Same company, with a fresh new look. Clevertech is now Lumenalta. Learn more.
Expertise
Case studies
About
Insights
Careers
placeholder
    placeholder
    hero-header-image-mobile

    What is freight routing?

    MAR. 25, 2025
    6 Min Read
    by
    Lumenalta
    Every day, businesses navigate a complex web of shipments crisscrossing the globe.
    Transportation alone costs U.S. companies over $1 trillion annually (around 10% of revenue), underscoring how crucial it is to optimize freight routing from the start. Efficient freight routing can mean the difference between a streamlined supply chain and one plagued by delays and excess costs.
    Key takeaways
    • 1. Freight routing is essential – It’s the backbone of moving goods efficiently, directly impacting shipping costs, delivery times, and customer satisfaction.
    • 2. Optimized routes save money – Strategic routing can cut transportation costs significantly by reducing miles traveled, avoiding delays, and improving load utilization.
    • 3. Routing guides drive consistency – A well-crafted freight routing guide ensures everyone follows the same playbook, minimizing errors and streamlining operations across carriers and suppliers.
    • 4. Technology boosts routing performance – AI and route optimization software enable real-time adjustments and smarter planning, helping companies achieve up to double-digit percentage cost savings and improve reliability.
    • 5. Choose routing methods wisely – There’s no one-size-fits-all. Businesses should evaluate their needs and data to pick (and possibly combine) routing strategies that best balance cost and service for their supply chain.

    Understanding freight routing

    Freight routing is the process of determining the most efficient path to ship goods from origin to destination. It involves selecting optimal routes, carriers, and transportation modes (such as truck, rail, air, or sea) to ensure shipments arrive on time and at the lowest possible cost. In essence, freight routing is about planning the journey of freight in a way that balances speed, cost, and reliability. Mapping out each leg of a shipment’s journey gives businesses greater control over logistics and allows them to respond proactively to disruptions.
    "Effective freight routing transforms a complex supply network into a streamlined, cost-efficient operation."

    Benefits of freight routing in supply chain operations

    Implementing strategic freight routing offers several important benefits for supply chain operations:
    • Reduced transportation costs: Optimized routing minimizes total miles traveled and avoids inefficient detours, directly cutting fuel and shipping expenses.
    • Faster delivery times: Choosing the quickest and most direct routes helps ensure products reach their destinations sooner, improving customer satisfaction.
    • Improved resource utilization: Efficient routing means fuller truckloads and fewer empty miles. This maximizes the use of available capacity (vehicles, drivers) and reduces waste.
    • Enhanced supply chain visibility: A well-planned route provides clarity on where shipments are at any time, helping businesses track freight movement and anticipate arrival times.
    • Greater reliability and consistency: Following established routing plans reduces the likelihood of unexpected delays. Consistent routes build predictability into the supply chain, leading to more reliable delivery performance.
    • Lower environmental impact: Shorter, more efficient routes decrease fuel consumption and emissions, contributing to more sustainable logistics operations.
    Freight routing is more than just choosing the shortest path—it is a strategic decision that directly influences cost, service quality, and operational efficiency. Businesses that prioritize effective freight routing gain an advantage by reducing unnecessary expenses, improving delivery reliability, and making better use of available resources. As supply chains continue to grow in complexity, leveraging advanced routing strategies and AI-backed technologies can help businesses stay agile and responsive to shifting demands.
    A well-optimized freight routing system doesn’t just move products—it strengthens the entire supply chain by improving transparency, minimizing waste, and aligning transportation logistics with broader business goals. Investing in smarter routing solutions today ensures sustained efficiency, cost savings, and long-term supply chain resilience.

    Freight routing process

    The freight routing process is a structured approach to efficiently plan and execute shipments from origin to destination. It begins with planning and carrier selection, where logistics teams gather shipment details—such as weight, volume, destination, and delivery timelines—and evaluate potential carriers and transportation modes. Using a transportation management system (TMS) or manual assessment, they choose the most cost-effective and reliable option. 
    Once a carrier is selected, the next step is route optimization, where the most efficient path is mapped out taking into account factors like transit time, road conditions, and potential stops or transfer points. Advanced routing software leverages algorithms to optimize these decisions, minimizing delays and unnecessary mileage. 
    After the route is established, the execution and monitoring phase begins. The shipment is dispatched, and real-time tracking systems—often powered by GPS and carrier updates—enable logistics teams to monitor progress. If unexpected disruptions like weather events or congestion arise, alternative routing options can be implemented to mitigate delays. Once the shipment reaches its destination, a post-delivery review evaluates route performance, transit times, and costs, feeding valuable insights into future routing decisions. This continuous improvement cycle ensures that freight routing remains efficient, cost-effective, and adaptable to changing conditions.

