Transportation LogisticsTransportation LogisticsSpring 2009Spring 2009

Travel Time Variability and the Travel Time Variability and the Impact on Supply ChainsImpact on Supply Chains

Lack of reliabilityLack of reliability Caused by congestion Caused by congestion

Expected variabilityExpected variability Caused by rare eventsCaused by rare events

Unexpected variability (disruption)Unexpected variability (disruption)

Generally longer than average travel times Generally longer than average travel times are the concernare the concern Penalties for longer than average trip times Penalties for longer than average trip times

much greater than penalties for shorter than much greater than penalties for shorter than average trip timesaverage trip times

How do we manage How do we manage variabilityvariability

Demand sideDemand side influence when people travel to create a influence when people travel to create a

more constant demandmore constant demand Supply sideSupply side

Provide more infrastructureProvide more infrastructure Protect infrastructure from disruptions Protect infrastructure from disruptions Notify travelers Notify travelers

$43 Million in trade each day$43 Million in trade each day About 500,000 northbound and About 500,000 northbound and

southbound trucks in 2005southbound trucks in 2005 Many agencies operating (FDA, CBP)Many agencies operating (FDA, CBP) 44thth busiest N. border commercial busiest N. border commercial

crossing, busiest crossing W. of Detroitcrossing, busiest crossing W. of Detroit Transit times can be long & Transit times can be long &

unpredictableunpredictable Congested during peak periodsCongested during peak periods

Lower Mainland/Whatcom Lower Mainland/Whatcom County Border CrossingsCounty Border Crossings

Dataset Comparison Dataset Comparison (Southbound)(Southbound)

FAST vehicle distributions match in FAST vehicle distributions match in the two datasets, therefore we the two datasets, therefore we assume the nonFAST data for June assume the nonFAST data for June 2006 is reasonably representative of 2006 is reasonably representative of average nonFAST crossing times.average nonFAST crossing times.

The average wait time for nonFAST The average wait time for nonFAST vehicles is distinctly longer than for vehicles is distinctly longer than for FAST vehicles, but the standard FAST vehicles, but the standard deviation is not.deviation is not.

Over the three day period the Over the three day period the average arrival rate per lane for the average arrival rate per lane for the WCOG data is the same for FAST and WCOG data is the same for FAST and non-FAST (21.5 vehicles per hour) non-FAST (21.5 vehicles per hour) but FAST service rates are shorter but FAST service rates are shorter (86 seconds compared to 119, 121 (86 seconds compared to 119, 121 for the two non-FAST lanes), so for the two non-FAST lanes), so differences in wait time are due to differences in wait time are due to differences in service rates rather differences in service rates rather than differences in arrival rates. than differences in arrival rates.

Probe WCOG

Average wait time FAST

23 minutes

22 minutes

Standard deviation FAST

24 minutes

21 minutes

90th Percentile FAST

47 minutes

Average wait time nonFAST

1 hour 23 minutes

Standard deviation nonFAST

26 minutes

Border Crossing TimesBorder Crossing Times

4 hours20 minutes

Seasonal Variation

0:00:00

0:14:24

0:28:48

0:43:12

0:57:36

1:12:00

1:26:24

Janua

ry

Febru

ary

March

AprilM

ayJu

neJu

ly

August

September

Octobe

r

November

Decem

ber

Tim

e (m

in)

