Hub Group Implements a Suite of OR Tools to Improve Its Operations

Abstract

Hub Group, a North American intermodal freight rail transportation company, developed an integrated production decision support system to improve its yield management and container allocation. The system combines a suite of analytical tools, including forecasting, error distribution analysis, expected value-based heuristics, and optimization tools to improve the decision making of Hub's frontline employees. It is important to note that the production decision support system was structured to fit within Hub's existing organizational structure, business processes, and information technology systems to reduce project risk, development costs, and operational disruption. In 2008, the system's first full year of use, Hub improved its revenue per load by 3 percent and increased its container velocity by 5 percent. These improvements led to a net return of $11 million in cost savings, which equals 22 times Hub's initial investment during that first year of operation.

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