An Analysis and Approach to Reduce Road Transportation Costs with Cold Chain Logistics: A Case Study of ABC Company, a Private Operator of Domestic Temperature-Controlled Freight Transport

Abstract

This research analyzed road transportation costs and explored strategies for reducing road transportation costs using cold chain logistics. ABC Company, a private operator of domestic temperature-controlled freight transport was chosen as a case study. The company’s five delivery areas were studied. The principle of the 7 Wastes was used to develop guidelines for problem-solving. The ECRS principle was applied to assess problems in each activity. This research found that the problem that most affected the total costs was the waste of time due to waiting, waste of waiting time during the loading process of goods onto delivery trucks with the cold chain system, and waste of waiting time when the trucks were not pre-cooled to the required temperature in advance. This resulted in an inability to promptly receive and arrange goods within the transport vehicle, causing ABC Company, the case study, to lose opportunities to accept additional jobs each day. This impacted backhaul costs and affected the total road transportation costs, especially in terms of fuel expenses, which were a primary factor influencing variable costs related to vehicle fuel consumption rates. These variable costs depend on the distance traveled (VC₂).  The improved approach should involve rearranging work processes and improving processes to ensure smooth information flow from the order placement stage to the delivery planning stage. A system or application should be set up to link data more efficiently, providing faster and more convenient real-time access. The analysis results, after adjusting the service areas based on transportation time and considering the shortest distance with the lowest cost according to the cost-saving approach, led to the decision to reduce the number of service areas from five to four. The cost analysis revealed that the total transportation cost for all delivery areas for the case study of ABC Company, a domestic temperature-controlled freight operator using 4-wheel temperature-controlled trucks, amounted to 10,564.87 Baht per month before optimization. After the improvements, the total monthly transportation cost decreased to 3,734.89 Baht. The total transportation cost was reduced by 6,829.98 Baht, which is equivalent to a 35% decrease. The number of transportation trips was increased. Before the improvement, there were 52 trips per month; after the improvement, this increased to 63 trips per month. Following the improvement, the monthly income from transportation services (Transportation Charge Income) increased to 495,180.00 Baht, compared to the previous income of 409,448.00 Baht. This results in an increased income of 85,732.00 Baht, which is a 9% increase.