The tricky part is to make sure that empty equipment is available at the right place the right time in the right number.
Did you realize that an increase of the utilization factor by merely 10% can increase your net profit by as much as 50%?
A global carrier is typically utilizing each container 5 times per year for full loads.
When the utilization (number of full loads per box per year) is increased, this will usually not incur any additional fixed cost but only direct variable cost, i.e. the costs that will only occur if the additional box is booked and loaded.
This means that the additional contribution yielded by increasing the utilization is fully impacting the net profit by a similar amount - so if the line is able to increase the utilization factor by only 10% - from 5.0 to 5.5 full loads per year, this will typically add some 14% to the total contribution (coverage of the fixed costs) – but, considering the additional contribution is directly reflected on the bottom line the net profit is improved by not less than 50%.
I would like to illustrate that more by this case - assumptions:
Have a look at the numbers in the below box and note the change and impact on contribution and net profit by the increase of box utilization (number of full loads per container per year) - these are the number used in the graph above:
I would claim that with respect to yield and profit optimization, equipment utilization is the most important KPI.
It does not require any magic to do this, but it does indeed require a relatively good coverage of IT solutions that are properly integrated in order to provide the needed information and elements from areas like forecasting, commercial, operational planning and execution, and follow-up - below is an outline of a complete integration and inter-relation:
I have been working quite a lot with design of such areas and elements as well as relevant and required integration. Please contact me for a talk about how I can help you.