Towards more efficient logistics: increasing load factor in a shipper’s road transport

• Published date: 08 May 2017
• Pages: 228-250
• Date: 08 May 2017
• DOI: https://doi.org/10.1108/IJLM-04-2015-0071
• Author: Vendela Santén
• Subject Matter: Management science & operations,Logistics

Towards more efficient logistics:

increasing load factor in a

shipper’s road transport

Vendela Santén

Department of Technology Management and Economics,

Chalmers University of Technology, Göteborg, Sweden

Abstract

Purpose –Increasing load factor is crucial for transport efficiency and may benefit shippers because of its

potential to reduce both environmental impact and transportation costs. The purpose of this paper is to

explore how shippers can increase load factor in their road transport by identifying opportunities for logistics

action and influences on load factor performance measures created by such opportunities.

Design/methodology/approach –A case study is performed of the outgoing goods flow from the central

warehouseof a large retailer in Sweden.Data are collected frominterviews with the shipper and its contracted

freightforwarder, as wellas from archivalsources and visual observations,and applied to producea framework.

Findings –Logistics actions that can increase load factor are identified and categorised according to

packaging efficiency, loading efficiency and booking efficiency, all of which are linked to logistics variables

and specific performance measures in the framework. Visual observations of volumetric load factor in

vehicles indicate room for improvement via, for example, making lead times more flexible.

Practical implications –The framework’s principles can be used to support shippers in finding

opportunities to increase load factor.

Originality/value –The framework clarifies the concept of load factor as a whole by explaining each

logistics action’s contribution to increasing load factor, as well as the actions’combined effect in the context of

a shipper and its purchased transport share.

Keywords Logistics, Performance measures, Transportation, Load factor, Logistics actions, Shipper

Paper type Research paper

1. Introduction

To mitigate the growing environmental impact of freight transport, the urgency of greening

freight transportation activities has been outlined in both political debates (European

Commission, 2011) andresearch on sustainable logistics(Dey et al., 2011). Ambitious long-term

environmental targetsset by politicalorganisations,including the EuropeanUnion’s goal to cut

greenhouse gas emissions in the transport sector by 60 per cent by 2050, are spurring this

sense of urgency (European Commission, 2011). As identified in the EU White Paper

addressing transport (European Commission, 2011), strategies for meeting EU climate change

goals focus on initiatives geared towards more competitive, resource-efficient transport

systems. In this context, a significant variable involved in the creation of more efficient road

freight transport systems is increased load factor (Piecyk and McKinnon, 2010; McKinnon,

2000; SOU, 2013), which allows the movement of more goods with fewer transport resources

and thus reduces vehicle-km per transported tonne. As a result, increased load factor reduces

not only environmental impact but also transportation costs (Wu and Dunn, 1995; Kohn

and Brodin, 2008), particularly benefitting shippers for whom transportation is a large share of

total logistics costs.

Today, an increasing share of shippers outsources their logistics activities (Langley et al.,

2014). In the Swedish context, for example, more than 95 per cent of manufacturing

companies have their transportation organised by a third party (Lammgård, 2007). Though

third parties may organise transportation, shippers nevertheless play an important role in

influencing the efficiency of transport operations. For example, shippers must engage

freight forwarders in order to achieve more efficient, environmentally friendly supply chains

The International Journal of

Logistics Management

Vol. 28 No. 2, 2017

pp. 228-250

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-04-2015-0071

Received 16 April 2015

Revised 25 November 2015

Accepted 14 December 2015

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

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IJLM

28,2

(Martinsen, 2014). Furthermore, both opportunities in and limitations on transport

operations are the result of shippers’decisions concerning the planning and management of

the material flow (Aronsson and Huge Brodin, 2006), such as lead time and the frequency of

deliveries (Piecyk and McKinnon, 2010). Shippers’opportunities to influence load factor thus

calls for collaboration with freight forwarders and an understanding of how their choices

influence transport operations organised by third parties.

Though increasing load factor is critical for efficient freight transportation, a recent

literature review finds surprisingly few studies that focus on ways of doing so (Santén and

Rogerson, 2014),i.e. how to increase load factor in practice.In the environmental and logistics

literature, load factor is often conceived of as a single aspect among others (e.g. Piecyk and

McKinnon, 2010; Dekker et al., 2012). Furthermore, researchthat focusses on load factorrarely

assumes the perspective of shippers (Santén and Rogerson, 2014); rather, it assumes the

perspectives of other actors, including trucking firms (e.g. Léonardi and Baumgartner, 2004)

and companies with their own vehicle fleets (e.g. McKinnon and Ge, 2004).

To expand the current understandingof how shippers can increase load factor, this paper

investigates a shipper’s outgoing flow of goods. The purpose is to explore opportunities to

increase load factor from a shipper’s perspective, by identifying logistics actions and their

influences on load factor performance measures. To achieve this objective, a framework is

developed that relates logistics actionsto load factor indicators and corresponding measures.

The use of the frameworkwill ultimately supportdecisions regarding which actionsto take to

increase load factor and how to evaluate it in the context of a shipper.

After the following section, an overview of research related to load factor is given, which

further describes the challenges to be overcome when investigating ways of increasing and

measuring load factor. Section 3 describes the study’s method, and Section 4 presents the

case. Section 5 next sets forth the results in the form of a framework describing how load

factor can be increased in shippers’transportation operations. Section 6 concludes the paper.

2. Load factor

Load factor is a performance measure of transport efficiency in terms of the amount of

goods loaded into a vehicle. More specifically, it is the ratio of the actual load carried to the

maximum load that could be carried (McKinnon and Ge, 2004); the actual load can be

measured in reference to the constraints of weight, area or volume.

The next three subsections review research concerning load factor measurements and

the ways in which shippers can increase load factor, first, by examining the role of load

factor in the logistics performance literature; second, by elaborating on the challenges

involved in measuring load factor; and third, by describing how shippers can influence load

factor. The subsections conclude by offering insights from the literature as a starting point

for developing the framework describing opportunities to increase load factor and their

influences on load factor performance.

2.1 Logistics performance literature –the role of the load factor

Companies measure their performance for several reasons: to identify success, to evaluate

improvements, to understand processes, to identify problems and to support decisions

(Gunasekaran and Kobu, 2007). Action is taken in companies to achieve performance, and

the aim of measuring performance is to quantify action (Neely et al., 2005). The challenge is

finding a way to design performance measures that correlate with performance goals and

the aim of measurement.

Logistics performance can be measured for strategic, tactical or operational purposes

(Gunasekaran et al., 2001) and for application in a number of logistics areas, e.g. transportation,

warehousing, inventory control, order processing and logistics administration (Mentzer and

Konrad, 1991). In the context of a shipper, load factor measures provide the transport and

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