Reducing fuel consumption has become a high priority in the business world, both for financial and environmental reasons. Companies dependent on planes, trucks, cars, boats, and the like have felt the financial pinch of increasing fuel prices. They've also felt pressure, both from inside the company and from the public, to reduce vehicle emissions that cause air pollution and global warming.
One company that has sought to rein in fuel consumption is Con-way Freight. In 2008, the company launched a project called Network Rationalization in an effort to reengineer its line-haul distribution network -- the movement of freight between its 300 service centers, where 100,000 customer shipments are picked up and delivered daily. The purpose for the overhaul was twofold: First, to cut operational costs while maintaining or exceeding service levels; second, to lower the company's carbon emissions by reducing miles traveled and fuel consumed.
"A key aspect of this project was defining and producing metrics that demonstrate how potential changes would save Con-way money. In this case, line-haul miles and line-haul cost savings were very important," says Jeff Holmes, enterprise architect for Con-way Enterprise Services. "Being able to link those metrics to a positive impact on the environment further justified the project."
In years past, determining the impacts of changes to the network was a very imprecise and labor-intensive endeavor, says Holmes. Load planning relied on the expertise of a few people in the line-haul office to optimize the use of drivers and equipment for moving freight from origin to destination according to a load plan. It could take a load planner a full two months to analyze the design trade-offs and cost implications of redistributing line-haul freight at a single service center.
Fortunately, the company had a newly developed line-haul simulation tool at its disposal, a custom-made C++ simulator engine wrapped with a Web interface that lets load planners control how simulations are performed and that can model changes to a freight distribution network. The tool simulates the flow of freight through the proposed network over a configurable period of time based on set shipment volumes, and it details whether changes are beneficial from a number of perspectives, including traffic per lane, poundage handled per service center, total miles traveled, and overall cost.
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The line-haul simulator, by the way, is deployed in Con-way's datacenter, which takes advantage of recently implemented virtualization technologies and energy reduction measures that cut the company's carbon emissions by about 600,000 pounds in 2008.
In just two months, Con-way was able to reduce the overall size of the line-haul distribution network by 10 percent (resulting in 40 fewer service centers) while supporting the existing freight throughput. The Network Rationalization project has eliminated 124,000 miles per day from line-haul operations (5.2 percent of 2.4 million total daily miles) through more efficient routing and use of third-party truckload carriers (which use more direct routes). This will conserve 4.9 million gallons of diesel fuel annually, saving $14 million in fuel expense and reducing carbon emissions by 108.8 million pounds annually. Overall, this reengineering effort will save Con-way Freight $30 million to $40 million annually in operating costs and significantly reduce its carbon footprint.