Check out our first in a series of videos on important logistics topics of interest to chemical shippers.
Stephen Hamilton, Managing Director of ChemLogix Global, discusses how BulkTainer ISO tanks offer enhanced safety and security for shipping chemicals by taking chemicals off roadways and reducing the incidence of accidents. Click Here.
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.
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.
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
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.
I welcome your feedback on experiences you’ve had with intermodal.
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