NB Average

NB Standard Devia tionSB Average

SB Standard Devia tion

Disruptionsoff-hours

0:00:00

0:28:48

0:57:36

1:26:24

1:55:12

2:24:00

2:52:48

3:21:36

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Tim

e (m

in) NB Average

NB Standard DeviationSB AverageSB Standard Deviation

0:00:00

0:14:24

0:28:48

0:43:12

0:57:36

1:12:00

1:26:24

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Tim

e (m

in) NB Average

NB Standard DeviationSB AverageSB Standard Deviation

SB more variable

ORIGIN

DESTINATION

ORIGIN ORIGIN

DESTINATION DESTINATION

HandlingFacility

BORDER

ORIGIN

DESTINATION

ORIGIN ORIGIN

DESTINATION DESTINATION

HandlingFacility

BORDER

Example 1: Jet FuelExample 1: Jet Fuel

Vancouver International Airport

Cherry Point Refinery

Border

1. Charges supplier for wait times more than 30 minutes

2. Is forced to hire more drivers and adds this cost to freight rates

3. Specialized provider

Example 2: LTL SeafoodExample 2: LTL SeafoodBC Fish Farms

California Wholesaler

Border

BCProcessing

PlantsBC

Distributors

California Wholesaler California Produce

HandlingFacility

1. Responsible for spoiled goods

2. Increases freight rate to account for additional buffer time and spoilage

3. Harassed when shipments delayed by congestion and variability

4. Specialized provider

Example 3: Small TL Example 3: Small TL FirmFirm

Origin

Destination

Border

Destination

Origin

1. Increases freight rate to account for additional buffer time

2. Harassed when shipments delayed by congestion and variability

Example 4: Lumber Re-load Example 4: Lumber Re-load FacilityFacility

Wood processingplant

Border

Reload Facility Destination

1. Increases freight rate to account for additional buffer time/safety stock

2. Charged by railroad when cars not filled in time

Example 5: Air CargoExample 5: Air Cargo

Vancouver International Airport

Border

1. A significant amount of the time critical cargo at the border is crossing northbound to meet cargo flights at Vancouver international airport.

2. YYZ is better served by widebodies for direct flights to Asia than SEA

3. Variability can cause missed flights

USLocations

Reported StrategiesReported StrategiesStrategyStrategy ConsequenceConsequenceIncrease buffer Increase buffer timestimes

•Reduces capacity of existing infrastructure or Reduces capacity of existing infrastructure or requires additional hires and equipmentrequires additional hires and equipment•Increases transportation and inventory cost Increases transportation and inventory cost •Reduces late arrivals and stock-outsReduces late arrivals and stock-outs

Increase dwell Increase dwell times at times at intermediate intermediate handling handling facilitiesfacilities

•Reduces impact of delay on outbound vehicles, Reduces impact of delay on outbound vehicles, particularly relevant for LTL operationsparticularly relevant for LTL operations•Increases total transit time and therefore inventory Increases total transit time and therefore inventory costcost

Routing ChangesRouting Changes •Reduces the impact of variability on operationsReduces the impact of variability on operationsSchedule Schedule changeschanges

•Reduces the impact of variability on operationsReduces the impact of variability on operations

Reduce level of Reduce level of activity in cross-activity in cross-border tradeborder trade

•Reduce impact of variability on operationsReduce impact of variability on operations•Stop providing courier or same day serviceStop providing courier or same day service•Reduce revenue to carrier and level of cross border Reduce revenue to carrier and level of cross border economic activityeconomic activity

Change Change transportation transportation modemode

•Change border procedures which, depending on Change border procedures which, depending on local circumstances, may improve travel time local circumstances, may improve travel time reliabilityreliability

Cost of No ResponseCost of No Response Late deliveries can lead to a loss of business Late deliveries can lead to a loss of business

or various late charges and penalties. or various late charges and penalties. Port of VancouverPort of Vancouver Reload facilityReload facility Hours of service constraintsHours of service constraints Performance contractsPerformance contracts

Increased buffer times means typically Increased buffer times means typically arriving ahead of schedule, and wasting arriving ahead of schedule, and wasting driver and truck time.driver and truck time.

Pacific Highway Cross-Border Truck Commodities & Origin-Destination Patterns

Non-metallic products3%

Plastics and rubber2%

Prepared foodstuffs 3%

Base metals2%

Meat, fish, and seafood2%

Misc. manufactured products2%

Allied paper products4%

Agricultural products4%

Other18%

Wood products7%

Empty/Empty containers47%

Articles in base metal2%

Waste and scrap2%

Southbound Travel Southbound Travel PatternsPatterns

ORIGINS

 West

Lower Mainland

Rest BC AlbertaEast

Lower Mainland

Whatcom West Canada

East Canada TOTAL

DESTINATIONS

Alaska 0.1%   0.1%         0.2%

East Canada 0.1%             0.1%

Whatcom 10.5% 0.6% 0.2% 0.1% 0.1%   0.1% 11.6%

Puget Sound 34.9% 0.7% 0.8% 0.2%     0.4% 37.1%

West WA 4.4% 0.2% 0.1%         4.8%

East WA 3.2%             3.2%

West USA 28.4% 1.7% 0.7% 0.1% 0.1% 0.1% 0.1% 31.0%

Rest USA 11.6% 0.4%           12.1%

TOTAL93.2% 3.7% 1.9% 0.4% 0.2% 0.1% 0.5%  

Cost of variability is Cost of variability is currently smallcurrently small

Companies ability to forecast travel times is poorCompanies ability to forecast travel times is poor Delivery time windows are wideDelivery time windows are wide Low equipment utilizationLow equipment utilization

