Carrier selection and management are often a top priority for transportation managers, so making changes to your supplier relationship should be done mindfully.
Because Fuel Recovery results in significant cost avoidance that impacts the transactional outcomes for carriers, shippers often ask, “Won’t carriers just adjust my linehaul rates to preserve their margins?”
MYTH: CARRIERS WILL REALLOCATE PROJECTED SAVINGS INTO LINEHAUL.
An Analysis of the Operational Costs of Trucking: 2018 Update, ATRI Report
BUSTED: New Fuel Recovery clients report negligible, or no increases to their previously contracted linehaul rates due to changing fuel programs.
According to a 2018 report released by the American Transportation Research Institute (ATRI), the primary costs for fleets—including driver wages, equipment, insurance, and maintenance—have increased year-over-year since 2013.
Fuel costs, however, reportedly went down by almost thirty cents over this same time period. When fuel is managed with a market-based approach like Fuel Recovery, shippers can better understand how each line item drives costs in their budget—particularly for fuel, the most volatile cost within your transportation spend.
Most carriers are well acquainted with the Fuel Recovery methodology. With the right change management strategy, carrier feedback is consistent about the fairness and accuracy of the program.
While some carriers may request adjustments to linehaul rates, Breakthrough equips shippers with baseline data specific to their network to ensure the best possible outcomes with their carriers. Backed by actual, lane-level data, both parties can engage in informed discussions about the cost drivers for each bucket.
Consider the lane example above. Throughout the year fuel costs varied greatly on a single lane from Milwaukee, WI to Atlanta, GA. Even a notable increase in linehaul would fail to capture the ongoing unpredictability of the fuel market. On a given day their arbitrary linehaul increase may serve them well, but without the data provided by a Fuel Recovery program, market events will drive prices out of scope from their expectations.
With full, data-based price transparency, more informed linehaul rates can be negotiated based on service, capacity, and value provided to carrier networks. Both shippers and carriers will never be able to account for daily fuel price fluctuations, so increases in linehaul will not fully eliminate your savings potential.
Fuel Recovery savings have proven to endure.