Time To Deliver: New science-based approaches to optimise freight transport in Australia

CSIRO Services Science

The demands on land supply-chains are increasing more than ever.

Nows the time for transport companies to consider change. Discover why intelligent optimisation and innovation will transform transport operations and maximise efficiency.
Moving more freight, to more customers, faster, is the unavoidable transformation ahead for transport companies. Goods need to be delivered with less expense, lower environmental impact and under safer working conditions. To achieve all this, supply chains will inevitably increase in complexity. Quick decisions by transport companies, to deal with such complexity, include rapid investment in new equipment to solve logistical problems short-term. However long-term strategies, that reduce costs and improve services, include sophisticated use of systems optimisation and innovation at every kink in the supply chain. Here we outline the benefits of systems optimisation for future transport logistics.

2 CSIRO Mathematics , Infor matics and Statistics

Photo: Carl Davies CSIRO

Changing the way for road and rail transport

In Australia, interstate road freight is expected to increase by 130% between 2008 and 2030 according to the Bureau of Infrastructure, Transport and Regional Economics. The rail freight task will experience similar growth. As a direct consequence, transport companies will have to meet this demand and remain profitable. Road haulage companies will invest in bigger trucks, with more freight hauled per driver, to improve productivity. Delivery times will shorten to meet customer requirements. Yet the growing task of moving more freight safely, and with reduced environmental impact, has foreseeable hurdles. Firstly, an increased truck capacity means that more goods are needed to fill each load. In turn, this requires moving freight in aggregated loads. Tracking who owns what and where its going, managing subloads at change points and organising driver rosters are just some of the issues that aggregated shipments create. Secondly, recent legislation makes all parties in the supply chain not just the transport operator - legally responsible for safe work conditions. Managing the risk of driver fatigue - by planning schedules, training drivers and checking records is essential, yet complicates the hauling of aggregate loads. Thirdly, future planning of cities will create outer freight distribution hubs to prevent large vehicles clogging up already congested public transport and commuter dense networks. The unloading and reloading of aggregate loads onto smaller vehicles at such hubs will be complex. Similarly, the rail network faces capacity limits. Only so many trains can operate simultaneously and the current network is used for public and freight transport; both forecast to increase. Reducing wait times, handling and mistakes, in addition to maintaining consistent freight movement are essential for meeting future demands. To achieve this, a holistic approach and new thinking is needed for the land supply chain. With flexible, dynamic logistic networks we can meet the needs of a growing population and ensure transport companies remain competitive.

Road and rail to take flight

Today, technology affords us abundant data on how land freight is moved. Journey times are accurately recorded, vehicle movements are pinpointed by GPS, and real-time traffic data is available. Land supply chains are no longer point-to-point deliveries, but networks to which complex modelling can be applied. However, to make a real impact, we must use both data and models, together, to make better decisions. Unlike the land supply chain, the airline industry evolved with sophisticated optimisation systems, due to the obvious dangers and expense of air travel and its more recent development. The typical airline system has several advantages over land supply networks in order to run smoothly and remain profitable. So what concepts can land transport learn from how airlines operate? Firstly, airlines have state-of-the-art timetabling and task scheduling. They control all aspects of their aircraft, from whereabouts and routing, to maintenance and refueling. In terms of human freight, extensive travel information aids successful deliveries. Secondly, airline revenue is proficiently managed and adjusted, in real time, depending on ticket sales. Seat prices are tier-adjusted, with pre-assigned fares and tariffs released relative to demand. Thirdly, airlines forecast and arrange complicated staff duty patterns. Unlike road transport, airlines have always been heavily regulated for pilot fatigue. Advanced roster systems ensure a suitable crew is available. Even last minute changes, due to absenteeism, missed connections and emergencies, are readily handled. In order for land transport systems to reach the same sophistication as airlines, and benefit from costsavings and better work practices, two areas must be addressed. 1. Better forecasting of workloads. While airlines know in advance who has booked tickets, many road transport operators are lucky to know one day prior to a delivery being required. Nevertheless, data on peak periods for land freight can be used to model and better predict outcomes. 2. Better use of real-time location data. This accessible data can be used, for example, to shorten journey times for commuters or plan efficient truck routes based on traffic flow.

