Route optimisation: the saving hiding in plain sight
Route optimisation: the saving hiding in plain sight
Route efficiency is the most underanalysed cost dimension in most fleet operations.
The vehicles follow routes established when the operation was smaller, or when a particular customer was added, or when a driver found a way that worked and stuck with it. Those routes are rarely formally reviewed — and they rarely reflect current conditions.
The European Commission’s DG MOVE transport research division documents that route optimisation — using GPS data to analyse and restructure delivery or service routes — delivers average distance reductions of 10–30% for commercial fleets that have never undergone a formal route review.
The numbers in practice
A fleet covering 2 million kilometres per year may be covering 200,000–600,000 kilometres it does not need to cover. At $0.80 per kilometre in combined fuel, wear, and driver time cost — a conservative figure for medium commercial vehicles — that represents $160,000–$480,000 per year in avoidable cost.
The McKinsey Global Institute’s logistics research documents that last-mile delivery typically accounts for 28–55% of total logistics cost and is the segment with the highest optimisation potential.
The Geotab 2024 benchmarking report documents that fleets using route optimisation software achieve an average of 13.4% reduction in distance per delivery and 11.8% reduction in fuel per delivery compared to their pre-optimisation baseline.
For fleets without optimisation software
A manual route audit — plotting current routes on a map and identifying obvious inefficiencies — achieves a documented average of 6–8% distance reduction. Free to conduct. Requires one person and one day.
Does your fleet operate the same routes it operated three years ago?
Sources
European Commission DG MOVE transport optimisation research; McKinsey Global Institute last-mile logistics research; Geotab Route Optimisation Benchmarking Data (2024).