    Types of freight routing

    There are several types of freight routing strategies that businesses use, depending on their network and needs. Key freight routing types include:
    • Direct (point-to-point) routing: Shipments travel directly from origin to destination with no intermediate stops. This is common for full truckload shipments where a dedicated truck carries goods straight to the delivery point.
    • Hub-and-spoke routing: Freight is first sent to a central hub or distribution center, then sorted and shipped out to final destinations (the spokes). This method consolidates shipments for efficiency and is often used by parcel carriers and LTL (less-than-truckload) networks.
    • Milk run (consolidated) routing: A single vehicle makes multiple pickups or deliveries in one trip, following a route that connects several suppliers or customers. Milk runs are efficient for collecting smaller loads from various points and consolidating them into one shipment (or vice versa).
    • Intermodal routing: This involves using multiple modes of transportation for a single shipment route (for example, combining truck and rail, or sea and truck). Intermodal routing optimizes cost and time by leveraging the strengths of different transport modes, especially for long-distance or international freight.
    • Dynamic routing: Unlike static pre-planned routes, dynamic routing uses real-time data and technology to adjust shipment paths on the fly. For instance, if a sudden storm or traffic jam is detected, an AI-powered system can reroute trucks to avoid delays without human intervention. This approach increases flexibility and responsiveness in the face of disruptions.
    • Customer or supplier routed freight: In some cases, the routing decision is dictated by either the customer or the supplier. Customer-routed freight means the customer specifies the carrier and route (often because they’re paying for shipping or have preferred arrangements). Supplier-routed freight means the supplier manages the shipping details. Understanding who controls the routing is important for compliance with agreements and optimizing coordination.
    Choosing the right freight routing approach depends on a company’s shipping volume, destination network, and cost priorities. Businesses handling frequent, high-volume shipments may benefit from hub-and-spoke or milk-run models, while those with long-distance international shipments might prefer intermodal routing to reduce expenses. Companies that require flexibility in response to changing conditions may find dynamic routing more effective. Additionally, businesses should consider whether routing decisions are best managed internally or delegated to customers or suppliers based on contractual agreements. By aligning the routing strategy with operational goals and leveraging technology for optimization, companies can achieve better efficiency, cost savings, and improved reliability in their supply chain.

    What is a freight routing guide?

    A freight routing guide is a documented set of instructions and preferences that a company provides to ensure shipments are handled consistently. Essentially, it’s a guidebook for how to route freight properly according to that company’s standards. A routing guide typically outlines which carriers to use for specific lanes or regions, service level requirements (like preferred transit times), packaging and labeling guidelines, and any special procedures that must be followed.
    Companies (especially large retailers or manufacturers) issue routing guides to their suppliers and logistics partners so that everyone follows the same shipping protocols. For example, a retailer’s routing guide will tell vendors exactly how to prepare and route inbound shipments to the retailer’s distribution centers – from scheduling delivery appointments to attaching the correct labels. The goal of a freight routing guide is to create consistency, prevent errors, and align all parties with the most cost-effective and efficient shipping methods for that business. Failing to adhere to a routing guide can lead to penalties or refused shipments, so it’s taken seriously in logistics operations.

    Components of an effective freight routing guide

    An effective freight routing guide is comprehensive yet clear. It covers all the key elements needed to move freight according to plan. Important components typically include:

    Preferred carriers and modes

    A routing guide clearly specifies which carriers are approved for use and what modes of transport should be utilized for various shipment types. For each shipping lane or region, the guide might list primary and secondary carriers (for instance, a preferred trucking company for deliveries to the East Coast, with an alternate carrier if the first is unavailable). It may also indicate when to use certain modes – such as when air freight is justified versus when to stick to ground or ocean shipping. This practice ensures that freight moves with trusted partners at negotiated rates, maintaining both service quality and cost control.

    Packaging and labeling guidelines

    Standardizing how goods are packed and labeled is a crucial part of any freight routing guide. This section details the proper packaging materials and methods (palletizing, crating, use of slip sheets, etc.) to protect products in transit. It also outlines labeling requirements, including what information must appear on shipping labels or documents (purchase order numbers, destination addresses, barcodes, etc.). Clear packaging and labeling guidelines help prevent misrouting and delays – for example, ensuring that every carton has the correct destination label and barcode so it can be quickly scanned and sorted upon arrival. Following these standards reduces the risk of damage, loss, or confusion during the shipping process.

    Documentation and compliance requirements

    Freight always comes with paperwork. A routing guide will specify the necessary documentation that must accompany each shipment. This often includes the Bill of Lading (BOL), packing lists, invoices, and any customs documents for international freight. The guide will detail how these documents should be filled out and any reference numbers or codes required. Compliance requirements also fall under this component – for example, adhering to regulations like weight limits per truck, hazardous materials handling procedures, or security protocols. Spelling out documentation and compliance needs helps shippers avoid legal issues, fines, or shipment refusals due to missing or incorrect paperwork.

