providing web-enabled tendering, online auctions and bulletin boards for road haulage services. This is making it easier to match loads with available vehicle capacity across much larger ‘communities’ of shippers and carriers on both a short- and medium-term basis.
• Installation of vehicle tracking systems – Vehicle tracking systems makes it much easier to find backloading and load consolidation opportunities and to coordinate the activities of the various fleets. Also, by making transport operations more ‘visible’, telematics can give both shippers and carriers greater confidence in delivery schedules, helping to overcome one of the traditional obstacles to backloading.
• Reverse logistics – An increasing proportion of products is travelling back along the supply chain for repair, reuse, recycling or remanufacture. The growth in the recovery of waste packaging and life-expired product is also done. This is creating new opportunities for backloading.
• Use more space-efficient handling systems and packaging – The efficiency with which the cubic capacity of a vehicle is used partly depends on the nature of the packaging and handling equipment. Companies must reconcile the desire to maximize vehicle fill with the need to protect products from damage in transit and to minimize handling costs.
• Employ computer-based planning tools – A wide range of software tools is available to help companies optimize the use of vehicle capacity. Computerized vehicle routing and scheduling (CVRS) software has vastly improved in terms of its functionality, flexibility, applicability, user-friendliness and the efficiency of the solutions it yields.
• Increases transport efficiency – Levels of transport efficiency can be increased by encouraging customers to adhere to an ordering and delivery timetable. Customers are informed that a vehicle will be visiting their area on a ‘nominated’ day and, that to receive a delivery on that day, they must submit their order a certain period in advance.
• Collaborate with other users and providers of transport services There is a limit to how much any individual company can do to improve the utilization of vehicle capacity. To reach high levels of utilization it is often necessary to collaborate with other companies. This collaboration can be two-dimensional, as
• Horizontal collaboration – This occurs where companies at the same level in a supply chain combine their freight transport demands to increase average consignment size or create additional backloading opportunities.
• Vertical collaboration – This involves collective action by trading partners at different levels in a supply chain, often with the assistance of logistics service providers.