UPS Crunches Data to Make Routes More Efficient, Save Gas

Photographer: David Paul Morris/Bloomberg
United Parcel Service Inc. trucks in San Francisco on April 19, 2012. The shipping company spends about $1 billion each year in technology to improve operations.

United Parcel Service Inc., the world’s biggest package shipping company, is using data from customers, drivers and vehicles in a new route guidance system that will save time and money and reduce fuel burn.

The On-Road Integrated Optimization and Navigation, or Orion, system is being introduced this year to 10,000 of the Atlanta-based company’s 55,000 U.S. drivers, UPS said today. Orion has been in development nearly 10 years and is the company’s biggest technological advancement in the same timeframe, UPS said.

UPS has a history of monitoring and standardizing even the smallest issues, from drivers keeping keys hooked on a finger instead of in their pockets and making only right turns, to increase efficiency and reduce costs. The company declined to provide total savings from technology it has designed and other programs.

“We’re using big data to drive smarter and the idea is an extension of that to other things,” Chief Information Officer David Barnes said in an interview. “This is a world where we have such levels of connectivity the information in almost all cases is coming faster than the packages are being picked up.”

The latest effort gathers electronic information from UPS customers, from its fleet of 101,000 delivery vehicles and from handheld devices carried by drivers to craft optimal routes that reduce distance, time and fuel. Complicating the task are parcels with specific pickup or delivery times, and the company’s My Choice option that lets customers use a smartphone app to move or delay deliveries.

Mathematical Model

“We brought that information together and looked at developing a mathematical model that would take into account the physics of the driving route, the knowledge of the driver and information from the packages to bring it all together with optimal routing,” Barnes said.

The shipping company, which spends about $1 billion each year in technology to improve operations, won’t comment on the cost to develop the program beyond saying it was “significant” or how much it will save when it’s fully deployed in 2017.

Initial tests show a decline in miles driven on routes using Orion, UPS said. A reduction of 1 mile per day for every driver can save the company as much as $50 million a year in fuel, vehicle maintenance and time.

“Early results have been extremely positive,” Myron Gray, president of U.S. operations, said on an Oct. 25 conference call with analysts. On average, routes using Orion have been meeting or exceeding expectations, Barnes said.

Reduced Emissions

By the end of this year, it will have saved UPS more than 1.5 million gallons of fuel and reduced carbon dioxide emissions by 14,000 metric tons, the company said.

Using a proprietary system of telematics to gather 200 data points from equipment on each vehicle, UPS in 2012 was able to eliminate 206 million minutes of idling time and save more than 1.5 million gallons of fuel.

As part of an effort begun in 2004, delivery routes were designed to minimize left turns, which require vehicles to wait at intersections for oncoming traffic to clear before proceeding.

Orion won’t have updates of real-time data that would help drivers avoid accidents and road construction, Barnes said. That ability already is being worked on for the next generation of the system.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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