Hours of service regulations and working patterns make it Hours of service regulations and working patterns make it difficult to exploit time savings difficult to exploit time savings Single driversSingle drivers Home baseHome base Typical origins and destinationsTypical origins and destinations

Commodity types not generally time criticalCommodity types not generally time critical

Wasted blocks of time are small relative to useable blocks of Wasted blocks of time are small relative to useable blocks of timetime

Cost is born directly by driver not by trucking firmCost is born directly by driver not by trucking firm

ConclusionsConclusions Border delays perceived as fixable and border Border delays perceived as fixable and border

process of little value. process of little value. Although other sources of variability often Although other sources of variability often

contribute more to delay they are perceived as contribute more to delay they are perceived as unfixable.unfixable.

Some logistics structures compound delay from Some logistics structures compound delay from one to many vehicles.one to many vehicles.

Moderate delay (2 standard deviations) is Moderate delay (2 standard deviations) is primarily accommodated by increasing buffer primarily accommodated by increasing buffer times.times.

Companies do not currently accommodate very Companies do not currently accommodate very long delays in their logistics planning.long delays in their logistics planning.

How much does reliability How much does reliability matter?matter?

It depends!It depends! Trying to meet a schedule Trying to meet a schedule Trying to utilize resources effectivelyTrying to utilize resources effectively Commodity profileCommodity profile Operating environmentOperating environment CompetitionCompetition ExpectationsExpectations

Nature of schedulingNature of scheduling

This describes what level of variability makes This describes what level of variability makes the delivery late. If deliveries are not the delivery late. If deliveries are not scheduled, they cannot be late, and incur a late scheduled, they cannot be late, and incur a late penalty of any sort. If deliveries are loosely penalty of any sort. If deliveries are loosely scheduled, a greater magnitude of variability scheduled, a greater magnitude of variability will need to be present to cause a late penalty. will need to be present to cause a late penalty. Specific levels considered are suggested as:Specific levels considered are suggested as:

Truck arrival is scheduled tightly (less than Truck arrival is scheduled tightly (less than one hour window);one hour window);

Truck arrival is scheduled loosely (1-4 hour Truck arrival is scheduled loosely (1-4 hour window); andwindow); and

Truck arrival is not scheduled.Truck arrival is not scheduled.

Level of contractingLevel of contracting This helps to describe who bears the cost This helps to describe who bears the cost

of inventory. If transportation is managed of inventory. If transportation is managed in-house, then the shipper is responsible in-house, then the shipper is responsible in transit inventory. If it is outsourced, the in transit inventory. If it is outsourced, the organization moving the goods is not the organization moving the goods is not the one bearing the inventory cost. Specific one bearing the inventory cost. Specific levels considered are suggested as:levels considered are suggested as: Transportation contracted (inventory Transportation contracted (inventory

cost not incurred by carrier); andcost not incurred by carrier); and Transportation in-house (inventory cost Transportation in-house (inventory cost

incurred by carrier).incurred by carrier).

Relative cost of inventoryRelative cost of inventory The higher to value of the goods, the more The higher to value of the goods, the more

sensitive the operations will be to travel time sensitive the operations will be to travel time variability due to larger inventory costs. Specific variability due to larger inventory costs. Specific levels considered are suggested as:levels considered are suggested as: Non-perishable or low value goods; andNon-perishable or low value goods; and Perishable or high value goods.Perishable or high value goods.

Travel time riskTravel time risk If a carrier makes many deliveries in one day If a carrier makes many deliveries in one day

and they operate in a scheduled environment, and they operate in a scheduled environment, the carrier will need to predict the travel time the carrier will need to predict the travel time of each individual leg in a delivery route. of each individual leg in a delivery route. Thus, the number of deliveries per day comes Thus, the number of deliveries per day comes into play when considering the impact of into play when considering the impact of variable travel times on a carrier. Specific variable travel times on a carrier. Specific levels considered are suggested as:levels considered are suggested as: Short range (many deliveries in one day);Short range (many deliveries in one day); Medium range (2-3 deliveries per day); andMedium range (2-3 deliveries per day); and Long haul (one delivery per day).Long haul (one delivery per day).

