How Vehicle Routing Optimization Systems Solve Route Problems

May 17, 2023
13 min

What do excessive drivers’ idle times, ineffective cost controls, missed pickups/drop-offs, and high fuel consumption have in common? They all are basic vehicle routing problems (VRP) that you may have already faced in your business and perhaps are now looking for solutions to.

Here comes a vehicle routing optimization system that can assist you in solving any type of vehicle routine problem. However, many delivery services, shipping businesses, or moving companies still wonder if they need tailor-made systems or off-the-shelf solutions.

If you find yourself puzzling over this very question, keep reading to find out:

  • What is a vehicle routing optimization system and why does it matter
  • Key vehicle routing problems you can solve with optimization
  • Must-have features of vehicle routing software
  • Off-the-shelf vs custom transportation route optimization software: what will better address your needs
  • How Ascendix helped a client solve their vehicle route problems.

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What is Vehicle Routing Optimization System and Why It Matters

A vehicle routing optimization system is a technology solution designed to help companies automate their delivery processes and eliminate vehicle routing problems arising from inefficient pipelines. Simply put, it’s a type of transportation management software that enables delivery providers to generate the most efficient vehicle routes within the specific supply chain.

Optimizing resource constraints, excessive drivers’ idle times, delivery pickups/drop-offs, as well as cutting down on capacity constraint issues, empty legs, and missed waypoints, are all about vehicle routing optimization.

Transportation route optimization software is a benefit-oriented solution for all business parties including fleet managers and drivers. Here are the party-specific outcomes for each side.

Fleet management software benefits for fleet managers:

  • Real-time delivery tracking. Managers can access currently assigned routes, vehicle indicators, estimated arrival times, and traffic conditions and maintain the continuous flow of runtime services.
  • Dynamic routing/rerouting. Managers can monitor detailed minute-by-minute traffic data, construction problems, and weather conditions and trace delivery executives and drivers in real-time.
  • Accurate & AI-driven analytical tools. It helps managers analyze on-road fleet performance like roadblocks, fuel consumption, and avoidance zones to generate real-time reports that help optimize route planning, minimize theft risks, and improve multiple KPIs like time gaps, effective loading, etc.
  • Enhanced driver performance. User-oriented vehicle route optimization software helps executives monitor their driving performance metrics like improper braking, harsh cornering, overspeeding, distracted driving, and others. Speed history, real-time alerts, braking, and acceleration reports, and even video telematics can help drivers make their performance better.


In turn, vehicle drivers benefit from using transportation route optimization software by obtaining:

  • Transparent schedule, traffic updates, planned routes. A driver’s app gives them a clear vision of day-by-day schedules, traffic, and weather condition updates, and ensures their routes are optimized while having real-time support in case of urgency.

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Key Vehicle Routing Problems You Can Solve with Optimization

A vehicle routing problem (VRP) was first mentioned in 1959 by George Dantzig in his traveling salesmen problem (TSP) papers, where George Dantzig presented the first algorithmic approach for petrol deliveries. Later in 1964, Clarke improved Dantzig’s VRP solutions with a greedy algorithm, also known as the savings approach.

So, VRPs have been a daily routine for delivery companies for decades, arising in the form of different business use cases. Let’s now discuss the core vehicle routine problems and solutions you can get with transportation route optimization software.

The list of common VRPs includes:

  • Capacitated Vehicle Routing Problem (CVRP)
  • Vehicle Routing Problem with Time Windows (VRPTW)
  • Pickup and Delivery Vehicle Routing Problem (PDVRP).


Capacitated Vehicle Routing Problem (CVRP)

CVRP means your fleet units have a maximum load capacity which limits the weight and volume of transported goods. This often leads to inefficient transportations as you might underload each vehicle and, as a result, spend a pretty penny arranging several trips instead of a single one. Additional issues may include:

  • Building vehicle routes to multiple depots
  • Having various dimensions of trucks
  • Facilitating different vehicle capacities.


Example: A delivery company has its own fleet and utilizes transportation pallets to deliver goods. Each vehicle has a limited load capacity while multiple business units (BU) need different numbers of pallets per each delivery. This leads to a capacitated vehicle routing problem for a company to arrange trips and vehicle loading in the right and cost-efficient way.


Solution: A vehicle routing optimization system uses advanced algorithms that enable the company to generate the shortest destination-specific routes and assign them to each vehicle. This solves the CVRP challenge as the total number of units for each vehicle addresses its capacity limits.


Vehicle Routing Problem with Time Windows (VRPTW)

Route scheduling is among the cornerstones of efficient fleet business operations as business units are often available within specific time slots. This means managers should arrange unit-specific trips so that drivers deliver goods within an allocated timeframe. In case you miss specific timeframes, it leads to decreased customer satisfaction and unearned or lost profit in the long run.

