Contact us to schedule a meeting, training session, or consultation during our Houston training sessions August 26 - September 1.
Monday, August 22, 2011
Wednesday, August 17, 2011
Fuel Surcharge Recovery
The below article was provided to us by our friends at McGee and Associates. Fuel surcharges are a way of life in the freight business. If you are not breaking out fuel surcharges in your LoadTrek billing plane - you'll now know why it's such a good idea.
A fuel surcharge is a fee that can be added to the freight charges that allows a carrier to be reimbursed for incremental or excessive fuel costs. While most companies understand the mechanics of a fuel surcharge (FSC) and the need for incremental fuel expense recovery, few carriers quantitatively measure the effectiveness of their FSC programs. This article is about how to measure FSC recovery effectiveness.
History and Purpose of Fuel Surcharge
FSC first appeared in response to the 1973 oil crisis with the goal of reimbursing carriers for the unusual spikes in oil prices. On Feb. 7, 1974, the Interstate Commerce Commission (ICC) promulgated Special Permission No. 74-2525, denominated “Emergency Fuel Surcharge for Line Haul Transportation Charges and Other Charges Motor Common Carriers.” Paragraph one of that order authorized carriers to increase their freight rates by surcharge, up to six percent (at the time). Fuel surcharges became a permanent part of carrier pricing again in the mid-90s when prices reached a high around $1.15 per gallon; $1.10 to $1.20 became the baseline price for most carriers in establishing their fuel surcharge programs at the time and remains basically unchanged today.
In general, little has changed in the surcharge calculation mechanics. Each Monday, the Department of Energy (DOE) collects data from a representative group of approximately 350 retail diesel outlets then issues the national average diesel price for that week. Most carriers use the national average or components of it to calculate their fuel surcharge. The surcharges are still generally calculated using one or two popular methods (i.e., cent per mile and/or percent of line haul rates). Despite alternative approaches, such as the Fuel Surcharge Index and computation aids like the phone app, PocketFuelCal, the basic formula used by the most carriers is:
FSC per mile = ((DOE self-serve diesel fuel price average) - (carrier’s baseline price)) / (miles per gallon (MPG))
The effectiveness of the surcharge to meet its intended objectives varies widely from carrier-to-carrier primarily due to calculation nuances and the inaccuracies inherent in using weekly averages. Many carriers have known for a number of years that this effectiveness can and must be managed. There are several ways to approach the analysis of fuel expense recovery.
One approach is to evaluate total fuel expense compared to total revenue, specifically and theoretically related to fuel. Focusing on the effectiveness of the surcharge, however, requires a comparison of the incremental fuel surcharge revenue with incremental fuel expense. A primary management metric developed to monitor the FSC effectiveness is the FSC Recovery Percentage, or simply the Recovery %.
The Recovery % may be calculated several different ways, but the objective is to compare the incremental shipper
revenue associated with fuel to the carrier’s incremental fuel cost. One formula used to calculate the Recovery % is as follows:
Recovery % = Incremental fuel expense / incremental fuel related revenue
Where:
• Incremental fuel expense = ((DOE self-serve diesel fuel price average) - (carrier’s baseline price)) multiplied by gallons purchased and consumed during the period
• Incremental fuel revenue = fuel surcharge revenue + base rate revenue related to abnormally high fuel prices
Like the basic fuel surcharge, the recovery formula is simple, but the “devil is in the details.” Typically, the carrier baseline price is the starting point for its fuel surcharge table of $1.10 to $1.20. As a practical matter, however, most carriers will have a number of shipper required surcharge programs with different starting points. It is also difficult to match or determine the exact number of gallons purchased and used to generate the fuel surcharge revenue in a period. Which DOE price to use also presents choices.
Further complicating the computation is the assertion that some base freight rates include an incremental fuel component. Despite the analytical imperfections, a consistently applied methodology will provide a meaningful tool to focus management’s attention on the components affecting any differential. Focus can lead to accountability, which provides the incentive to improve results. With typical recovery percentages of 65 percent to 75 percent, it is not surprising that carriers fully engaged in managing the effectiveness of their recovery programs have developed responsive solutions, including improving their fleet MPG while using static numbers in the surcharge computations, applying the surcharge to all miles (not just loaded), updating the FSC amounts daily instead of monthly or weekly, managing out-of-route miles, and finding ways to increase the differential between the DOE and company average fuel price.
To quote the old adage, “What gets measured gets done,” start measuring Recovery % and join the large number of carriers who understand the benefits of making this a key business management metric.
