Celadon and ALK Team to Control Total Toll Costs - Case
Transcription
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. pcm24-Casestudy.indd 1 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. 8/31/2010 9:07:39 AM “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 pcm24-Casestudy.indd 2 8/31/2010 9:07:40 AM