Time To Deliver: New science-based approaches to optimise freight transport in Australia 3

Optimise to maximise
In the transport business, reducing cost and enhancing customer service are key. Therefore, planning and monitoring performance - with an emphasis on continual improvement - is critical. The need for sophisticated optimisation is clear when real factors such as outer city distribution hubs, large capacity trucks and fatigue risk management, exist. Transport companies will advance, through systems optimisation and innovation, to provide optimal service and increase profits. In general, there are three stages in the supply process that benefit from optimisation. The planning stage - before the delivery process begins - is an ideal time to optimise pricing, forecast peak periods and decide where to put what sized trucks. With little lead-time for day-today operations, planning for upcoming peak periods optimises the number of trucks and drivers to meet demand. During the delivery process, there are real-time aspects to monitor, for instance unforeseen disruptions and applying rules to control operations, such as restricting waiting times for loading or what to do if a truck breaks down. Finally, optimising the stage after a delivery is completed will work out if the delivery went to plan, or find out what to adjust next time to better meet key performance indicators.

Complexity at the coal face: an Australian case study

The good news is that every supply chain can be improved, no matter how complicated or underdeveloped it is. The most important point is to identify the true bottleneck, with regard to increasing productivity and profits. One real-life example of supply chain optimisation is the operations of the Hunter Valley Coal Chain (HVCC). HVCC generates AU$15 billion in annual export revenue. Blending and loading coal into sea vessels at three ports, after transport along 380 kilometres of rail from 27 train loading points, following extraction from 35 different mines owned by 13 coal producers, makes HVCC an enormous logistical feat. As demand for Hunter Valley coal increased, so did the impetus for optimisation. Intelligent advice suggested building a forth seaport terminal to increase the coal supply to international buyers. Yet building a new port terminal was a significant financial outlay, and it was vital to first determine whether the rest of the supply chain could keep up. The HVCC logistics team enlisted CSIRO to perform optimisation modelling of the current supply chain, before investing in major capital works. CSIRO reviewed many aspects of the HVCC operation, including loads, service levels, fleets, handling facilities and human resources. Through science-based approaches to optimisation, CSIRO found effective solutions for HVCC to cope with demand and expansion without unnecessary spending.

How to optimise the supply chain process

Optimising your supply chain offers the most benefits when three factors are present: complexity, degrees of freedom and change. If your supply chain is simple, for example, isnt multimodal or doesnt move aggregate loads, then you can normally figure out what to adjust in order to improve the system without optimisation. However, more complex supply chains, including less than a truck load services always benefit from systems optimisation. Furthermore, if your supply chain has degrees of freedom, meaning that there is some aspect or process you can change, then applying optimisation will show you the best way to achieve maximum efficiency. Finally, because nothing is ever set in stone, an element of change with time or with external factors can be modeled. Technology allows changes to be monitored, thus continual optimisation will ensure you provide the best service as things continue to change.

Photo: John Bartholdi, Georgia Institute of Technology

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Summary
To

Need advice?
Beware of reacting too fast and rushing to employ a consultant, go out to tender, or invest in a computer package that may do little to optimise your processes. As a first step, seek impartial, expert advice. Often, the biggest hurdle is correctly defining the problem. Find out what your company specifically wants to achieve. Get reliable advice on the best way to use systems optimisation to ensure you stay viable for the long haul.

meet future demand, freight transport systems will expand capacity and improve efficiency data and workload forecasting can be used to streamline task scheduling, manage revenue and improve work practices benefits the planning, delivery and post-delivery stages of the supply chain to save money and enhance customer services approaches to optimisation enhance productivity and profits in all manner of supply chain systems

Real-time

CSIRO
CSIRO, the Commonwealth Scientific and Industrial Research Organisation, is Australias national science agency and one of the largest and most diverse research agencies in the world, with more than 50 locations throughout Australia and overseas. CSIRO offers logistics systems optimisation and innovative modelling to private companies and organisations, as well as supporting the Australian Government to improve industry, society and the environment.

Contributor
Alan Dormer, Theme Leader, Services Science, CSIRO Mathematics, Informatics & Statistics CSIROs Alan Dormer leads a team of researchers who bring science to Australias growing services sector. His team is dedicated to applied research for the services sector. The current focus is in transport and logistics, government services, industrial services, finance and infrastructure, and there are plans to include other sectors in the future.The team applies specialist skills in quantitative risk, mathematical modelling, optimisation, information and communications and more. Read more about Alan and his team at: www.csiro.au/people/Alan.Dormer.html www.csiro.au/science/ps63k.html

Optimisation

Science-based

Before

needless overspending occurs, seek reliable advice about optimisation

Time To Deliver: New science-based approaches to optimise freight transport in Australia 5

Front cover photo: Carl Davies, CSIRO

For further information: CSIRO Mathematics, Informatics and Statistics: Alan Dormer Phone: (03) 9545 8082 Email: alan.dormer@csiro.au

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