Monthly Archives: April 2011

How to Cope with $5.00 Diesel in Local Trucking

It now costs over $200 to fill up a straight truck, and pouring 120 gallons into your twin-75 equipped tractor can cost $500.  In an earlier post we discussed fueling strategies.  If $10 is saved on labor, it is as good as $10 saved on fuel cost.  What else is there?

We are not going to list all the well known strategies for reducing fuel efficiency, such as more efficient trucks, driving slower, less idling, correct tire pressure, etc.  Many of these techniques have little benefit in the local trucking universe.  Often overlooked is what kind of diesel is being used. This is a potential money-saver for you.  Think about it.

During the winter months diesel is often blended with expensive additives to prevent ice buildup.  Sometimes standard practice starts the “additive season” too soon and ends too late.  The difference in cost can be ten cents per gallon or more.

In the warmer months, or warmer climates, biodiesel is an excellent choice.  Because of government subsidies, biodiesel is often $0.15/gallon less than plain diesel.  Biodiesel gets the same or better mileage and comes with no additional maintenance or other expense.  Look for a source, figure out the extra labor cost (if any) to get the truck to the appropriate facility, and make an informed decision.  Most wet fueling operations can provide biodiesel.  It is your tax dollars that are providing the subsidy, so you might as well get some benefit from it.

So, what is biodiesel?  Biodiesel is a blend of diesel fuel with organic materials other than ethanol, such as used cooking grease, canola oil, etc.  It is refined and cleaned before use.  Here is a link to an interesting slide show about biodiesel:

http://www.biodiesel.org/resources/sustainability/pdfs/Advance_Biofuel_Webinar_20100827.pdf

As usual:  keep doing the homework, and you can probably keep finding new places to save money.

Local Trucking Company Lends A Hand for Wildlife Documentary

Moose alert!  Way’s Transport, a local trucking company in Western Newfoundland, Canada, lent its resources recently to National Geographic (NG) for a video shoot.  NG was looking for video footage of moose in the Northern Peninsula, where collisions between trucks and moose are common.

Click here to read the story.

“Moose racks” can help to reduce vehicle damage from such collisions.

Moose accounted for 3,400 vehicle crashes in Maine from 2000 to 2004, according to the Center for Disease Control:  here’s a detailed article.

http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5547a3.htm

In late spring, moose are drawn to roads for the salt left there by vehicles.

–Jonathan Miller, Editor

How do I get my local trucking company more work from freight brokers?

More and more shipments, including local delivery, are being controlled by freight brokers or their fancy-named cousins, logistics providers.  There are many considerations for doing business with brokers–but first, you must get the freight offered to you.

How do you successfully solicit shipments from freight brokers?  The first step is to contact a prospective broker.  Most brokers do not have a specific dispatcher assigned to local pickup & delivery.  Each dispatcher generally has a personal local resource list. You can understand a dispatcher sometimes wanting to guard that list against revealing to other dispatchers.  The trick is to gain a beachhead with one dispatcher and then leverage that relationship to get introduced to other dispatchers that may need local services.

Once you have interested a broker in your services, the next step is to fill out an information sheet.  This rarely asks the questions that pertain to local P/U & delivery, such as:  “Do you have straight trucks?” or “Do you have liftgates?”, etc.  Often you are asked to simply list states in which you do business.  It is difficult to define a metropolitan area.  All these questions are barriers to local operations.  The information you provide is usually entered into a spreadsheet format that has no room for “explanations.”  You must consult with your prospect to determine the best way to enter information such that it is visible to other prospective users.

The path is difficult, but the rewards are worth it.  You must “sell” each dispatcher as if s/he were a separate customer.  Keep in mind that dispatchers often change jobs and usually bring their “stable” of customers and resources with them, potentially providing you with fresh dispatchers to solicit.  Resist the urge to get the work thru price reduction.  Brokers use one-truck operators, unregistered carriers, etc. who can all undercut your rate.

Do not try to match rates;  concentrate instead on work that would be profitable for you if you got it.  Accept the fact that 90% of freight is going to the lowest price and you are competing for the remaining 10%, which is often the only work worth doing.

There are many other consideration for doing work with brokers, some of which will be examined in future blog posts.  In the meantime, do not ignore this potential rich source for future business.

Analyzing Fueling Costs for a Local Trucking Company

With fuel costs skyrocketing, and customers resisting additional fuel surcharges, it is all the more important to find areas to save money. Your decisions about how trucks are fueled can have a significant effect on your profitability. There are three choices for local operations:

  1. Fueling off-site
  2. Fueling at on-site facility
  3. Contract for wet fueling

Each method presents positives and negatives, costs and benefits. By analyzing the variables, you can arrive at the best solution for your business. Let’s examine each one in turn.

