Flexible real-time route optimization: Steering toward efficiency

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  Quantumrun Foresight
• August 15, 2023

Insight highlights

Logistics companies increasingly adopt flexible real-time route optimization to improve fuel efficiency, decrease vehicle wear and tear, and enhance driver productivity. These companies can provide real-time tracking and delivery status updates through software and traffic management systems, increasing customer satisfaction and competitive advantage. Other wider implications include potential job shifts towards technological roles, increased cybersecurity risks, changes in urban planning, and impacts on energy industries.

Flexible real-time route optimization context

Route optimization isn't solely about expediting the delivery of goods to consumers. It also plays a critical role in enabling transportation workers to plan their routes for optimal profit. This approach aids businesses in enhancing fuel efficiency and promoting sustainability. 

Onfleet's delivery software, designed to improve route visualization, is marketed as a tool that can save clients between 20 percent and 40 percent on fuel and driving time. Additionally, it allows for goods tracking and delivery time prediction, and automatically adjusts routes based on current traffic and road conditions. Intelcom, on the other hand, has developed its route optimization software that plans around 4,000 routes across Canada daily. 

Additionally, interest in unmanned traffic management (UTM) has increased. In 2022, Unifly, a Belgium-based UTM system company, teamed up with air navigation service provider (ANSP), NAV CANADA, to roll out NAV Drone. This platform facilitates drone operations in Canadian airspace. Unifly also partnered with Spanish ANSP, ENAIRE, to develop an automated digital platform for managing drone operations. 

Logistics companies are switching to optimization solutions to streamline their operations. For example, FedEx's Network 2.0 aims to run 100 fewer stations and reduce over 10 percent of the company's overall pickup and delivery routes by 2027. The firm anticipates that these efficiency improvements across its separate networks will yield annual savings of USD $2 billion.

Disruptive impact

At a macro level, real-time route optimization can save supply chain and logistics companies money through fuel efficiency, decreased vehicle wear and tear, and enhanced driver productivity. Moreover, automatically adjusting routes in response to traffic and other conditions promotes a more sustainable operation by reducing carbon emissions. Over the long term, real-time route optimization can dramatically improve service levels and customer satisfaction. 

In an age when consumers demand speed, predictability, and convenience, the ability to provide accurate, real-time tracking and prompt delivery status updates can give a significant competitive edge. Moreover, this technology can foster innovation and strategic decision-making by enabling logistics companies to better understand and manage their operational dynamics. For example, companies can use the rich data generated by route optimization software to identify trends, patterns, and opportunities for improvement or expansion. They can also leverage this technology to explore and test different business models or strategies. 

Another potential benefit is that logistics companies can efficiently manage their workforce, including contractors or gig workers. These firms can set up automated systems where payments are made accurately based on routes taken and hours on the road. As trucks continue to be designed with autonomous features, route optimization can turn them into independent machines that can truly supplement a shortage of truck drivers. 

Implications of flexible real-time route optimization

Wider implications of flexible real-time route optimization may include: 

• Driving hours being significantly reduced due to optimized traffic flows, leading to a decrease in the average working hours for drivers and a reduction in stress and fatigue. 
• Minimized travel distances and idling time, significantly reducing carbon emissions, improving air quality and public health.
• Human drivers needing to be retrained to manage and maintain autonomous vehicles. At the same time, there may be an increased demand for software engineers and data scientists who can work on route optimization algorithms and systems. 
• Understanding the most efficient paths influencing future infrastructure and city planning. Policymakers might use these insights to design more efficient road systems or to plan public transportation routes, potentially leading to more accessible and sustainable cities.
• Improved logistics and reduced transport costs lowering barriers to market entry, allowing for more competitive markets.
• Cyber attacks, including taking over delivery drones and truck fleets. Such potential threats may result in increased fleetwide cybersecurity hardware and software investments.
• Reduced reliance on fuel due to more efficient routes affecting the oil and gas industry. At the same time, this could stimulate the renewable energy sector, particularly if electric vehicles are paired with route optimization technology.

Questions to consider

• If you work in logistics, how is your company using route optimization technology?
• How might real-time route optimization impact society beyond logistics and supply chain management?