Monday, August 15, 2011
Mail Contractors: Why Join the NSRMCA?
We completed a successful and informative convention of the National Star Route Mail Contractors Association Baltimore. With dramatic changes coming from the USPS - you need to know what's coming and how to respond.
Click here to read about the NSRMCA.
Click here to read about the NSRMCA.
Wednesday, August 3, 2011
Free Webinar for LoadTrek.net Clients: What's New in the Latest Release
A new version of LoadTrek.net has been released. This release contains three items that you've been asking for:
1. For our postal contractor clients - a tool to audit your USPS compliance against the USPS compliance spreadsheet.
2. Static Job Frequency Template. Helps you set up those recurring loads, saving time by allowing you to apply a template for frequencies.
3. Automatic exception generation.
This webinar will discuss these added features.
1. For our postal contractor clients - a tool to audit your USPS compliance against the USPS compliance spreadsheet.
2. Static Job Frequency Template. Helps you set up those recurring loads, saving time by allowing you to apply a template for frequencies.
3. Automatic exception generation.
This webinar will discuss these added features.
- August 4, 1300 - 1400 CDT
- Sign up here to reserve your seat
Come See us in Baltimore August 7-11
LoadTrek will be attending the national convention of the National Star Route Mail Contractors Association. It is in Baltimore at the Renaissance Harbor Place Hotel, August 7-11.
If you are a member of the NSRMCA, it is highly recommended that you attend. You'll have a chance to network with USPS decision makers, collaborate with other HCR's, and find out what's happening in the mail contracting world.
If you are not a member of the NSRMCA, now is a good time to check it out. You'll find resources and access that you can't find on your own.
LoadTrek provides management tools that are ideal for mail contractors. Come by and see if we can help you. Contact us for more information or to set up an appointment.
If you are a member of the NSRMCA, it is highly recommended that you attend. You'll have a chance to network with USPS decision makers, collaborate with other HCR's, and find out what's happening in the mail contracting world.
If you are not a member of the NSRMCA, now is a good time to check it out. You'll find resources and access that you can't find on your own.
LoadTrek provides management tools that are ideal for mail contractors. Come by and see if we can help you. Contact us for more information or to set up an appointment.
Tuesday, August 2, 2011
American Trucking Association Response to the FMCSA's 5 Year Strategic Plan
Looking for a copy of the ATA's response to the FMCSA 5-year strategic plan?
We have it, contact us for a copy.
We have it, contact us for a copy.
Thursday, July 28, 2011
LoadTrek.net: New Postal Compliance Audit Report
If you were in today's LoadTrek.net HCR webinar, you saw the new Postal Compliance Audit Report. This new tool, to be released next week, will allow you to spend your time running your business - and less time determining your USPS compliance.
The USPS is serious about compliance with the GPS mandate on applicable highway contracts. And, as more HCR's are released, more have the GPS clause.
This new postal compliance tool is unique - because it compares your actual data to USPS data. You can easily see and manage:
Contact us to set up an appointment in Baltimore, or for information on our next webinar.
The USPS is serious about compliance with the GPS mandate on applicable highway contracts. And, as more HCR's are released, more have the GPS clause.
This new postal compliance tool is unique - because it compares your actual data to USPS data. You can easily see and manage:
- Trips that are being run differently from the USPS schedule. Are drivers running them out of order, are they being dispatched incorrectly, or is the USPS headquarters not updated on its own latest service change?
- Is the USPS expecting trip data that you are not sending?
- Are you sending trip data that the USPS has no record of requesting?
- Are drivers properly logging in and running their routes?
Contact us to set up an appointment in Baltimore, or for information on our next webinar.
USPS Report: A Strategy for Future Mail Processing & Transportation Network
Contact us to obtain a copy of a report by the Office of the Inspector General, "A Strategy for Future Mail Processing and Transportation Network".
If you are in the business of supplying transportation or logistics services to the USPS, there will be opportunities. But, the opportunities will be different.
If you are in the business of supplying transportation or logistics services to the USPS, there will be opportunities. But, the opportunities will be different.
Come see us in San Antonio August 1
LoadTrek will be attending the Texas Food and Fuel Expo in San Antonio at the Henry Gonzales Convention Center on August 1. We will be discussing items important to the convenience and petroleum retailer industries: EOBR's, CSA, route optimization, and delivery confirmation & validation.
Contact us to set up an appointment.