This way, delivery companies need to efficiently schedule rides considering customers’ time windows and fleet costs.


Example: A fleet driver needs to meet a customer’s timeframe by delivering the cargo on Wednesday from 9 to 10 am along with 15 other packages on the daily agenda with specific timeframes for each delivery.


Solution: Transportation route optimization software utilizes ETA calculations taking into account customers’ time windows, total traveling costs, and dispatch and destination coordinates. This way, a system finds an efficient set of routes and automatically assigns them to specific fleet units.


Pickup and Delivery Vehicle Routing Problem (PDVRP)

This challenge relates to on-demand transportation, which means that vehicles pick up cargos or passengers at one location and drop them off at another. These fleet operations are a common use case for shuttle, bus, and taxi services. As a result of inefficient routes, companies often deal with paired pickup and delivery points, which increases fleet costs.


Example: Uber-like taxi services mostly need to efficiently assign drivers to pickup locations and deliver passengers within the most time-effective route for customers and cost-efficient way for business.


Solution: Vehicle route optimization software can automatically process a potential total length of vehicle paths so that managers just need to assign drivers to customer requests.


Apart from the common VRPs we’ve just discussed, there are way more problems you may face. Let’s now discuss other fleet-related problems that transportation providers often deal with.


Inefficient Stuff Time Allocation

Fleet managers spend hours daily managing drivers and vehicle routes, maintaining detailed records of vehicle servicing and inspection, scheduling regular fleet maintenance, monitoring driver behavior, etc. These tasks take tons of time if processed manually, reducing the employee satisfaction index (ESI) and increasing labor costs in the long run.


Solution: Transportation route optimization software streamlines fleet management operations by providing up-to-the-second trip details, real-time route information, auto-sign features, driver-manager chats, predictive ETAs, and automated alerts that save time for managers and minimizes labor costs for business.


Ineffective Fuel Consumption and Idling

Excessive engine idling and drivers waiting for trips are among the core reasons for increased fleet fuel consumption and costs.


Solution: A vehicle route optimization system helps managers generate efficient off-the-road routes that minimize or eliminate idling periods for drivers and help accurately monitor fuel consumption by adopting real-time alerts that notify drivers to turn engines off.

Must-Have Features of Vehicle Routing Software

Dynamic Routing

Common routing algorithms are defined by processing and adjusting static routes by hand. This is an inefficient pipeline for most fleet businesses as on-demand transportation is thriving, where it is impossible to manually capture existing demand and calculate the best routes. Companies willing to win customers and avoid profit loss have nothing to do but adapt to the new reality.

Dynamic routing functionality is a real game-changer here. It stands for a set of algorithms that monitor up-to-the-minute delivery and drivers’ location to build the shortest routes which meet customers’ timeframes. Modern dynamic routing methods process multiple criteria like driver availability, customers’ time windows, loading capacities, traffic and weather conditions in real time.

More than that, advanced vehicle route optimization systems have dynamic rerouting features which enhance the delivery experience even more. In case customers rearrange time windows or driver availability changes in runtime, it helps managers quickly reassign the trip to another driver considering the same criteria based on new delivery and vehicle location, load capacity, etc.

Dynamic routing is a great way to streamline on-demand deliveries with automatic handling of last-minute constraints and route optimization.

Here’s an example of dynamic routing functionality by OnFleet.


Routing Features by OnFleet Vehicle Routing Optimization System

Routing Features by OnFleet Vehicle Routing Optimization System


Live GPS and ETA Tracking

Monitoring the real-time fleet vehicle’s location is a must to prevent theft risks, avoid driving fatigue, and comply with service hours. What’s more, a real-time indicator of the estimated time of arrival (ETA) helps manage up-to-the-minute off-road constraints and replan routes dynamically. Having visibility into these metrics can help you:

  • ensure that drivers don’t overwork during the day and don’t exceed hours of service (HOS). For example, the Canadian Government released a mandate on June 12, 2021, which requires that drivers don’t work more than 8 hours per day. It helps avoid driving fatigue and distress issues that may impact your delivery performance.
  • access real-time vehicle location and track zone availability. The vehicle onboard OBD systems collect multiple up-to-the-minute metrics like overaccelerating, improper braking, harsh cornering, and distracted driving, which, in fact, may well impact fuel consumption and total costs. Having this data on a screen, managers can generate insightful reports and share them with drivers to improve performance and decrease fuel costs.
  • minimize potential delays and facilitate first-come-first-served orders without constraints. Also, when paired with dynamic rerouting functionality, an estimated time of arrival (ETA) helps consider real-time variables like changed time windows, and traffic and weather conditions, and automatically replan routes and drivers without any downtime.


