Transportation Costing Group, specialists in activity-based profitability and cost analysis for the transportation industry, announced today, Aug. 21, the latest enhancement for its Cost Information System. Fuel on the Fly — provided free of charge to all CIS users — is a new capability designed to allow motor carriers to adjust fuel costs to reflect specific price levels, enhancing the ability to analyze freight profitability.
“The cost of fuel has become a critical issue for motor carriers,” says Ken Manning, president of Rockville, Md.-based TCG. “Fuel on the Fly allows CIS users to ensure that fuel costs and fuel surcharge revenues are properly accounted for when evaluating profitability. Knowing how much fuel costs on each load, shipment, lane or customer is essential to understanding the adequacy of fuel surcharge revenue, and, as a result, if the freight produces a profit or a loss.”
According to TCG, each time freight is costed with the interactive Cost Information System, the program displays the base fuel price reflected in the selected cost model and a field for a current price. For each analysis, the user can enter a new, current or projected fuel price in conjunction with a current or projected fuel surcharge to evaluate exposure to higher fuel prices; the system then will calculate an adjustment for fuel costs on the base and current prices and apply it to the fuel component of linehaul and local pickup-and-delivery costs so the cost reflects the same fuel price that the fuel surcharge represents. The new cost results reports generated include a “Fuel Adjusted By” label with percent adjustment and base and current prices.
“Fuel prices are changing rapidly, and surcharges do not always cover the higher cost of fuel because they don’t account for idle time, out-of-route mileage, empty miles or the different fuel consumption associated with different activities,” Manning says. “Fuel on the Fly is an effective way to use the most current fuel price and surcharge data when rates are quoted to evaluate the profitability of freight, lanes and customers.”