You can now determine actual toll costs by route and lane.
A trucking fleet experienced a common problem. They were spending an extra $42,000 per month on tolls. And they didn’t know why. That’s according to Scott Applefeld of ASR Solutions, during the Truckload Carrier Association’s webinar “How are Tolls Affecting Your Profitability Per Lane?”
The fleet reached out to ASR Solutions, a transportation consulting firm and PrePass partner, to uncover why.
This story is not uncommon. It underscores the fact that fleets cannot manage what they cannot measure, as is often the case with tolling.
The Tolling Cost Gap
Motor carriers try to wrangle four common accessorial charges from shippers: fuel surcharges, detention, lumpers, and tolls. In most situations, data backs up the expense.
“But historically, toll costs are estimated, not actual,” Applefeld said. “Routing software may say if you drive this route, exactly this way, with this type of truck, this will be your toll costs.”
Unfortunately, actual toll costs rarely match estimates for many reasons:
- The tolling station may read the toll incorrectly.
- Dispatch may route the shipment differently than originally tendered in the system.
- The driver may take a different route that incurs more or fewer tolls.
- The toll agency may hike up toll fees after the software-estimated toll costs.
Toll charges happen on the fly, but the actual bills often arrive weeks or months later. By then, most fleets lack a good way to reconcile toll data with dispatch data. As a result, fleets pay more for tolls than they should. Doing so can have a massive impact on the bottom line.
Consider that the Truckload Carriers Association estimates the average revenue per truck at $4,000 a month and notes most fleets run an operating ratio in the mid to high 90s. A fleet with an operating ratio of 95 and each truck generating $4,000 per month, shows a profit of $200 per month. Now consider that data shows the average truck incurs $200 per month in toll costs.
“You can see how close these numbers are,” Applefeld says. “If you mismanage your tolls, you can completely erase the bottom line profit every single month.”
A Better Way to Calculate Toll Costs
“Effectively managing toll costs, just like other accessorials, requires combining data collected by your toll payment provider with that collected by your transport management system (TMS),” Applefeld stresses.
That is exactly what the partnerships between PrePass and TMS providers, in this case Geotab, allow ASR Solutions to do. The company takes data from PrePass INFORM Tolling software, cross-references it with the GeoTab system, then analyzes it to deliver accurate toll information to motor carriers.
The data from PrePass gives information on the transponder, unit, license plate, toll location, and the tolling agency. When this data is cross-referenced with GeoTab’s data, fleets can verify the truck location, the license plate, the driver, and the time the toll occurred. ASR Solutions flows the data into the fleet’s dispatch system.
“Once you bring these two information sources together, you can look in the dispatch system and know the customer, lane, shipper, consignee, and what you billed and compare it to what you expected,” Applefeld said. “Putting the data together gives you insight so that you can accurately measure your tolls.
You can measure whether you priced a lane appropriately. You can tell when one driver incurs more tolls than other drivers on a specific lane. You can see when a driver varies from a planned route. You can verify a truck showed up when expected and when it was delayed.”
Fleets get paid to carry freight from one point to another, and they charge their customers to cover their costs. Mismanaging tolls can derail this process. However, combining tolling and TMS data sets helps fleets better manage and monitor their toll spending to enhance their bottom line profits every month.
Watch the webinar, “How are Tolls Affecting Your Profitability Per Lane?” and you will see a full presentation on this topic from PrePass and ASR Solutions.