Two interesting logistics articles in the financial media this week were the catalyst of this short post. Both articles reported on major shippers (a major truckload carrier in this Nasdaq piece and a leader in parcel delivery in the Wall Street Journal) raising the fuel surcharges they levy on customers, despite the fact that fuel prices continue to sit at multi-year lows. This counterintuitive development underscores the extent to which fuel price volatility impacts on a shipper’s bottom line and why configuring a “single carrier-rate” field in your TMS may no longer be the best practice.
UltraShipTMS implementation experts report that, during the scores of implementations they’ve participated in over the years, customers overwhelmingly request their TMS be configured to provide an “all-in” rate in the “carrier rate” field. That is, they want the carrier rates populated in their TMS to show a single dollar figure that includes both the line haul and fuel costs rolled together for convenience in billing.
In an environment where fuel surcharges seem to run counter to actual fuel costs, reporting separately on line haul costs and fuel costs allow TMS users to report on each cost individually and maintain a clear view of how fuel may be affecting transportation spend.
In light of the apparent decoupling of actual fuel costs and what carriers are charging their customers, UltraShipTMS experts are now recommending configurations involve a separation between the two rates (line haul and fuel), putting each figure into its own separate field. The benefits of doing so are difficult to deny. Particularly in an environment where fuel surcharges seem to run counter to actual fuel costs, reporting separately on line haul costs and fuel costs allow TMS users to report on each cost individually and maintain a clear view of how fuel may be affecting transportation spend.
Viewing fuel costs apart from line haul costs helps to answer such critical questions as “is my transportation spend lower because of fuel only?” Or, “am I achieving better freight negotiations?” Having clear visibility into the answers to these questions enables do better overall budgeting for transportation and promotes deeper understanding of how fuel cost is effecting your overall transportation spend.