Case Study: Dealing With Detention

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Solution Seeker: XTL, a regional truckload carrier operating in Ontario, Quebec and the U.S. In its 20 years of operation the company has grown from two trucks to 500. Since 1989 the carrier has grown from a $30-million-a-year operation with no IT foundation to a company with revenues triple that amount and investments in technology that have kept pace with that growth. The company prides itself on the “prudent use of technology”, understanding that the goal of IT should be to support maximum efficiency in business processes. As Doug Kimmerly, vice president, M.I.S, with XTL notes: “We never jump on the bandwagon of the newest toy. Instead we measure everything by its long term potential.”

Solution Provider: Cancom Tracking Solutions, established in 1990 as Qualcomm’s Canadian partner. Largest provider of satellite communications in Canada with 500 customers and about 32,000 units in operation. Largest fleet customer has more than 1,200 trucks; its smallest has two.

The Issue: Detention time at shipper and receiver locations reduces the operational productivity of carriers, a particularly troubling issue now that new hours of service regulations in the U.S. (and likely soon in Canada) are making every hour of driving time that much more precious. “It is something that is out of control, but some carriers charge (the shipper) only after an hour. Outside of Ontario, you would be shocked to find out that an hour is not standard, nor is two or three. In some cases carriers are not charging detention time until they hit four hours,” says Mike Ham, vice president of Cancom Tracking Solutions. “I don’t understand how they can survive.”

Driver retention is also affected by the increase in unproductive waiting time at shipper/receiver locations.

So why are carriers leaving so much money in potential surcharges on the table? Why are they risking aggravating drivers, their most precious resource? Ham believes that aside from some carriers being reticent to stick their customers with detention charges, what’s also holding many back is an inability to properly document detention time.

“How do we measure detention today? It’s a manual process. The driver has to enter some kind of message that tells dispatch they’ve arrived and they’ve left. The reality is it doesn’t work. You rely on the driver and for one reason or another – they’ve arrived late or early – they forget to do it. If you provide inaccurate data, people do not pay their bills.”

The Solution: Automating the capture of arrival and departure information so that no driver input is required. The application uses standard OmniTRACS hardware. Arrival and Departure events are detected and fed via integration to the carrier’s dispatch system. The host application compares the data with dispatch stop information. Essentially, the solution measures and compares the truck’s progress to the customer location to calculate arrival and then captures the movement of the truck as indication of its departure. With integration, detention times can be calculated accurately in real-time. Following pre-notification to the shipper, detention charges can commence. The data is delivered with 99% accuracy, according to Ham.

The Implementation: All addresses in XTL’s system are automatically geo-coded, so that long before the truck goes to pick up a load, the exact coordinates for the customer are in the system and arrival and departure times can be accurately captured. Since the start of 2004, XTL has been charging every one of its customers after one hour of waiting time. It also started paying its drivers after one hour of waiting time.

“Just like a taxi, from the minute we arrive at a customer, the meter is on. Everyone knows it and we send out the invoice,” Kimmerly says. “Detention time is something that, in spite of what some people will tell you, really is in our control. When is the last time you got into a taxi and didn’t pay for that driver’s time? Why is it that the taxi driver’s time is worth more than our truck driver’s time and our investment?”

XTL is also using the solution to calculate hours of service and reset opportunities for its drivers as well as their ETA and projected time of availability for the next load.

The Result: More accurate calculation of hours of service has meant that “we are actually able to use the available hours the drivers have,” Kimmerly says. As for charging for detention time, XTL had not only captured a sizeable amount of revenue through detention charges, it has significantly reduced detention. Over the course of 2004 its loads experiencing detention were reduced from 39% to 27%.

“That’s the key to the whole thing. They are unloading our trucks before they are unloading other companies’ trucks. Shippers have got to do something to eliminate detention time and they are not going to do it if you just roll it into the rate. You have to show it to them. It has to be on the bill. We stopped trying to hide from the issue and we were able to turn the corner,” Kimmerly says.

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