Transportation Leadership Journal
The transportation industry is fundamentally changing. The year 2020 will kick off a decade with new frontiers in data science, artificial intelligence, and optimization—all leading up to a shift in focus.
For the last 40 years, the transportation industry has utilized the DOE index – a national average price calculation – to determine the cost of diesel fuel reimbursements between shippers and carriers. Reimbursing based on an average index price creates an inability to accurately manage diesel fuel costs in transportation.
Fuel Recovery changed all of that. Breakthrough enables shippers to leverage real-time, lane-level data to reduce the fuel cost, consumption, and emissions in their supply chains.
Unlike an index-based surcharge program, Fuel Recovery moves beyond one average price and accounts for the time, tax, price, and geography specific to each shippers’ individual freight movements. Fuel Recovery calculates the exact cost of fuel used to move goods to market, bringing transparency and fairness to diesel fuel reimbursements between shippers and carriers.
Shippers in Canada are accustomed to using the Freight Carriers Association’s (FCA) Fuel Index which publishes weekly fuel surcharge percentages. Shippers typically consider this surcharge in addition to their base fuel price as a mechanism to reimburse their carriers for fuel.
This manner of calculating fuel costs distorts the realities of each individual freight movement. Implementing Breakthrough Fuel Recovery enables Canadian shippers to uncover the true cost of fuel and allows for fair and accurate reimbursement to carriers.
The deregulated and liberalized Mexican fuel market poses a critical challenge to shippers. With IEPS taxes, all in freight rate structures, and changing legislation and infrastructure distorting prices, shippers have little visibility into their fuel spend or the dynamics that drive it.
To be effective in this environment, shippers need to actively manage their fuel spend by introducing a fair, accurate, and data driven fuel reimbursement program.
Breakthrough Fuel Recovery provides visibility into the actual cost of fuel for each freight movement. We mobilize your data and separate your fuel and freight costs, making fuel a pass through expense while ensuring carriers are made whole on their fuel expenses.
Throughout Europe, shippers and carriers are accustomed to all in transportation rates, including both freight and fuel. This rate is typically held for the entire duration of a contract. Fuel prices and taxes fluctuate regularly, though, leading carriers to build unnecessary risk into contracts. A more transparent, data driven approach is necessary for shippers to effectively manage their transportation fuel spend.
Breakthrough enables shippers to separate fuel costs from freight costs. This separation of line items allows shippers to accurately reimburse carriers for fuel based on date, geography, and regulatory environment. With visibility into real fuel price behavior on each freight movement, fuel related risk premiums can be removed from freight rates, resulting in fair and equitable reimbursements between shippers and carriers.
Fluctuations take place in the wholesale diesel market over the course of each week. Breakthrough clients know that fuel prices change every day and translate that into daily savings with Fuel Recovery.
Despite the current low-price environment, price distortion in the DOE Index has more than doubled since the inception of Breakthrough. This means your opportunity for savings is increasing even in a relatively low-price environment.
Fuel taxes vary dramatically by state and have a huge impact on fuel price. Fuel Recovery accounts for taxes by state – the way carriers pay taxes – to ensure accurate reimbursement of transportation fuel costs between shippers and carriers.
Diesel commodity costs vary substantially from one market to the next, creating variance in fuel prices by region. Fuel Recovery accounts for the difference in regional pricing by calculating fuel prices specific to the geography your goods travel through.
Interested in learning more about how implementing a Fuel Recovery program could improve your transportation strategy? Fill out the form and we'll reach out to schedule a discussion.