02/16/16 by Egor Korneev.
The United State Post Office is rolling out the Dynamic Routing Optimization (DRO) contracts in select cities in the US. The DRO contracts are cost-saving measures designed to minimize the total mileage and equipment requirements for the area-wide deliveries to postal facilities. LoadTrek is currently involved with the DRO project in Dulles, VA, and through this project, we have refined our understanding of DRO contracts. In this post, we discuss our insights and important implementation details to consider in executing DRO contracts.
The structure of DRO contracts.
The basic tenet of dynamic optimization is to estimate the immediate-future delivery volume and adjust the delivery plan, accordingly. This is a departure from the static trip schedules of current two-year postal contracts. The current contracts do not account for fluctuations in weekly or monthly volume. Depending on the season, the USPS trips might run less than full capacity, or the USPS might order extra trips to handle overflow.
In contrast, the DRO contracts will involve weekly replanning of morning trips. On Wednesday afternoons, the transportation carrier will receive a formatted Excel spreadsheet – the DRO trip manifest. The document will contain the schedule of trips for the week, from the coming Saturday through the following Friday. That schedule will include pickup and delivery locations, arrival and departure times, equipment requirements, and the trip numbers for the GPS reporting.
The DRO trip manifest will include the entire schedule. Only morning trips to facilities will change weekly, whereas the afternoon trips will continue to operate on a static schedule. The dynamic and static trips are designated in the document for easy identification.
LoadTrek customers will import the manifest document from the USPS directly into LoadTrek software. LoadTrek will convert the DRO trip manifest file into the familiar trip schedules within the software. Dispatchers can adjust and assign trips to drivers, organize the trips into routes, or build “superloads” for the driver based requests.
GPS Reporting Requirements for DRO contracts.
DRO contracts require GPS reporting technology. Each trip must report to the USPS upon departure from origin, delivery to each destination, and at fifteen-minute intervals en route. The GPS reporting device must be “with the mail,” according to the language of the contract. This requires an addition of the trailer tracking device to each postal trailer operating on the DRO contract.
The addition of the trailer tracking devices may represent a significant expense for the transportation supplier. The cost of the devices can range anywhere from $250 to $400 per device based on the configuration, battery type, and the frequency of the required reporting. Monthly fees can also range from $6 to $14 dollars per month depending on the provider and the required frequency of reporting.
Carriers utilizing LoadTrek have to change minimally, in terms of driver actions, to comply with the expanded GPS reporting requirements. If the company already uses LoadTrek for the GPS reporting, then drivers already perform all functions necessary.
LoadTrek also offers companies the option to implement trailer-based tracking only. The process requires carriers to import the DRO trip manifest file into LoadTrek Software. Then, when the trips begin, a trailer number must be assigned to each active trip. The trailer assignment can occur in one of three ways:
Each option has its merits. There is a balance of cost and accuracy to each approach.
Operational changes when running the DRO contracts.
A change from static schedules, planned for two years in advance, to weekly dispatching can be jarring to many postal operations. DRO contracts will require an active dispatch and short-term planning similar to those used by freight carriers. Naturally, companies with strong dispatching processes and systems may find themselves better prepared to handle the DRO contracts.
Postal contractors considering a bid for DRO contracts should analyze their operations and consider the additional costs of implementing a robust dispatching process. This may mean an investment into new personnel, training existing personnel to handle dynamic planning, and expanding utilization of the dispatching software.
The DRO project is in early stages. We anticipate changes to the project details to accommodate operational realities that are yet to emerge. Postal contractors and technology vendors must remain flexible to accommodate the shifting processes. The transition may take time but DRO contracts are here to stay.