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Up Close and Profitable

If a fleet's only measure of profitability is whether it has made payroll, it will not know where, exactly, the profits or losses are occurring....

If a fleet’s only measure of profitability is whether it has made payroll, it will not know where, exactly, the profits or losses are occurring.

A better strategy is increasing profitability by driving out unprofitable lanes, loads, drivers, etcetera, and improving companies in times when it may not be possible to grow them. “With the ever-worsening driver shortage, it is impossible to put a plan together to grow the top line; fleets can’t get the drivers. Business plans are changing the focus to the bottom line, improving efficiency and driving down costs,” explains Bob Maddocks, the chief executive officer of Maddocks Systems Inc., in Vancouver.

Today’s software tools let fleet managers and examine the profitability of specific areas of the company anytime, not weeks after the fact. Too, their predictive powers give dispatchers a good idea whether loads are moneymakers or losers before committing to the hauls.

Maddocks thinks fleets should strive to determine profitability in real-time, although the complete picture may only be available once the route is run. “You need to know when you are planning a load whether the driver, power unit, and load are profitable, and whether your resources are being used effectively,” Maddocks says.

The Maddocks TruckMate system command centre can calculate real-time profitability as you build your loads, Maddocks explains. “Say Pete is close to Springfield, with two trailers nearby. As the load builder is typing this in, the software calculates instantly the cost of getting and moving the load; for example, the trip will gross $1,300; Pete gets $1.06 per mile; the power unit costs X/mile; the trailer Y/mile; the dispatcher Z … the software calculates that the trip will cost $1,900. I have the opportunity to effect change; for example, give the load over to the brokerage department and never do it again. You see the effect now, not a month from now.”

Dorothy van Koughnett, controller and IT manager with Berry & Smith Trucking in Penticton, BC, uses Maddocks software. “You have all the data in the background. In one screen I can see if I will make my money back, based on past history. You can see a snapshot of what is happening with your trucks. If you see your driver has low miles, you can give him some lanes.”

Other predictive variables are the average fuel miles per truck, the average fuel costs on certain lanes and the cost of the available driver. The software makes decisions, but they can be overridden: It can present the nearest trucks to a backhaul in descending optimal order, but the dispatcher can add the human touch, such as choosing a driver who has been waiting longer for a backhaul.

This April, TransCore’s Link Logistics officially released a carrier version of its Web-based, pay-as-you-go OpsCenter software, a suite of integrated tools that, among its many functions, helps determine profitability before committing to a load and prepares detailed profitability analyses after a load is run.

As soon as dispatchers receive offers for loads, they can use OpsCenter’s LoadLink freight matching to determine the availability, location and cost of obtaining backhauls. “The dispatcher wants to ensure there will be a backhaul, and not have to run out-of-route miles to get it,” says Claudia Milicevic, general manager for Link Logistics.

LoadLink also accesses information from credit agencies on customers that put freight on the system, putting it on the load poster so dispatchers can examine the likelihood of prompt payment.

“When information on the raw costs of making a shipment gets transferred into the general ledger, costs like fuel, overhead and staff can be applied,” says Milicevic. OpsCenter adds items like tolls, gas costs and commissions as they are recorded into the system.

Making decisions that should generate profit is one thing. Following through to ensure profitability is another. “Waiting time and collecting for it is probably one of the most contentious issues. In LinkTrack a carrier can set up certain points and geo-fence to show time in and time out of an area,” says Steve Blair, the general manager of TransCore’s Keypoint. “Another big issue companies face is not sending their invoices out quickly enough.” Keypoint feeds operations information directly to accounting, making invoice processing quick and accurate.

The company’s GlobalWave satellite tracking system lets fleets collect and send performance data such as speed, idling and RPM information back to the office, where fleets can use this information to launch internal campaigns to improve performance. “Our software is a complete system for a carrier. We have reports that pull up, on a load-by-load basis to determine profitability,” says Blair.

The McLeod Software Corporation in Birmingham, Alabama, sells LoadMaster, the base package of integrated software tools for transportation management, plus optional modules that can calculate profitability proactively or historically by, for example, truck, customer or lane.

“I think that profitability analysis is a new phenomenon that has gotten to the point where people can use it. The data has always been there. It is a matter of getting the data out more easily so it can be used to benefit your business,” says Rick Halbrooks, McLeod’s vice president of sales and marketing. “The more data you have in LoadMaster, the closer you can get to within 10% of the true cost while you are in predictive mode.

Most of the software uses real time information, including fuel costs that are updated every time someone stops for fuel; real-time interactive mapping from mileage vendors; and updates to drivers on real road conditions.

Vice president of Floyd & Beasley in Sycamore, Alabama, Barry McGrady hints at the real-time capabilities of LoadMaster. “We are using a KPI [key point indicators] dashboard, via a spreadsheet, that pulls information from our database. We monitor it throughout the day to get up-to-the-minute as it changes; for example, gross revenue, empty and loaded miles, number of trucks reporting, number of orders entered.

There is a line that describes the goal for each day and another one that shows the percentage of the goal I have reached. I might see that revenue is off, but that 10 trucks haven’t reported. So my problem is that I’m not moving freight. It tells you where to look and then you can make adjustments.”

Historical information can be obtained anytime, Halbrooks explains. “We have a report called Owner Flash Report, which allows someone to pull up and examine their critical business issues anytime; for example, backhaul percentage today, what it was last week compared to this week, percentage of unseated trucks. This helps you anticipate problems before they become severe.”

Halbrooks believes most fleets are using Excel spreadsheets and months-old data to determine profitability. But, he notes, “The small fleets are taking advantage of the good times to buy software and upgrade their technology. In the last two years, we have had over 50% per year in growth in software sales. This year it was 61%.” LoadMaster starts at about $US 25,000.

Fleet managers need not struggle alone to understand how software does all this and how it might help their operations. Just call a vendor.

“Our sales people help fleets every day: They do return on investment analyses and show people how software more than pays for itself,” says Halbrooks. “Sales people can show customers where the blind spots are – where areas of non-profitability are.”

Carroll McCormick is an award-winning writer who has been covering transportation industry issues and technologies for more than a decade. He is based in Quebec.

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Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry.
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