Operations

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National Private Truck Council has added a seventh learning track to its Annual Education Management Conference and Exhibition, scheduled for May 2-4 in Atlanta. The new track, “Executive Education: Leadership Strategies for the Senior Supply Chain Professional,” will explore issues facing upper management. Other educational tracks are Safety and Compliance, Equipment and Maintenance, Finance, Human Resources, Professional Development and Third Party Logistics. For more information, visit www.nptc.org.

IdleAire Technologies Corp. plans to complete 16 truck stop electrification projects by spring and offer services to more than 400 locations before 2006. The expansion includes the first truck stop electrification project for Alabama. Fifty units will be available by March at the Bucksville Petro, located at the Interstate 20/59 exit 100.

SCS Transportation has acquired Clark Bros. Transfer, a less-than-truckload carrier operating in 10 Midwestern states. The operations of Clark Bros. will be integrated into SCS Transportation’s Saia unit later this spring, giving Saia a presence in major markets, such as Chicago, Minneapolis, St. Louis and Kansas City. The expanded Saia will serve 29 states with 127 terminals.

Overnite Transportation announced the expansion of its Detroit operation into a minihub for the company has been successful. The operation consolidates and distributes freight throughout the Midwest. The 98-door facility has helped overnight lower transit times in the Midwest, the company said.

The change in the hours-of-service rules created two shortages. One is the amount of time a driver can afford to spend at a customer’s freight dock without receiving compensation. The other is trailers as more shippers and receivers request dropped trailers. As a result, many carriers have increased their accessorial charges for items, such as waiting time at docks and trailer detention.

From a shipper’s perspective, the call for increased accessorial charges comes on the heels of paying for fuel surcharges over the past few years. Shippers understand this need; their managers feel the same pain each time they fill their own gasoline tanks. But when you consider that even truckers don’t always understand the intricacies of logging hours, your customers might find it harder to understand why they should pay more due to a change in government regulations affecting you.

Shippers that have paid fuel surcharges may resist paying for accessorial items. That’s not surprising. Traffic managers have always resisted accessorial charges. Paying for these items represents an admission that their operations have problems. In addition, it’s an expense that cannot be allocated to an individual purchase or customer order.

So even with the hours rules, higher demand and tighter capacity, collecting accessorial charges will be a struggle. To improve your collection rate, start by removing the excuses customers have for not paying these charges. The main excuses usually are:

  • Never agreed to pay for accessorial items;
  • Wasn’t aware we were incurring charges;
  • But what about times when the carrier cost us money; and
  • Items should be part of the carrier’s charges.

Shippers sometimes plead ignorance if freight contracts only mention accessorial items with a reference to a rules tariff. To many customers, that’s like being penalized for not reading the fine print. Include a schedule of major accessorial items and charges with each contract. If you want to include references to a rules tariff covering all accessorial items, that’s fine, but make sure the major ones are clearly spelled out in simple language that anyone can understand.

Customers also like to play the “we didn’t know game” with trailer detention. For example, a shipper holds a trailer five days, and a carrier bills them detention for two days. The shipper offers the excuse that it was not aware the carrier needed the trailer. The carrier could have retrieved the trailer on the third day.

To eliminate this excuse, notify customers of impending charges prior to their being incurred. For example, my operations people used to send customers a fax entitled in big bold letters, “Commencement of Detention Charges.” We faxed this out by noon of the last free day informing them that the free time on a specific trailer was ending. The result was we got most of our trailers back on time. We also achieved a 90 percent collection rate on those we didn’t.

Of course, some shippers fall back on the excuse that they don’t get to charge carriers for things carriers do that cost shippers money. For example, a carrier delivers a load late, and the customer has to pay overtime to get the trailer unloaded. The customer doesn’t get to bill the carrier for overtime pay. Yet, if the crew takes more than two hours unloading the trailer, most carriers will want to bill the customer for excess unloading time.

It’s difficult to argue against this reasoning, but just consider precisely what the shipper is paying for. Explain to shippers that their rates do not include a service guarantee. If the rates contained guarantees, they would be significantly higher. The rates are based, however, on assumptions regarding how long a customer will keep a driver at the freight dock during loading and unloading. These assumptions are clearly spelled out in the accessorial rate schedule attached to the contract.

This argument also addresses the final excuse – that these services should be included in the base rates. Many shippers will request that carriers raise their rates to recoup accessorial charges over future loads.

While this may seem to make sense and work well in the short run, this approach has pitfalls. Whenever a carrier embeds extra services into its rates, its rates look high to anyone who doesn’t know all that is included.

If a customer forces you into embedding accessorial costs in rates, maintain a separate accounting for these items as they occur. Then you can demonstrate to the customer how much of these services it used. Perhaps more important, you will better understand the profitability of that customer.