AI-based route optimisation can significantly limit the amount of unused truck capacity, while also boosting the ESG efforts of CEP operators. Overall, the technology provides an opportunity to reduce the expenses and environmental impact per delivered parcel.
Delivering parcels as quickly as possible is the name of the game in the CEP industry. No news there.
But there is a downside to the constant quest for speedy deliveries. Demanding customer expectations and inefficiencies in travel routes result in environmentally and financially unsound final mile logistics.
Intelligent prioritisation of package quantities would have to involve holding back shipments, but the option to bundle with package recipients from subsequent days is often ignored.
The consequence is the transportation of air.
The ‘transport of air’ is one of the unfortunate byproducts of an industry, where speed often takes priority over most other agendas.
Underutilisation of truck capacity is perhaps even more problematic as politicians and citizens in some of Europe’s largest cities are trying to limit the number of trucks circling the streets.
The EU has also voiced its support of projects that aim to make the logistics sector sustainable and efficient in its use of resources.
The transport of air is not only environmentally unsound. It hurts the financial sustainability of CEP companies as it increases the cost of each delivered item.
CEP companies are fully aware of the issue, but solving it has been tricky. For example, loose loads, which could theoretically limit the transport of air, are far more time-consuming than caged loads to load and unload, making it an impossible solution in the hyper competitive industry.
But now there is a new solution on the horizon: AI-powered route optimisation technology that can detect and advise on the most efficient route planning.
The AI-driven systems can analyse an incredible amount of data points and provide route planners with real-time input on how to deliver parcels faster and with less ‘transport of air’. An intelligent AI algorithm can learn based on past activities and be made available to the operator to support the scheduling, as noted in a study on artificial intelligence in the parcel industry conducted by Lufthansa.
In fact, by leveraging AI-based machine learning with data, some operators in today’s CEP industry are already positioned to identify situations when it is advantageous to delay certain parcel deliveries until there is adequate capacity in a truck.
The AI-driven route optimisation tools can highly effectively prioritise which items should go out for quick delivery and which should wait.
As a result, companies can get the most out of their trucks and the kilometres on the road while keeping cost per parcel delivery and air transport at a minimum.
Nordic postal and logistics provider PostNord is one of the CEP companies that has implemented a new loading system based on AI technology.
The system is expected to help PostNord reduce the number of kilometres driven by five percent. It is built on the company’s existing security cameras and an innovative AI algorithm based on “machine learning”.
In the visual shape of a 3D model, the cameras can show in real time how much each truck can be loaded with and how it must be loaded to make the most of the capacity.
Previously, the utilisation rate of the trucks was established by manual measurement, but the team responsible for planning the routes wasn’t sure they could rely on the data. So the decision was made to develop an automated solution that could provide a more accurate capacity estimation.
According to PostNord, the main objective of the AI project is to achieve significant improvements in the occupancy rate and savings from reduced driving distances. The KPI for the occupancy rate will be incorporated into planning, implementation and follow-up.
The company has indications that the number of kilometres driven can eventually be reduced by 5-10 percent as the system is fully developed and implemented. But interestingly, a reduction of kilometres by just one percent would pay for the introduction of the system in just three months.
Daily, Postnord loads more than 600 containers across 200 terminals. However, CEP companies of all sizes can benefit from using AI-based systems for route planning.
A reduction in kilometres driven is good for the environment, but also the bottom line.
Studies have found that driver wages and fuel costs alone make up 59.8% of the total operational cost per mile. This means that even tiny improvements in the overall route planning can have a significant impact.
Going forward there is little doubt that some form of AI technology will be implemented to support route planning across the industry.