1. Fueling off-site: This includes fuel card programs, off-site fueling facilities, etc. The direct costs are minimal, just the administrative cost of handling the cards and receipts. You will be paying retail price for the fuel, with some ability to shop around for a lower price, although sometimes the extra travel time eats up the savings. Many fuel card programs offer excellent reports for fuel tax purposes.

Indirect costs can be high. Consider the amount of time it takes a driver to fuel. There is (a) the added travel time to and from the fueling location, (b) the time spent dispensing fuel, (c) the time spent purchasing items from the convenience store, and perhaps (d) the time spent talking with other drivers who are fueling at the same time.

Example: you find it takes 10 minutes, on average, to detour for fuel. It takes 8 minutes to dispense the fuel, the driver averages 2 minutes in the store, and 2 minutes taking to others. This totals 22 minutes total. For a driver earning $15 per hour this costs the company about $20 after benefits and insurance (not including overtime). The 22 minutes cost $7.33, adding 18 cents per gallon to a 40 gallon fill.

2.  Fuel at on-site facility: The direct costs are large. The capital cost must be calculated and amortized. If you build a fuel station costing $35,000 and expect to spend $15,000 in maintenance and interest over five years, your per-year cost is $10,000 or $27.40 per day. In addition, there is either the time it takes a driver to fuel and chat, or the expense of having another employee do the fueling. Administrative expenses include administering the fuel station, sales and fuel tax reporting, etc. The up side is you can obtain fuel at wholesale, saving perhaps 20 cents per gallon off retail. You must calculate your expense and translate into a cost per gallon, then compare the expense to expected savings. If the cost/benefit analysis looks good, check into local laws concerning on-site fueling facilities before proceeding.

3.  Wet fueling: This refers to hiring a fuel supplier to fuel trucks parked at a single facility, usually at night. The direct and indirect costs are minimal. The supplier will provide details of how much fuel went into each truck. You will have no expenses for labor. The downside is that wet fueling usually, but not always, means a higher price per gallon. The price is usually expressed as a markup over a published, “wholesale” price. The markup could range from 10 to 30 cents per gallon. It is possible that this price, for larger fleets, could be less than average retail price. Even if price is higher, you must calculate your labor savings and compare to the added cost per gallon.

You may be surprised at how much savings can be realized with the wet fuel option. There are many other factors to consider. Some fleets have drivers pre or post trip their vehicles while fueling. Your municipality might not allow on-site or wet fueling. You may forge a great relationship, and discount, with a nearby retailer.

What’s the best fueling option for you?  Performing a cost analysis on the three methods will help guide you to the most cost effective choice.  Take a serious look at all three options, and you can not only make a good business decision but also know that you really looked at it from a number of angles.  Tell us in a comment what your experience has been with any of the options listed above.  We’d like to hear from you.

New HOS Data Has ATA Firing Back at FMCSA

The American Trucking Association was back on offense yesterday, calling on the FMCSA to scrap its proposed changes in HOS (hours-of-service) rules.  The ATA claims that new federal safety data do not support the FMCSA’s proposed changes to HOS because the current rules have dramatically lowered accident rates and are therefore sufficient.

Here is a link to the article in CCJ:

http://www.ccjdigital.com/new-safety-data-prompts-ata-to-again-call-on-fmcsa-to-retain-hos-rules/

Remember, the good news for local trucking, cartage, and P&D is that, whether implemented or not, the changes currently being debated in HOS regulations will not affect local trucking companies. Most local truckers operate under the 100 Air-Mile Exemption (115 statute miles as the crow flies) where a driver is allowed to record duty time using a time clock instead of RODS (logbook or EOBR).   The rules of 60 hours per week, 12 hours per day, with one 16 hour day permitted per week, etc.  remain unchanged.

Thanks for Subscribing!

Thanks for subscribing to the Local Trucking Blog, the online community created to provide you with the most practical, hands-on, time-tested perspectives and approaches to the problems and concerns that owners and managers of local trucking companies face every day.

If  you’ve ordered premium content, such as a white paper, you will receive e-mail instructions for downloading.

While you’re here, feel free to browse through recent posts that interest you, or read the “About Us” page to learn more about the Local Trucking Blog community.  Welcome!

The Editors

Thanks!

Thanks for requesting the white paper, “The 3 Biggest Mistakes Owners and GM’s Make in Local Trucking,” from the Local Trucking Blog.  You will receive an e-mail shortly with a confirmation request. After you confirm, you’ll get another e-mail with the white paper attached as a PDF.

Feel free to browse through recent posts that interest you, or read the “About Us” page to learn more about the Local Trucking Blog community.  Welcome!

The Editors