Posts Tagged ‘green’

Did you know the Fuel Surcharge you pay on every load doesn’t cover the out-of -pocket costs of higher fuel cost to your carriers?

Thursday, March 24th, 2011

Why? Fuel surcharge formulas are based on a loaded mile formula. All empty miles run between the terminal and your loading site, such as miles from the carrier’s last delivery to you or miles to the terminal for equipment repairs or tank cleaning, are not included in the fuel surcharge calculation.  As a result, the carrier has added fuel costs for those empty miles. Sure, when you contracted with the carriers, they built in some fuel recovery number for empty miles.  However, recent fuel cost increases (the time from when you negotiated your contracts until now) are not included in those calculations.

What does this mean to you? Let’s review a few examples. Say, during the time of your last contract negotiation, fuel costs increased by $1.50/gallon.  What added cost does that represent?   The average truckload carrier – either dry van or bulk – wants a minimum per-truck revenue of $200K to $225K.   Assuming a modest 10% empty mile to loaded mile ratio for TL van freight and 20% for bulk freight, unrecovered fuel costs is $2,769 for dry van carriers and $5,538 for bulk truck carriers. (Click View Graph below for more)

How do you effectively negotiate during any price increase discussion? Know your carriers empty mile ratio and average truck miles per gallon before you meet. Also, look back at your current contract effective date. Knowing what the fuel price was during your last contract renewal, along with your carrier’s empty mile ratio and average MPG/truck, will enable you to calculate your fuel cost impact on your carriers. You can also be a good partner to your carriers by putting actions in place to minimize empty miles and fuel waste.   As example, initiate a no idle rule at your plant during wait time to load.


Trouble in Mexico Causes Havoc when Shipping South of the Border.

Wednesday, June 10th, 2009
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The narco-wars in Mexico are all over the news these days and are causing US shippers to re-think how they get goods to and from Mexico. Lost in the attention grabbing headlines are some other issues that are wreaking havoc with trans-border shipping including the US govt’s refusal to allow Mexican truckers on US roads, increased delays with customs at the border, bandits along the north-south trucking routes as well as atrocious road conditions.

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There has to be a better way to move products between the US and Mexico, no? Well there is, and for the life of me, I can’t figure out why more shippers aren’t using it. It’s intermodal in-bond on the railroads. Basically, it just means putting your goods in a container and shipping via rail from a US point to a Mexican point (or vice versa) without stopping at the border. It eliminates the worries that shippers have regarding all the issues at the Mexican border towns as well as the customs delays. And to top it all off, it’s cheaper than trucking! Transit time on the rail from Chicago to Mexico City is between 4 and 6 days, so taking into account all the delays at the border, it’s actually about the same transit time as truck.

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We’ve been using this service for over a year and it has been flawless. We take loaded containers to the UP railroad in Chicago, send the appropriate customs docs to the railroad’s forwarder, it clears US customs and starts down to Mexico City. Four days later the container arrives at the Pantaco yard in Mexico City, where it clears Mexican customs. No delays at the border, no loss of product to highway accidents or to hijackers. This mode of trans-border transportation works well for bulk commodities in tank containers as well as traditional packaged freight in box containers. We have an easier time doing these cross-border deliveries than we do for some intra-US moves. One other positive gained from shipping products this way is that it is much kinder to the environment 28 Weeks Later .

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So to sum up, shipping intermodal inbond between the US and Mexico is cheaper, safer and cleaner.

Intermodal Transportation: A Cost Effective and Green Shipping Option

Tuesday, April 14th, 2009

As chemical companies search for new ways to reduce costs, various transportation mode options should be evaluated.   While trucking remains the most dominant mode of moving product domestically, intermodal freight transport (combination of truck and rail) offers opportunities for freight savings, especially when shipping products across the country.

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An underutilized transportation mode, intermodal is proven to cut costs and save fuel, while protecting the environment by reducing emissions. As railways operate more fuel-efficiently than trucks, intermodal transportation also can help reduce a company’s carbon footprint. Faeries dvdrip

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To determine if intermodal transportation is an option for your enterprise, business unit leaders should collaborate with their logistics  group or third-party consultants to evaluate supply chain strategies. Engaging the sales and marketing stakeholders early in the planning process is essential for the adoption of change and development of appropriate customer value scenarios. Typically, the longer the haul, the more cost effective intermodal transportation over alternative freight shipment modes.  However, modified lead times, resulting in new re-ordering points, may be trade–offs that must be considered with your customer base.  It typically takes 8 days to cross the country using intermodal methods.  As rail carriers work to improve shipping schedules, reduce loading and unloading times, and increase the number of lanes to support multiple delivery locations, intermodal transportation is worth another look when evaluating your transportation options. At the same time, you’ll be supporting the reduction of carbon emissions, an initiative all companies are now considering to support “green” campaigns.

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I welcome your feedback on experiences you’ve had with intermodal.


Red Mist aka Freakdog