Proof of Delivery

Delivery companies often deal with situations when customers claim improper cargo deliveries, which takes tons of time to find the truth, communicating with the assigned driver or carrier. Such disputes among drivers and customers can be easily prevented with built-in proof of delivery functionality.

The pipeline is as follows:

  • Drivers or carriers deliver goods to the destination point
  • They use mobile or web apps to report with photos, signatures, and barcodes
  • Fleet managers verify the information and share it with customers (If needed).


This way, proof of delivery helps your business eliminate potential risks, boost customer service, and streamline the task completion process.

Here’s an example of PoD implemented by OnFleet – transportation route optimization software.


Proof of Delivery by OnFleet Vehicle Routing Software

Proof of Delivery by OnFleet Vehicle Routing Software


Real-Time Dashboards for Managers

The information about tasks, drivers, routes, and activities you provide your fleet managers with should be meaningful and digestible. Otherwise, they may end up spending the better part of the afternoon analyzing raw numbers and chunks of data that could be conveyed in a much simpler and visually appealing way.

This is where dashboards can prove their value. You can leverage real-time maps with driver locations, their routes, vehicle-specific details, timeframes, pickup/drop-off rates, hours of service, and other metrics to boost the efficiency and performance of managers.

Here’s an example of insightful dashboards and analytics tools by OnFleet – a vehicle route optimization system.


Analytics Dashboards by OnFleet Vehicle Route Optimization Software

Analytics Dashboards by OnFleet Vehicle Route Optimization Software


Apart from all the features mentioned above, your platform functionality may also include:

  • Route cost calculation
  • Activity & event tracking
  • Scheduling & calendar management
  • Task assignment
  • Third-party integration.

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Off-the-shelf or Custom Transportation Route Optimization Software: What’s Best

When it comes to choosing custom vs packaged vehicle route optimization systems, many companies still wonder what meets their needs best. Let’s now figure out what is a better choice for your specific use case and demands.


Off-the-shelf transportation route optimization software

Fast deployment and launch

Ready-made software is a smart choice if you need to start using the platform in a matter of days as packaged software providers do their best to facilitate quick integration. All you need is to choose the pricing plan, proceed with the payment, get credentials to a SaaS-based platform, and start adjusting the system to your needs.


Oftentimes, packaged providers offer just a basic set of functionalities that will meet your initial needs like dynamic routing, tracking, task assignments, dashboards, and notifications. In case you want to extend the features, you should either upgrade a pricing plan or contact the provider to have additional features or enhancements implemented. It’s worth noting that 9 in 10 software solutions won’t implement additional features up to your specific needs until a provider releases a mature platform update.


Once you’re all set, you can adjust the platform user interface (i.e., color schema) and user experience elements (i.e., positioning of dashboards), but no more. Most packaged providers don’t implement advanced enhancements like custom pipelines, dashboards, analytics tables, etc. on demand.

Nonetheless, many companies opt for ready-made transportation route optimization software due to low initial costs, but they’re only short-term. In the long run, you’ll most likely overpay for additional users, pricing plans, integrations, and limited scalability.

So, the core benefits of adopting ready-made software are:

  • Low initial costs and fast deployment
  • Basic functionality out-of-the-box
  • UI customizations available.


In turn, the main drawbacks include:

  • Long-term cost inefficiency
  • Limited features and no on-demand functionality
  • Low flexibility and control
  • Low support level.


The most popular packaged software providers are OnFleet, Tookan, Verizon Connect, RouteXL, Route4Me, and Circuit for Teams.


Custom vehicle routing optimization system

Cost efficiency

Building a custom platform from scratch is a pricey yet beneficial approach if you want to build an ecosystem tailored to your specific use case and business model.

First, it enables you to save costs in the long run. We recommend starting with an MVP version that includes the core platform infrastructure and features that you need first. Next, you can validate the existing platform functionality and upgrade it up to your demands step by step.

Just to illustrate, for OnFleet’s professional pricing plan which includes the full range of premium features, you will need to pay $9,999/mo performing up to 50,000 tasks per month. However, with a system that is tailored to your slightest needs, you’ll recoup the custom development investments within several years.

High control level

Second, a custom vehicle routing optimization system allows for the control over updates and upgrades from A to Z. Unlike ready-made software, tailor-made platforms mean you fully manage the storage of records, and sensitive data, and plan functionality updates. In contrast, packaged solutions cannot guarantee that your business data is fully protected and the provider controls updates and upgrades.

On-demand features

Third, you can implement on-demand functionality and embed the required level of scalability. If you want to utilize a routing cost calculator or generate custom records, tailor-made platforms are a fit. As we mentioned above, boxed solutions provide you with a fixed range of functionality within your pricing plan and no more adjustments.