Contact us to set up an appointment.
Monday, July 25, 2011
Free Webinar for Customers - USPS Compliance Self-Audit
| Review the Audit Postal Compliance Report and Discuss Steps to Improve USPS Compliance. |
| Title: | LoadTrek.net - Review New Report: Audit Postal Compliance |
| Date: | Thursday, July 28, 2011 |
| Time: | 1:00 PM - 2:00 PM CDT |
Tuesday, July 19, 2011
Tuesday, July 12, 2011
Saturday, July 9, 2011
FMCSA Seeks Comments on Strategic Plan to Improve Truck and Bus Safety
"Federal Motor Carrier Safety Administration 2011 - 2016 Strategic Plan: Raising the Safety Bar" is a plan is shaped by three core principles:
- Raise the bar to enter the motor carrier industr
- Maintain high safety standards to remain in the industry
- Remove high-risk carriers, drivers and service providers from operation.
Comments on the draft strategic plan can be submitted to the Federal Docket Management System at www.regulations.gov, Docket ID No. FMCSA-2011-0098.
In addition, FMCSA has set up an IdeaScale Community on its main Web site at www.fmcsa.dot.gov to comment on the plan. IdeaScale is a Department of Transportation initiative providing an interactive, on-line, transparent space for people to engage in conversation about draft proposals and vote whether they agree or disagree, which also allows FMCSA to ask clarifying questions to make sure the best comments and ideas are submitted.
Public comments at the www.regulations.gov and the www.fmcsa.dot.gov web sites will be accepted through July 29, 2011.
Commodity or Transportation Partner?
Many of our clients are contractors for the USPS. Most of our clients are in the truckload or LTL business, and even our private fleet clients haul for hire on backhauls. When you backhaul off load boards, for brokers, etc., you are a commodity. To the shipper, you are a 53 foot trailer. However, this is not the way your primary customers should view you.
Do your primary shippers view you as a commodity or a partner? If you are a commodity - you'll get bumped for someone cheaper. And, simply being good is not good enough. Even with our USPS contractors who fall under the GPS mandate - the USPS many times does not really know how good you are. They're getting your LoadTrek-generated arrival information - but they may not be "getting it".
I have found that one approach is to ask the right questions of your shippers. Deep, thought-provoking questions. What are their biggest challenges with their customers regarding the supply chain? What trends do they see affecting their supply chain in the coming year? Questions that show you know their business, you know your business, and that their success is your success. Questions that reveal problems you can help them with.
If you are met with a blank stare - you're dealing with a person who sees you and your company as a collection of trailers that somehow magically move around. You are a commodity. If you get back answers that are meaningful, you have found your internal champion.
Do your primary shippers view you as a commodity or a partner? If you are a commodity - you'll get bumped for someone cheaper. And, simply being good is not good enough. Even with our USPS contractors who fall under the GPS mandate - the USPS many times does not really know how good you are. They're getting your LoadTrek-generated arrival information - but they may not be "getting it".
I have found that one approach is to ask the right questions of your shippers. Deep, thought-provoking questions. What are their biggest challenges with their customers regarding the supply chain? What trends do they see affecting their supply chain in the coming year? Questions that show you know their business, you know your business, and that their success is your success. Questions that reveal problems you can help them with.
If you are met with a blank stare - you're dealing with a person who sees you and your company as a collection of trailers that somehow magically move around. You are a commodity. If you get back answers that are meaningful, you have found your internal champion.
Friday, July 8, 2011
Tuesday, June 28, 2011
Who is responsible for your company's success?
Of course - it's you. However, you may not be acting like it. If you purchased a service or product (even LoadTrek.net) thinking that it can transform your company with no fundamental change in behavior - you are shifting responsibility away from yourself to this product or service.
You can buy the best hoping to simplify your office, organize your dispatch, help your drivers be accountable, fill in the blank with anything. But, it takes more. Some ideas that have helped me are:
You can buy the best hoping to simplify your office, organize your dispatch, help your drivers be accountable, fill in the blank with anything. But, it takes more. Some ideas that have helped me are:
- Nothing good happens without effort. Work, learn, and be rock-solid consistent.
- Once isn't enough. Don't turn your attention to your newly-purchased product or service only when things go bad and you need answers.
- Keep a journal. Make notes, keep a spreadsheet, write a document. Make your own learning ledger of training notes and good ideas.
- Find a partner, someone using the same product or service you can share ideas with.
Subscribe to:
Posts (Atom)