Menlo Worldwide Forwarding optimizes its airfreight network routing

Menlo Worldwide Forwarding, the former Emery Worldwide, ran a large North American aircraft transportation operation in a downturn worsened by a weak economy, the September 11 attacks and a shrinking airfreight market.

With Menlo Worldwide Technologies it built a network-routing-optimization model for the whole operational network, letting managers repeatedly identify and apply lowest-cost solutions as the changing, complex routing requirements evolved.

By maximizing use of network capacity, the model cut costs and lifted margins while holding service levels, and gave management the model it needed to move from an asset-based integrator to an asset-light forwarder.

Optimize the network, not each shipment

The model optimizes the entire network at once, capturing economies of scale single-shipment planning misses.

It was re-run as conditions changed, so the answer tracked a volatile environment.

Maximizing network-capacity use reduced operating cost without cutting service.

The same model guided the strategic retreat from owning aircraft to forwarding freight.

When a fixed network faces falling demand, the value is in re-optimizing the network as one system, not in trimming each shipment.

In 2002 alone Menlo Worldwide Forwarding cut operating costs 21%, raised operating margin 41%, and improved financial results by $80 million in the North American aircraft transportation operation. The model also let management move the business to an asset-light freight-forwarding model.