The Cost of Uncertainty: What’s True during a Family Vacation is Doubly True during Daily LTL Operations
Please welcome guest blogger Charles Rosa, an operations research principal at Con-way Freight.
– Sean Devine
Our family routinely takes a vacation from our home in Michigan to visit relatives in Atlanta for a week each spring. We generally take this trip by car since we love the scenery, especially the mountainous areas of Kentucky and Tennessee.
We approach one portion of road along this route with a mixture of excitement and fear, however. That is the Jellico Pass, which cuts through the Cumberland Mountains and, on a clear day, provides an incredibly scenic view of beautiful Appalachia. The amazing view explains our excitement; our fear is caused by the fact that the high pass can be (and often is) shrouded in fog or heavy rains so dense that the driving can become treacherous.
On the bad days, we slow the car to a crawl and the drive becomes something we simply endure — and something that guarantees a late arrival at our relative’s home. With that in mind, we always make sure to pad our schedule for the trip, since we don’t know whether the drive will go smoothly. This means less time spent exploring the attractions of Atlanta.
It’s simply the cost of the uncertainty associated with inclement weather.
We face similar kinds of uncertainty here at Con-way Freight. Uncertainty around the transit time of nearly all the legs in our network, and uncertainty around the amount of demand for shipping services that we will face from day to day. For Con-way Freight, that means extra costs.
Extra costs for the manpower to staff a network with reserve capacity to handle spikes in demand, all the while operating more slowly than it otherwise would have without the risky transit legs. Still more charges for the additional reserve trucks and trailers necessary both to handle unusually large demand and for use as replacement vehicles in the event of weather-induced problems on those risky legs. Finally, additional extra fees (quite literally) for the higher premiums needed to insure transit of freight under the dangerous conditions associated with trips through mountain passes and the like. These costs are incurred not once (like on my trip to Atlanta), but continuously, since we run service across all of our legs throughout the year.
In the coming months and years, Con-way Freight will continue to work hard with its customers to try to control any uncertainty it can. While we may not be able to control weather, we can start to collaborate more closely with our customers to reduce the variability of demand around which we plan our operations on a day-to-day basis. This effort will benefit all of us in the form of reduced costs. That’s good news for Con-way Freight and our customers.
Charles Rosa is an operations research principal at Con-way Freight. He has been with the company since August 2009, working on analytical models to support its strategic and operational decision making. Prior to Con-way Freight, he worked at General Motors R&D, where he was a staff research engineer. In that role, his contributions included the development of an optimization/statistical model-based revenue management system that is being used to inform pricing/production decisions across GM’s entire portfolio of vehicles.
Charles received his Ph.D. in operations research from the University of Michigan.




















