With New Fuel Tax Looming, Here’s a Way Logistics Directors can ‘C’ their ‘A’

The Wall Street Journal reports on the swelling support among lawmakers for increases in gas taxes to help offset the mounting costs of the nation’s crumbling transportation infrastructure.  If I were a Logistics Director at a company engaged in high volume shipping, I’d be concerned that the resulting rise in transportation costs will be blamed on me and the transportation department.  Yet, it doesn’t have to be.  Here’s the latest on the fuel tax debate and what savvy logistics directors are doing by way of CYA (cover your a**).

The Journal report focuses on South Carolina’s legislature where, for the last thirty years, even discussing raising fuel taxes was regarded as a political third rail.  The reporting suggests that lawmakers there are feeling emboldened by recent fuel tax hikes in Alabama, Louisiana and Oklahoma, and may follow suit accordingly.  The republican governor of South Carolina is suggesting he will veto the law.  Nevertheless, with fuel prices overall sitting at levels far off from the heights reached a decade ago, and roadways, bridges, and tunnels in serious need of repair, it seems likely the trend will continue state by state.

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Your department can avoid taking the heat for what seems likely to be a growing trend of fuel tax hikes if it has the visibility only a great TMS can afford.  As an added bonus, the same great TMS can also help mitigate rising costs due to the aforementioned HOS management, labor costs, capacity and scheduling challenges too!  

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Now, back to our hard-working logistics director who may not have the visibility in his transportation management process to separate the cost of line haul charges from fuel surcharges.   There are numerous factors that contribute to fluctuations in the overall landed cost of freight movements and it can be difficult to determine with any degree of certainty, which factor is to blame for cost increases.

However, the transportation department aided by a strong TMS platform enjoys the line item spend visibility needed to isolate the individual drivers of changes in freight costs.  Your CFO may not fully understand the nuances of cost drivers like tight trucking capacity or how hours of service rules drive up labor costs.  He likely doesn’t quite believe the notion that opaque scheduling processes lead to shorter lead times and higher, more costly spot market utilization.  But your CFO will definitely, innately understand that transportation is not responsible for rising costs stemming from a fuel tax hike.

Your department can avoid taking the heat for what seems likely to be a growing trend of fuel tax hikes if it has the visibility only a great TMS can afford.  As an added bonus, the same great TMS can also help mitigate rising costs due to the aforementioned HOS management, labor costs, capacity and scheduling challenges too!

Simply put, get a TMS for some CYA!
 

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