To optimize urban deliveries, supply chain managers must not only find the best route between multiple addresses, but also consider multiple stops, empty running and the service times that you have set with your client. This is highly important in measuring logistics costs and performance.
The average service time is a metric that calculates the amount of time that it takes in average to deliver to a customer in its premises.
Given the current scenario of last-mile and urban logistics, it is important to monitor how is your fleet leading their route to service a client, as delivery fleets face many external barriers before arriving to the customer's doorstep, such as:
An average service time is calculated as:
You need to take service times in consideration to plan your fleet's routing schedule. Your client's timing is fixed; your route to and from the customer's doorstep is not. Just imagine your company runs a small fleet comprised of small and medium trucks for frozen food deliveries for small retail stores. There are pros and cons for each size, though.
Just look at this picture:
| Truck | Small Size | Medium Size |
| Average service time | 15 minutes | 30 minutes |
| Daily deliveries | 18 | 18 |
| Total service time | 270 minutes | 590 minutes |
| Number of return trips | 6 | 3 |
| Empty running minutes | 270 minutes | 135 minutes |
| Empty running + service times | 540 minutes | 675 minutes |
It is highly important to take these numbers into account.
Academics from Portland State University, for instance, made an interesting and insightful research about the Impact of Last Mile Parking Availability on Commercial Vehicle Costs.
Their research was presented at the International Conference on Information Systems, Logistics and Supply Chain held in France in June, hosted by Kedge Business School and the University of Bordeaux, where one of the key topics was Smart and Durable city logistics.
Miguel Figliozzi and Chawalit Tipagornwong, from the Department of Civil and Environmental Engineering, found out that that on-street parking spaces and freight loading zones (FLZs) in New York City where insufficient during certain periods of the day in many dense and congested urban areas, and commercial drivers chose not to park in available FLZs located away from customers.
In their case, service times could be costly. “When nearby parking is not available, the cost of double parking and parking fines can be substantial", they say.
“For example, in New York City large delivery fleets such as FedEx and UPS paid $550 million in 2013.”
This can have important consequences in pricing and planning:
“Since repeated parking fines increase delivery costs, urban freight distributors and service providers raise service fees to customers in areas where deliveries or pick-ups are more difficult; for example, UPS charges a surcharge in some areas of Manhattan in New York City”.
As a result of their research, the academics saw that as parking availability decreases, costs increase more rapidly for less than truckload shipping (LTL) services than for Courier services, as LTL are more likely to wait for parking than courier services.
“The differences in costs per customer for LTL and courier deliveries are related to customer service times and route structures. LTL vehicles have longer service times and hence the probability of parking fines are higher if the vehicles are not legally parked.”
As we see, for cost management, it is highly necessary to analyze in detail waiting and service times and track multiple routes to find the best delivery combinations.
We recommended regularly updating data when scheduling routes, incorporating these external scenarios into the picture, to make route optimization more precise and…definitely, less costly.