Episode 10: Fuel

In this episode we talk about fuel.

If I could be “Captain Obvious” for a moment by telling you something you already know, I’d remind you that fuel is one of the top expenses anyone in the trucking business has to deal with.  Obviously driver costs (for fleet owners), insurances and truck payments are in the top five as well, but fuel is simply a necessity.  To make matters worse, it can be confusing with all of the discounts and programs fuel companies put in place.  So I want to give you just a quick view of how the fuel discount program works at Chieftain.

First, remember that volume drives the discount.  Fuel is a commodity and the companies like Pilot, Flying J, TA, Loves, etc. all want one main thing, gallons!  They measure the gallons that move through their network because it is a commodity they focus on making a few pennies per gallon times an enormous number of gallons.  Every negotiation and discussion with the fuel companies I’ve EVER had result in a discussion about how many gallons we could put in their network.  So the more gallons we have as a company the more leverage we have over pricing.

The next step in the negotiation process is to understand how the cost of the fuel works for the various trucking stop chains.  Simply put, all of the chains by their fuel from a fuel depot known as a “rack”.  The rack is the place where pipelines deliver the commodity to bulk delivery points whether it’s Exxon, Marathon, BP or whatever, they all terminate at a point where tankers come in and get loaded for deliveries to various truck stops.  The distance from the rack to the truck stop determines how many pennies per gallon will be added to the cost for transportation and the combined total of rack price and transportation becomes the “cost”.  This “cost” number is published multiple times per day (6 to be exact) and is distributed in an electronic feed to those interested in receiving it.  It is from this point that negotiations begin, with everyone knowing the actual cost of the product.

The types of fuel programs most prevalent are the “cost plus”, “retail minus” and “better of” pricing models.  The basically function just like it sounds – a “cost plus” program charges the trucking company a markup from cost for every gallon it buys regardless of what the sign says on the truck stop when you pull in.  Likewise, a “retail minus” program charges a discount of so many pennies from the retail sign on the truck stop when you pull in.  These programs make it easier to tell what you are paying but they are also subject to extreme fluctuation and individual truck stop preferences because they set the retail price so getting a discount from an artificial price isn’t really very aggressive.  Most small companies who have low monthly fuel volumes usually end up in these programs.  Then there is the “better of” programs in which you could have a “ better of cost plus $.04 or retail minus $.10” which depends primarily on the underlying cost but in times where the commodity spikes in price for a short term (like it can occasionally do in October when fuel is being consumed very quickly for farming operations) the retail minus feature can “protect you” from wild swings in cost caused by demand fluctuations.

Now, my understanding and research reveals that a lot of the truck stop chains don’t make as much profit on fuel as they do on other things they offer like food, coffee, maintenance services, etc.  This doesn’t mean they lose money on fuel, to be certain, but they are motivated to buy huge volumes of fuel from the refiners and make their money on the variation in the market prices for the fuel.  So, again, volume is their main focus and second, they want you stopping in to get coffee, food and other products or services that are at higher margins.  To incent us to buy gallons through their truck stops, because of our fleet size, Pilot/Flying J’s and Love’s has given us a hybrid fuel discount program that is “better of cost MINUS $.04 or retail minus $.10 per gallon”.  You read that right, cost MINUS $.04/gallon.  That means a couple things: First, the sign that shows the price for fuel at the truck stop doesn’t matter.  Second, owner/operators and fleet owners benefit significantly from this because you get that full discount every time you buy fuel at a Pilot/Flying J’s or Love’s Travel Center.   (To be precise, Love’s actually has a cost MINUS $.045/gallon program but they have a $.90 per transaction/card swipe charge so the pricing works out about the same as Pilot/Flying J’s.)

If you really want to dial into your savings even more, the “fuel solutions” you get from our QualCom system, come from a program called Expert Fuel that runs on our dispatch software.  It basically takes information from the load you are running that day and compares it with the most current cost (with our discounts) at every station along the route you would take and tells you where to buy fuel at the lowest price.  We measure the effectiveness of the Expert Fuel system regularly and every month it saves us between $.23 and $.30 per gallon from the US average price as reported on www.eia.gov .  With an average fuel economy of 6.5 mile per gallon that savings equates to between $.035 — $.046 per mile in additional revenue to the truck.  To quote a famous American inventor/author/statesman – “a penny saved is a penny earned!”

To summarize — volume drives the pricing, the more volume we have as a company the more aggressive pricing we will get, and the pricing on the sign at the truck stop doesn’t mean anything to us for what we will pay for fuel.  We push really hard to make sure you have a competitive advantage when it comes to buying fuel so you can put more money in your pocket every week.

AS A REMINDER —  The Team Conference Call is 3-15-18 at 1300.  Please call in to 267-930-4000 and use PIN 721-724-708# to get on the call.

Episode 9: Various Topics

In this episode I touch on several different topics including the planned Town Hall conference call, keeping trucks clean, the parking expansion area in Wentzville, and several other things.  Like I said in the podcast, the call-in number for the Town Hall conference call is 267-930-4000 PIN: 721-724-708# and it is scheduled for Thursday, 3-15-18 at 1300.  I’m also requesting, again, that you contact me with any questions, comments or podcast topics you’d like to have discussion about.