    Scheduling and service level expectations

    Timeliness is critical in logistics, so a good routing guide sets clear expectations for scheduling. This component covers how far in advance shipments should be scheduled, preferred pickup and delivery windows, and transit time requirements. For instance, the guide may state that suppliers must schedule deliveries 48 hours in advance and that all inbound trucks must arrive at a warehouse between 8:00 AM and 3:00 PM on weekdays. It will also define service level agreements (SLAs) such as on-time delivery rate targets or maximum allowable transit days for certain routes. Including these details aligns all parties on timing and performance standards, ensuring the supply chain runs on a predictable schedule.

    Communication and accountability policies

    Even with a great plan, things can go wrong. Effective routing guides outline how communication should flow and who is accountable at each step. This includes providing contact information for key logistics coordinators or freight managers, instructions for notifying delays or issues (e.g., if a truck breaks down or a shipment is missed), and escalation procedures if problems aren’t resolved promptly. Additionally, the guide often mentions consequences for not following the outlined rules – such as chargebacks or penalties if a vendor uses an unauthorized carrier or misses a delivery appointment. Establishing clear communication channels and accountability ensures that all stakeholders stay informed and responsible, helping maintain efficiency and allowing quick issue resolution if problems arise.

    The role of technology & AI in freight routing

    Technology – especially artificial intelligence (AI) – is modernizing freight routing. Advanced routing software can process vast amounts of data (from traffic patterns to weather forecasts) to plot the most efficient delivery paths. AI algorithms enable dynamic route optimization, automatically adjusting routes in real time as conditions change. For example, if a sudden storm or traffic jam is detected, an AI-powered system can reroute trucks to avoid delays without human intervention. These savings come from shorter routes, better truckload utilization, and proactive avoidance of disruptions. Technology also brings greater visibility – IoT sensors and GPS trackers feed live location data into management dashboards, so businesses know exactly where their freight is and can predict arrival times with high accuracy.

    Challenges in freight routing

    Despite its benefits, freight routing comes with challenges that businesses must manage, including:
    • Unpredictable disruptions: Weather events, traffic congestion, and accidents can throw even the best-laid routes off course, causing delays and requiring rapid adjustments.
    • Carrier capacity constraints: During peak seasons or tight markets, securing a truck or space on a vessel can be difficult. Limited carrier capacity means routes may need last-minute changes or premium costs to find alternatives.
    • Regulatory and compliance issues: Transportation is subject to many rules (hours-of-service limits for drivers, weight restrictions on certain roads, customs regulations for cross-border shipments). Staying compliant can constrain routing options and requires careful planning.
    • High fuel costs and surcharges: Volatile fuel prices can suddenly make certain routes or modes far more expensive. Companies might need to re-route or consolidate shipments to mitigate fuel surcharges, adding complexity to routing decisions.
    • Data and visibility gaps: Incomplete or delayed information about shipment status can hinder effective routing. Without real-time visibility, companies struggle to react to route disruptions or to optimize mid-transit.
    • Coordination across partners: Effective routing often requires tight coordination between shippers, carriers, freight forwarders, and customers. Misalignment or miscommunication among partners can lead to routing mistakes, such as a truck arriving when a loading dock is not ready.
    "Organizations that leverage AI-based freight routing see significant gains in efficiency – often cutting logistics costs by double-digit percentages while improving on-time delivery."

    Choosing the right routing method for your business

    Selecting the best freight routing strategy for your business depends on your specific logistics needs and resources. Start by evaluating your shipment patterns: Are you mostly shipping full truckloads to single destinations, or do you often combine smaller orders heading different ways? If your freight is centralized through distribution hubs, a hub-and-spoke model might fit. For scattered deliveries in a region, milk runs could reduce costs. Consider the importance of speed versus cost in your operations – time-sensitive products may require direct or even dynamic routing with air freight, whereas less urgent goods can go by slower, consolidated routes.
    Also, assess your technology capabilities. If you have access to robust TMS or AI-based routing tools, you can take advantage of dynamic routing to stay flexible. If not, you might lean on more static plans or third-party logistics providers. Trial and measurement are key: implement routing improvements on a small scale and monitor performance (transit times, costs, service issues). This data-backed approach will highlight which routing method delivers the best results for your situation. Ultimately, the right method is one that aligns with your business’s service commitments, budget, and growth plans – and it may be a mix of methods tailored to different segments of your freight.
    At Lumenalta, we understand the critical role of smart freight routing in modern supply chains. Our team combines business pragmatism with technical expertise to deliver digital solutions that optimize logistics operations. Whether it’s implementing AI-based routing systems or developing comprehensive freight management guides, Lumenalta helps companies streamline their supply chain for maximum efficiency and resilience. Let us help you navigate the complexities of freight routing and drive your logistics performance to new heights.
    table-of-contents

    Common questions about freight routing


    What is freight routing and why is it important?

    How does a freight routing guide help my business?

    What are the main challenges in freight routing?

    How can AI improve freight routing?

    How do I choose the best freight routing method for my business?

    Want to learn how freight routing can bring more transparency and trust to your operations?

    Learn more about how freight routing can modernize your business.