Have you ever seen a three-ring binder full of napkins?
While napkins around the world bear witness to great ideas written during the haste of inspiration, routinely falling back on this approach for trip costing and planning doesn’t exactly make full use of all resources, namely analytical software that can better assess the profitability of trucking routes and take napkin math to another level.
But be careful, advises Dan MacKenzie, vice president of pricing and credit for Toronto-based XTL Transport. While no one knows your own business quite like you, taking a do-it-yourself approach to building a program around a complicated topic such as cost and profitability analysis may not work as planned.
“We had been looking for something, and we actually thought we could build it ourselves, and after five years of thinking and trying, we realized we can’t,” MacKenzie said.
At that time, roughly seven years ago, XTL turned to Transportation Costing Group, which in 2015 was acquired by SMC3, the long-time Atlanta-based data solutions company that traces its roots back to the Motor Carrier Act of 1935.
SMC3’s Cost Intelligence System (CIS) has proven to be a good match for XTL in sizing up route costing and profitability based on analyzing a truck’s entire round trip with a focus on operating ratio. The ongoing goal is to help offset empty miles — that leg of a trip where a truck is not hauling a load and thus is incurring more cost without pulling in additional revenue.
CIS, which can be used for truckload and less-than-truckload carriers, uses joint cost accounting to examine how expenses impact the truck’s entire round trip, not just one leg of the journey. Conversely, revenue for the round trip is measured against joint cost to help determine profitability.