Thanks again for listening and please share this podcast with other ELH employees.  We continue to work hard to improve our communication systems and trust you will find opportunities to benefit from this effort.  Please send emails to me at jberlin@elhc.net or call me at 810-233-7331 ext 238.

Episode 8: Communication

In this episode of the ELH Podcast, I spend a few minutes discussing how communication technology has evolved over the years and why communication is so important.  Despite all of the tools we have for communicating with people it is not uncommon for miscommunication to happen even more frequently than ever before.  We typically forget that there is more to effectively relaying information than just what we say.  Body language, tone, inflection, the words we choose all play a part in effectively communicating with others.  Over the last few weeks I have participated in several meetings with groups of people from around the company.  Most of the “issues” and difficulties arise from one main problem — lack of clear communication.  If we all take a little more time to make sure we use all of the communication skills AND tools, we stand a much better chance of being heard and understood.

Episode 7: Drive Wyze and Other Topics

In this episode we spend a little time talking about some of the new things we are starting for 2018.  The switch to the Paylocity system, while certainly some change, brings a lot of capability and improvement to our overall payroll system.  Also discussed the new DrizeWyze system we rolled out to all company trucks for bypassing weight stations.  Got everyone up to speed on the ability of employing the company’s legal counsel for fighting minor traffic violations that a driver may get in Michigan to help keep our CSA score low and to not negatively impact the driver’s PSP score.  Fianlly, post trip inspections.  It is so important that we complete post-trip inspections each and every time a trailer is dropped off to ensure the next driver isn’t delayed.

As always, if you have any questions, please do not hesitate to reach out to me at jberlin@elhc.net OR on my office line at 810-233-7331 ext 238.

Episode 6: Safety

In this episode of the ELH Podcast, I spend a few minutes talking about safety.  Safety is not just a slogan, it needs to be everyone’s concern.  No matter what we do each day or how timely we deliver the freight, if someone gets hurt, we’ve failed.  We need to work hard everyday to ensure we are being a safe company and that starts at the top.  The company is committed to providing all the needed resources for safety and we will help build systems that can be conducted safely but it is the responsibility of each and every person in the organization to utilize those resources and follow those processes to make each day injury/accident free.

Please visit the ELH main website at www.elhc.net for more information.  You’ll find a ton of helpful information that will help you connect with the company and help us provide support for you.

As always, please feel free to contact me with any comments or questions at 810-233-7331 ext 238 or via email at jberlin@elhc.net.

Episode 5: Interview with Driver Advocate

In this episode of the ELH Podcast, I interview Michelle O’Neal.  Michelle is in the newly-created position of Driver Advocate.  We know that if we are going to grow Chieftain, we absolutely must do a better job of meeting our driver’s needs.  Michelle’s role with Chieftain is to be the voice of the driver so the company thoroughly “hears” what we can do to make things better.  She also will serve to help drivers navigate the various departments of the company that impact the driver’s time with the company.  Rather than wondering what department can help solve a problem a driver is experiencing, Michelle can either point them in the right direction or simply step in and help with the solution.

We have discussed in previous episode how important driver’s are to the continued success and growth of the company so in this episode we help show a little more of that overall commitment.  As always, please don’t hesitate to reach out to me with any comments or questions at 810-233-7331 ext 238 or via email at jberlin@elhc.net.

Episode 4: Customer Service

In this episode of the ELH podcast I discuss customer service.  I discuss the differences between internal and external customers and why both are important.  Growing any company requires a focus on customers but most only focus on the external customers and forget there are important people in their own organization that help provide ultimate value to the external customers.

In our organization, internal customers are extremely important and it would benefit everyone to remember that and try to improve how we treat others within our own company.

Episode 3: New Trucks

In this episode I talk about the new trucks we received in 2016 and 2017 and some things we can all do to make them work for us just a little better.  There is also some encouragement for those who are driving the new trucks to take just a little extra time to make sure they stay nice.

The primary reason for this podcast in the first place is for us to be able to communicate.  I spend a little time discussing what communication is and why it is so important.  Communication is a two-way street, it’s not just me pushing information to you, it’s the feedback and questions that you send that keep the discussion flowing and information getting successfully passed.

As always, please contact me with any questions at 810-233-7331 ext 238 or via email at jberlin@elhc.net.

Episode 2: Company and Divisions

In this episode of the podcast, I spent some time talking about the various divisions of the company and talking about how the entire company has grown over the years.  Sometimes understanding the history of something can help build an appreciation for the hard work and effort that has gone into it.  Obviously everyone will have different opinions of how the growth looked from their perspective at the company but in this episode I try to spend a little time explaining what it looked like from my perspective.

Episode 1: Introduction to the Podcast

Please see the very first, introductory episode of the ELH podcast.  In this episode I discuss the basic reason for the podcast being published/produced in the first place.  Obviously communication modes have become easier and more plentiful as technology improves but that doesn’t really mean that actual communication happens any better.  We try very hard to get information about the company to everyone through the newsletter, the website, home mailers and others methods but it never ceases to amaze me how many people still get missed on a regular basis with the information that is most important.

I’ll try very diligently to get an episode per week published with the latest updates and company information.  Please feel free to contact me with any questions or any topics you’d like to have me discuss.  I can be reached via phone at 810-233-7331 ext 238 or via email at jberlin@elhc.net.