Celadon and ALK Team to Control Total Toll Costs - Case

Celadon and ALK Team to Control
Total Toll Costs - Case Study
Company Profile
Celadon Trucking Services, Inc. is one of the top 20 truckload carriers
in North America.
Celadon’s fleet of 3,000 trucks and 9,000 dry–van trailers specializes
in North American cross-border trucking. Some 2,500 of Celadon’s power units
operate in the United States, 250 in Mexico, and 250 in Canada. Celadon is listed
on the New York Stock Exchange, where earlier this year founder, Chairman, and
CEO Steve Russell rang the closing bell to mark Celadon’s 25th anniversary.
Products and Services Used
“Of the companies we talked with, some had seen their toll costs go up 50%,
some had seen their costs go up 100%,” Gabbei said. If Celadon were to install
transponders without controls, he noted, the company anticipated a $2 million hit
to their bottom line.
“In trucking you try to save pennies,” he said. “There was no way we were going to
put transponders in our trucks without having our hands around the controls.”
But the issue of control was not an easy one.
“We’ve been looking at this toll process since I’ve been here,” said the
13-year Celadon veteran, “and we’ve been looking at putting transponders in our
trucks for the past three to five years.”
 ALK’s PC*MILER®|Tolls 24
 ALK’s PC*MILER|Connect
 Manhattan Associates’ Carrier™ Solutions (Fuel&Route®)
 Qualcomm®’s OmniTracs® & QTracs®
 IBM iSeries® platform
Business Situation
Altogether, Celadon pays in excess of $3 million annually just for
highway and bridge tolls.
Until recently, all Celadon drivers paid cash at toll booths. But now, after months
of concerted effort, Celadon has decided to install toll transponders across its fleet.
Mike Gabbei, Celadon’s Chief Information Officer oversaw the successful effort.
It began with the clear understanding that the cash toll payment system had
serious drawbacks.
“A driver has to pull over and pay at a toll booth. He’s losing revenue
by not going down the road -- even if he’s only stuck for five or ten
minutes,” Gabbei said.
In an industry that competes for qualified drivers, that kind of predictable delay
can hurt – especially when Celadon drivers can see competitors’ trucks equipped
with transponders breeze through express lanes.
“Then there are the back office functions. One, the driver does have to receive
prior approval for the toll road. Second, he/she has to scan in their toll receipt
paperwork. Third, payroll has to process all that paperwork, and so on,” Gabbei
explained.
Gabbei knew the answer was not simply to install toll transponders and deal
with the results. Other carriers had done just that only to find many drivers felt
entitled to use toll roads whether use was authorized or not.
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PC*MILER RouteMap™ and detailed route report showing toll plaza information.
Technical Situation
The effort gathered momentum in 2009. Celadon was experimenting with transponders in a dedicated part of its fleet that carried high-value freight. Gabbei saw
the value of providing specific entry and exit information to drivers when tolls were
authorized, often by a driver manager.
Gabbei explained that a Celadon driver would send in a macro over the company’s
Qualcomm mobile communications system asking for an authorization for, say,
$53 in tolls. Since Celadon was using ALK’s PC*MILER 23 with the Tolls Module, the
manager could see what the tolls should be.
“If that number was close or matched the amount the driver asked for, he approved
it,” Gabbei said.
If the driver required an advance for tolls, it would be loaded on that driver’s
Comdata card – another administrative job.
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“Still, all we could tell the driver was, okay, you’re going to use a toll road
in Illinois for 11 miles. Or, you’re on the PA toll road for 63 miles. That was all
the data we had available to us to share with the driver,” Gabbei said.
With the success of that testing and with Manhattan’s decision to include ALK’s
plaza-to-plaza information in its route and fuel application, Celadon committed
to install transponders across its fleet.
That left plenty of room for misunderstanding – or deliberate abuse -most often when assigned routes paralleled toll roads.
“Actually to 2,750 trucks,” Gabbei said. “This does not apply to the 250 units
in Mexico.”
But Gabbei and his team realized that plaza-to-plaza data could close that
loophole. By comparing the data from electronic transponders with precise
plaza-to-plaza authorization, the company could easily detect unauthorized tolls.
Celadon could confidently charge those costs back to the offending driver.
Using transponders along with precise entry and exit data would make it easier
for conscientious drivers to comply and more difficult for others to take advantage.
Celadon would have the kind of controls it had been looking for.
Benefits
For its U.S. and Canada fleets, Celadon anticipates substantial benefits.
To start with, Gabbei expects to save approximately $250,000 a year in
unnecessary toll expense formerly incurred. This figure includes those tolls
approved by driver managers under the ballpark estimate policy for authorization.
Exact entry and exit points along with exact toll amounts are now preauthorized
with a route.
And, driver managers will no longer be involved in toll authorization. “We probably
average over 150,000 transactions a year that a driver manager has to go in and
manually look up and approve,” Gabbei said. “All of that goes by the wayside.”
Similarly, clerks no longer have to deal with scanned toll receipts. With transponders
on Celadon trucks, tolls can be processed electronically. The back office process
for authorizing, paying, and reconciling tolls can be entirely electronic.
Of course, driver efficiency and satisfaction are expected to improve even as
Celadon reaps cash rewards.
Manhattan Associates’ Fuel&Route® showing integrated PC*MILER directions, toll costs and plazas.
Solution
Since Celadon uses Manhattan Associates’ Fuel&Route application for truck
routing recommendations that include optimal fueling stops, Gabbei asked Manhattan to include entry and exit plaza information with those routes. But Manhattan
told Gabbei that ALK provided the actual map-based routing data, which did not
include entry and exit information.
“So I called up our sales rep at ALK and said, hey, I’ve got this idea,”
Gabbei recalled.
“A driver will pick up on average of probably ten or fifteen minutes per load,”
Gabbei noted, adding that Celadon will implement a toll dispute process to
deal with any problems that might arise when unauthorized tolls are charged
back to a driver.
As an added bonus, by using transponders Celadon will be eligible for
discount programs offered by some toll authorities.
Considering all these accrued cash and efficiency benefits, Celadon expects that
the controls it has developed will do more than simply hold the line on current toll
costs. It will actually add to the bottom line.
A number of conference calls ensued as Gabbei outlined Celadon’s concept
to ALK’s marketing and product management people.
“ We expect to realize an overall savings
of $750,000 a year,” Gabbei said.
“ALK came back and said it was a great idea,” Gabbei said.
PC*MILER 24 has since been released so that entry and exit plaza data is now
available to all ALK customers using PC*MILER|Tolls.
Then ALK acted accordingly. With the next PC*MILER update, version 24, only
a few months away, ALK made a special effort to ensure that entry and exit plaza
data were part of the release. Celadon became an alpha and beta customer to
test the entry and exit toll plaza information.
“Now we could tell a driver to get on at toll plaza 123 and get off at toll plaza
187,” Gabbei said.
For More Information Contact PC*MILER Sales
Tel: 800.377.6453 ext 1 Email: [email protected] Web: www.pcmiler.com
081710
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