So, the core advantages of custom solutions are as follows:

  • Long-term cost-efficiency
  • On-demand features
  • High flexibility and scalability
  • Advanced support and concierge services
  • High control level.


The drawbacks include:

  • Development takes 2-4 months for an MVP version and 6-9 months for a full-featured product
  • High initial costs.


In terms of a development approach, you can either choose outsourcing vs in-house team development. Read the criteria-by-criteria comparison post to know what’s better to meet your specific needs.

How Ascendix Helped the Client Solve Its Vehicle Route Problems

At Ascendix Tech, we have solid experience in delivering custom fleet management systems that help clients solve their vehicle route problems. Here’s a detailed case study on how we helped the Luxembourg-based market-leading mobility company build a one-fits-all state-of-the-art SaaS platform that helps fleet companies, drivers, and customers meet their day-to-day operations.

In recent years, the client has grown its own fleet and operations in such mobility domains as school transportation, airport shuttles, and group public travels for both businesses and individuals. This reinforced the company to look for ways to implement a first-of-a-kind mobility-on-demand fleet management platform from operators for operators.

So, they contacted Ascendix to get professional help with the development of all-in-one fleet operator software that would:

  • Optimize fleet performance and maximize fleet utilization
  • Automate trip dispatching and scheduling processes
  • Minimize transport idle time
  • Solve the problem of empty legs, and idling drivers
  • Interconnect many system solutions that do not communicate well together into a single platform.


Let’s now explore the results using a before-after approach.


Before: Many drivers idled during the shift spending too much time waiting for the new trips.

After: Optimization of driving time utilization.

We designed and implemented a system algorithm which periodically checks shift by shift to find the emptiest ones and then reallocates resources and replans routes by reassigning shifts. So, the client now has optimized-only shifts with a required load.


Before: Multiple drivers could perform only a few trips in parallel.

After: A multi-stop trip merger algorithm.

We implemented a system logic that automatically merges several trips in a single shared one with multiple stops. In case the algorithm detects flow stops and empty time windows, it merges orders trying to meet clients’ requirements like those regarding a preferred timeframe. More than that, it helped the client to optimize vehicle capacity and reduce carbon footprints.


Before: Non-optimized route planning algorithms which accepted new orders without considering the trip distance and fuel consumption.

After: We implemented advanced booking assignment algorithms which automatically calculate distances for each available driver and suggest the most cost- and time-efficient trip for managers. It decreases the total route time and optimizes fuel consumption.


Before: Operators had to manually process orders to follow the maximum driving time and break duration rules.

After: We designed a driver management system with enhanced dynamic breaks. This means the system analyzes trip durations and automatically reschedules mandatory breaks to address the labor rules without any interruption. This helped streamline the booking pipeline making it loss-free.


Apart from the above solutions, we’ve helped the company implement the following:

  • Comprehensive Back-Office
  • A Mobile Driver App
  • Mobile and Web Customer Application
  • Integration with BI Tools
  • Advanced Monitoring System
  • Google Maps & TomTom Integration.


As a result, we’ve delivered a powerful mobility-on-demand system and one-fits-all fleet ecosystem which helped the client to optimize fleet performance and minimize idle time.

Keep reading the full case study to know all the challenges, solutions, and results achieved and specific vehicle route problems solved throughout building a tailor-made fleet management platform.

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Wrapping Up

Transportation route optimization software helps solve multiple vehicle route problems like CVRP, VRPTW, PDVRP, excessive idle times, increased fuel consumption, and others. You can choose ready-made solutions or custom vehicle routing optimization systems based on your current needs. They both can address your requirements and solve problems your fleet business currently has.

If you’re looking for a custom fleet management software development partner, Ascendix Tech is here to help you. Just drop us a line and we’ll send an estimate and discuss your needs.


What is vehicle routing optimization?

Vehicle routing optimization is about generating the most time- and cost-efficient trips based on your logistics operations, fleet capacities, drivers’ load, and clients’ time windows. It helps to decrease fuel consumption, reduce idling time, solve vehicle route problems, and drive revenue.

What is vehicle routing system?

A vehicle routing system is a software solution designed to help fleet businesses automate their day-to-day operations with advanced algorithms that optimize routes, reduce idling time, streamline fuel consumption, and help solve vehicle route problems. The top examples are OnFleet, Tookan, Verizon Connect, and RouteXL.

How does route optimisation work?

Route optimization is based on complex algorithms that process multiple business-specific metrics like fleet load capacities, clients’ time windows, route stop distances, driver availability, and on-road conditions to generate the most time- and cost-efficient routes.


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