24 DC VELOCITY MARCH 2014 www.dcvelocity.com
newsworthy
What can you get for a penny nowadays? If you’re a big
truckload shipper, how about $6 million a year in fuel surcharge savings?
A survey of 150 large shippers by Transplace, a Dallas-based third-party logistics service provider, found that for
a shipper with $100 million in annual truckload spend, a
one-cent-per-mile adjustment in the formula for calculating fuel surcharges could cut its annual fuel surcharge bill
to $32 million from $38.8 million, Transplace said.
Typically, fuel surcharges are based on the differential
between current weekly diesel prices set by the Department
of Energy and a contractually agreed upon base rate for diesel, an amount lower than the commodity’s market price.
The surcharge is calculated by adding a penny for every five
or six cents per mile that market prices exceed the contract
rate, and then multiplying that figure by the number of
miles traveled.
For example, a shipper and carrier agree to a base diesel
price of $1.50 a gallon. If weekly pump prices hit $4.00 a
gallon and the interval of increase is set at 6 cents per mile,
the amount comes to 42 cents a mile. The surcharge is then
determined by multiplying that number by the mileage the
truck travels.
Currently, the marketplace is split between intervals of 5
cents a mile and 6 cents a mile, Transplace said. However,
carriers are leaning toward greater use of the 6-cents-a-
mile threshold—a far more favorable level for shippers—to
reflect the increasing cost burden of fuel and a significant
increase in the fuel-efficiency of the nation’s truckload
fleets, the company said.
The wider the per-mile interval, the more shippers can
save. Based on an interval of 7 cents per mile—a level that is
the exception rather than the rule—the example shipper’s
fuel surcharge bill drops to $19.7 million a year.
Fuel surcharges are by far the most common of all “
accessorial” charges imposed by carriers to compensate them for
services not directly connected to the line-haul movement
of the freight. For the first 10 months of 2013, fuel surcharges added, on average, nearly 18 percent to a truckload
carrier’s base rate for line-haul services, according to data
from consultancy IHS Global Insight.
Fuel surcharges imposed on rail intermodal moves can be
between 12 and 33 cents a mile lower than surcharges on
truckload shipments, according to Transplace. However,
some shippers use the same programs for both movements,
an approach that leaves millions of dollars in unnecessary
charges on the table, Transplace said.
Ben Cubitt, Transplace’s senior vice president for consulting and engineering, said that intermodal fuel surcharges, if properly negotiated across a network, can cost
shippers about half of a typical truckload’s fuel surcharges.
Shippers that budget the same surcharges for the two shipment types are not achieving the “full economic efficiencies
of intermodal versus truckload moves.”
Small change in fuel surcharge formula can yield big savings,
survey finds
UPS Inc. has acquired U.K.-based Polar Speed, which
provides temperature-sensitive pharmaceutical supply
chain services. … C.H. Robinson has opened an office
in Innsbruck, Austria. … Third-party logistics company
Total Quality Logistics is opening a new sales office in
Troy, Mich., a suburb of Detroit. … Intelligrated, a North
America-based automated material handling solutions
provider, and its software subsidiary, Knighted, will
showcase new fulfillment execution software, fulfill-
ment technologies, and automated material handling
equipment at Modex 2014 on March 17–20 at the
Georgia World Congress Center in Atlanta. … Superior
Tire & Rubber Corp. of Warren, Pa., is celebrating its
50th anniversary. … In response to the continued rise in
costs of key raw materials and other inputs, Sealed Air
Corp. is implementing North American price increases
ranging from 3 to 8 percent within the company’s food
care and product care divisions. ... SI Systems, a supplier
of advanced warehouse control systems, warehouse
management systems, and order fulfillment solutions,
has moved to 101 Larry Holmes Dr., Suite 500, in Easton,
Pa. … Dematic, a supplier of logistics systems for the fac-
tory, warehouse, and distribution center, has introduced
an order fulfillment solution for piece-picking applica-
tions called the Dematic Put Wall System. … Arpac will
be featuring the Semi-Automatic Pro Series LP Wrap-
N-Weigh and the Automatic Electro-Wrap EWA Rotary
Tower Stretch Wrapper at the upcoming Modex 2014
show at the Georgia World Congress Center in Atlanta.
… The Port of Quincy in Washington is participating in
an effort to improve rail freight movement across the
Great Northern Corridor, which spans the northern tier
of the western United States from the Puget Sound and
the Lower Columbia River to Chicago.
short takes
