How are fuel costs benchmarked fairly among customers?
DAT iQ Benchmark employs a total cost approach to benchmarking fuel costs. This method accounts for variations in fuel programs among customers, normalizing these differences to provide an equitable comparison. Essentially, when differences in fuel surcharges occur—even if one customer's costs are 10% higher or lower in any given month—these are adjusted to match a standard model, ensuring all customers are benchmarked fairly.
How does DAT iQ Benchmark normalize fuel costs?
DAT iQ Benchmark has maintained a consistent methodology for normalizing fuel costs for over 20 years. The process involves:
- Receiving contributed data on specific shipping lanes, including line haul and fuel costs, which may vary due to different fuel surcharge programs.
- Using a modeled fuel surcharge program that reflects current fuel prices to standardize these costs across different shipments.
- Calculating the total cost minus the modeled fuel cost to derive a standard line haul cost. This figure is then used in our models to ensure comparisons are made on a like-for-like basis.
Can you explain the benchmarking process with a specific example?
Consider two shippers using the same lane but with different fuel surcharges. Suppose both have a total contributed cost of $600 due to varying line haul and fuel costs. Here's how we benchmark:
- We apply a standard fuel charge (e.g., $90 for each shipper) and calculate the line haul cost.
- The standardized line haul cost (e.g., $510) is used in our model to derive a benchmark cost.
- We then add the standard fuel charge back to the line haul to provide a total cost comparison. Both shippers would see their costs benchmarked as $600 against our model, showing a 0% difference to our benchmark.
| Shipper 1 | Shipper 2 | |
|---|---|---|
| Lane | A to B | A to B |
| Contributed line haul | 450 | 500 |
| Contributed fuel (FSC) | 150 | 100 |
| Contributed total | 600 | 600 |
| Model FSC | 90 | 90 |
| (Contributed total - Model FSC) = Model Linehaul | 600-90=510 | 600-90=510 |
| Model output Total | 510+90 = 600 | 510+90 = 600 |
| Benchmark Analytics Benchmark LH + FSC | 600 | 600 |
| Customer Position to Benchmark | 0% | 0% |
| Benchmark Analytics Line Haul only | 600 - 150 = 450 | 600 - 100 = 500 |
What feature in DAT iQ Benchmark allows users to analyze line haul costs excluding fuel?
In the Preferences sidebar, users can toggle their ‘Cost’ calculation setting between viewing total costs and line haul costs exclusive of fuel. This feature helps users analyze the pure line haul expenses they submitted, without the added variability of fuel costs. It provides a clearer view of how their costs stack up against the benchmark, focusing solely on transportation expenses.
What additional features does DAT iQ Benchmark offer for analyzing fuel trends?
In the Trends visualization, users can select Fuel/mile from the metric dropdown menu to perform a fuel trend analysis to compare their fuel surcharges over time (visualized in purple) against an aggregate of others (shown in gray). This comparison helps users understand how their fuel costs evolve relative to the market and assess the effectiveness of any changes they make to their fuel surcharge programs.
What analysis does DAT iQ recommend to assess the impact of changes in a fuel surcharge program?
To gauge the effectiveness of changes in a fuel surcharge program, DAT iQ recommends using position-to-benchmark analysis. This analysis helps users compare their total cost position before and after changes to their fuel program, taking into account all relevant variables such as distance and fuel costs. This approach provides a comprehensive view of how cost changes over time, helping users make informed decisions about their fuel strategies.