Customers hold the key to containing truckers’ costs

A RECENT road transport survey has revealed the extent to which hauliers’ customers or alternatively their clients’ customers and service providers, like Transnet’s container terminals and other facilities at the port, impact on profitability. Undertaken by consultant Mike Johnston of Transport Concepts for the Durban Harbour Carriers’ Association, the survey shows that many of the fixed costs (that is the time-related costs) are under the control of the road transporters’ customers. For example, for the container delivery operators in the DHCA, the depot time, loading/offloading and terminal hand-in time currently make up around 82% of total trip time for local deliveries (0- 14 kilometres); 71% for medium distance deliveries (15-30 kms); and 53% for long distance (31-200 kms). “This is where much of the opportunity lies,” said Johnston. “These are the key areas on which the road transporter (with his clients) needs to focus. Bring these down, then the input costs go down because of increased number of trips possible per day/month. This will carry through to the output costs, and thereon into the price – if it is sustainable.” As an example, Johnston calculated that a 30-minute reduction (+ 13%) in the overall standing time at any of these locations (either individually or collectively) would yield an approximate 12% reduction in the cost of moving a container. Conversely, an additional waiting time of 30-minutes would push the cost up by 12%. “Real and significant savings can come from better asset utilisation,” he said. Most time-related costs are not under the control of the road haulier, but tend to be dictated by his customers and/or the customers’ service providers – like Transnet Port Terminals. “We really have to get the message across to everyone in the freight industry that any delays to our vehicles cost us money, and we need to work together to improve the cost-efficiency of the transport exercise,” Kevin Martin, MD of Freightliner and vice-chairman of the harbour carriers, told FTW. The survey found that, apart from the price of fuel, most of the variable costs – like fuel consumption, overtime, tyres and maintenance – are under the limited control of the operator. But there’s not much more that can be done to improve efficiency here, according to Johnston, with all the reputable operators already applying everything from vehicle maintenance programmes to driver training in their search to maintain cost-efficiency. Johnston also highlighted how critical it was for a road transporter to complete a specific number of trips per month if his vehicle unit was to make a reasonable profit – which he measures at about 8%-10% of sales. For a 6x4 truck tractor and tandem trailer, for example (the typical unit used by transporters carrying containers toand- from the docks), his calculations revealed a need for 67.50 trips per month or 3.29-trips per day. “Should the haulier drop three-to-five trips a month,” said Johnston, “he would be at break-even, and any more lost trips would result in a loss for that vehicle during the month.” His survey found that the only way to guarantee the required number of trips was to watch and manage the turnaround times for each trip. “And the road transporter needs the help of all the others in the chain if he is going to achieve that,” he said. “The only other two options open to the trucker is to cover for the delay risk with a price premium (like insurance companies do) or to walk away from the work.” But the other partners in these delivery chains are going to have to be persuaded to co-operate.