Empty Miles Reduction in the Downstream Network for a Consumer Goods Manufacturer

Abstract

Logistics and transportation companies face a significant challenge with empty miles, which results in costs without generating revenue. To tackle this issue, we explored two potential strategies: one involves generating revenue by collaborating with external companies, while the other involves adopting backhauling strategies to identify potential loads within the network. To generate revenue, we considered utilizing the company’s private fleet as a third-party logistics (3PL) fleet for other organizations and analyzed the associated costs. To identify feasible backhaul opportunities, we used a heuristic method that involved creating all possible lane combinations for existing nodes and then filtering pickup options based on criteria such as drive time, distance, cost savings, and greenhouse gas emissions. In addition, we conducted a market sensitivity analysis to assess the robustness of our potential opportunity lanes. Our study revealed that there is a significant potential to increase revenue of about $24 million per year and enhance the company’s topline performance by utilizing the private fleet as a 3PL for other external companies.