Driver payDriver pay If drivers are paid by the hour, then the If drivers are paid by the hour, then the

driver himself does not bear the cost of driver himself does not bear the cost of longer than average travel times and the longer than average travel times and the cost is borne by the carrier. If the driver is cost is borne by the carrier. If the driver is paid by the trip (often the case with owner-paid by the trip (often the case with owner-operators), the cost of longer than average operators), the cost of longer than average travel times is borne by the driver himself. travel times is borne by the driver himself. Specific levels considered are suggested as:Specific levels considered are suggested as: Driver paid by the hour (employee); andDriver paid by the hour (employee); and Driver paid by the trip (subcontractor).Driver paid by the trip (subcontractor).

Level of variabilityLevel of variability Carriers that drive primarily on highways will Carriers that drive primarily on highways will

likely anticipate less travel time variability, likely anticipate less travel time variability, whereas carriers that drive primarily on arterials whereas carriers that drive primarily on arterials may anticipate more travel time variability. This may anticipate more travel time variability. This should affect both the current design of their should affect both the current design of their operations, and the impact of longer than operations, and the impact of longer than average travel times on their operations. Specific average travel times on their operations. Specific levels considered are suggested as:levels considered are suggested as: Primarily highway driving; andPrimarily highway driving; and Primarily arterial driving.Primarily arterial driving.

Fleet sizeFleet size A larger fleet size presents a carrier with A larger fleet size presents a carrier with

flexibility and the ability to spread risk of flexibility and the ability to spread risk of larger than average travel times across larger than average travel times across drivers or vehicles. Specific levels drivers or vehicles. Specific levels considered are suggested as:considered are suggested as: Small vehicle fleet (single driver);Small vehicle fleet (single driver); Medium vehicle fleet (less than 25 Medium vehicle fleet (less than 25

vehicles); andvehicles); and Large vehicle fleet (more than 25 Large vehicle fleet (more than 25

vehicles).vehicles).

ConnectivityConnectivity The consequences of larger than average travel The consequences of larger than average travel

times are more severe if the delivery is meeting times are more severe if the delivery is meeting an outgoing vehicle at an intermodal facility, an outgoing vehicle at an intermodal facility, cross-dock or terminal. Specific levels considered cross-dock or terminal. Specific levels considered are suggested as:are suggested as: Meeting connection (intermodal or cross-Meeting connection (intermodal or cross-

dock/terminal); anddock/terminal); and Not meeting connection (intermodal or cross-Not meeting connection (intermodal or cross-

dock/terminal).dock/terminal).

Schedule flexibilitySchedule flexibility The ability to mitigate the impact of larger The ability to mitigate the impact of larger

than average travel times due to congestion than average travel times due to congestion is limited by the carrier’s schedule flexibility is limited by the carrier’s schedule flexibility and the current timing of trips. Specific and the current timing of trips. Specific levels considered are suggested as:levels considered are suggested as: Trip occurs during peak periods but Trip occurs during peak periods but

ability to shift off peak;ability to shift off peak; Trip occurs during peak period and Trip occurs during peak period and

limited ability to shift; andlimited ability to shift; and Trip occurs off peak.Trip occurs off peak.

MetricsMetrics

For Freight Movers, reliability is related to the For Freight Movers, reliability is related to the frequency that the experienced travel time is within frequency that the experienced travel time is within +/- 15 minutes of the expected travel time. +/- 15 minutes of the expected travel time.

None of the respondents currently have delivery None of the respondents currently have delivery windows of less than 30 minutes in length, and windows of less than 30 minutes in length, and therefore it is fair to say that travel times do not therefore it is fair to say that travel times do not need to be predicted with any more certainty than need to be predicted with any more certainty than +/- 15 minutes. +/- 15 minutes.

More narrow time windows are not required in part More narrow time windows are not required in part because they are currently unattainable. because they are currently unattainable.

For carriers that make many deliveries in one day, a For carriers that make many deliveries in one day, a series of longer than average travel times compound, series of longer than average travel times compound, making it difficult to identify how reliable an making it difficult to identify how reliable an individual trip needs to be. individual trip needs to be.