State governments across the country have discovered a promising new revenue stream — tolls. Whether it's plans to lease public highways to private investors, to impose “congestion fees” to underwrite mass transit, or to build new roads funded solely by users, tolls are the new darling of governors and state legislators.
Proposing to cover a huge budget deficit with significantly higher highway tolls, New Jersey's Gov. Jon Corzine was even open enough to drop his stance that the new funds are for infrastructure projects only.
And out West where people proudly call their highways “freeways” and consider tolls an Eastern phenomena, legislators are “salivating over the prospect of tolls boosting budgets,” according to one observer.
Toll costs have always been part of the truck fleet business, but a relatively minor one. So minor, in fact, that many for-hire fleets haven't considered it cost-effective to invest much time or manpower in systematically tracking and recovering actual toll payments through accessorial charges or rates, or in reconciling driver reimbursements. And for fleets of all types, seat-of-the-pants estimates on miles vs. tolls have been good enough when it came to routing around the paid roads.
But with more tolls and higher tolls on the way and with diesel prices making every mile expensive, that isn't good enough anymore. Last year alone, 36% of North American toll roads raised rates, rates that almost always bear significantly higher charges for trucks than passenger cars. And in the first quarter of 2008, tolls have increased or new toll-collection plazas have been added in almost 50 locations.
“Tolls are headed in the direction to be the fastest growing form of taxation in the U.S.,” says Kara Jo Witkowski, product manager for ALK Technologies' PC Miler routing applications. “No matter if you're from the North or the South, East or West, or anywhere in between, tolls are increasing the cost of your lanes.”
The trend is clear: tolls are becoming an increasingly significant part of fleet operating expenses and need to be managed as such. It's time to take a close look at the tools that can help you do that.
At minimum, a fleet needs to capture accurate data on what tolls it actually pays by vehicle, date and location so it can audit and assign those charges without manual input.
Many toll authorities have helped free this process from paper receipts by adopting electronic collection systems based on RFID tags assigned to specific vehicles. The largest of these collection systems is EZPass, which can be used to electronically pay tolls assessed by 23 agencies that stretch from Maine south to Virginia and west to Illinois. But since these systems are really designed to speed up traffic flow through toll plazas and cut the authorities' cost of collecting tolls, their data access features are quite basic — usually web access to static HTML pages — and aren't really intended for easy integration with fleet management systems.
Fortunately, electronic tag systems like PrePass, NorPass and BestPass developed separately to help fleets bypass weigh stations. Not only do they aggregate electronic toll data for fleets in more usable forms, but they can also cut toll costs through volume discounts and by simplifying or eliminating bonds required by various state authorities.
The oldest and largest electronic bypass system, PrePass added toll services to its network five years ago. Called PrePass Plus, it enables its basic vehicle transponder to directly communicate with the EZPass system, avoiding the need for a second tag. For a small service fee, it presents all of a fleet's toll charges in a single invoice file, using the sophisticated automatic vehicle identification capabilities of its tag to provide accurate data about vehicle, location, time and date.
With 425,000 trucks enrolled in PrePass, the group aggregates its EZPass payments to qualify for any volume discounts offered by the various agencies. For example, Maryland has a sliding discount scale for EZPass users that runs from 2.5% for totals under $100 to 33% for payments over $5,000.
“PrePass is EZPass' single largest customer,” says Dick Landis, president and CEO of Help Inc., the public/private non-profit corporate parent of PrePass. While its larger fleet customers already qualify for the maximum discounts, smaller ones also get the benefit of those discount levels. More importantly, PrePass provides the bonding required by each of the individual authorities in the EZPass system, “which is a big savings, especially for smaller fleets,” says Landis.
In addition to the discounts and enhanced data, PrePass serves as the single point of contact if a fleet has an EZPass account problem, and eliminates inventory management for dedicated EZPass tags. As a government and industry partnership, “PrePass doesn't have a pro- or anti-toll position, but if there is a toll, we can make the process easier,” says Landis.
BestPass actually functions as a contracted business partner of PrePass and NorPass services, focusing on offering those bypass services to smaller fleets. Tolls are an essential part of that service since smaller fleets can benefit most from aggregation for discounts.
“Each toll road [in EZPass] has its own volume discount structure, so we aggregate everyone [in BestPass] and everyone shares in the maximum savings,” says Aram Taleporos, BestPass president, who points out that there are 1,500 carriers and 50,000 vehicles currently enrolled. “We also manage the bonding process for all of the individual states, which can be expensive for an individual fleet. And we manage the transponders, too, notifying every authority if the fleet moves a tag from one truck to another.”
More importantly, BestPass offers fleets flexibility in toll data. “We not only provide single invoices, but create the audit statements any way that makes sense for the fleet,” says Taleporos. EZPass statements only list payments by transponder number, but BestPass will provide data files that can be sorted by the fleet's truck number, exit or entrance locations, terminal assignments, or any other way the fleet requires.
PLANNING FOR THE FUTURE
Accurate and data-friendly historic records for tolls paid are a good first step in getting a handle on a fleet's toll costs. But some routing software systems provide more proactive tools that let fleets make better decisions about what tolls they pay as well as help them build rates that include accurate toll costs and provide their drivers with toll prepayments or quick settlements.
As add-on modules or features for truck routing systems, toll calculating software is usually integrated tightly with other routing chores, providing point-to-point mileage and toll costs in one place and making it easier to identify the most cost-effective route based on a combination of time, mileage and toll costs.
For example, running a route comparison from Altanta to Boston on PC Miler's toll module shows that the shortest route will incur $98.61 in tolls and take 17 hrs., 10 min. The program's “toll discouraged” route cuts tolls to $30 and drive time to 17 hrs., 1 min., but adds 44.5 mi. to the trip. And the “practical” route suggested by PC Miler cuts drive time by 27 min. from the shortest route and brings tolls in at $55.01 while only adding 27 mi. to the shortest distance. “That gives you the tools to choose the most profitable route based on your business model,” says ALK's Witkowski.
Other uses for toll forecasting software include improved rate negotiation based on real costs, better driver retention with faster and more accurate settlements, and more accurate expense tracking and auditing, according to Witkowski.
The range of variables considered by toll software far outstrips any manual calculation system. PC Miler estimated costs are not only based on roads traveled, but also automatically draw on actual vehicle dimensions, weights and axles to determine precise costs for each specific toll encountered in a route. “We also calculate discounts for EZPass and 25 other discount toll programs,” says Witkowski. And the location of toll facilities are based on GPS coordinates and aerial photography for precise distances.
The toll feature of Rand McNally's IntelliRoute includes ferry fares, an important cost factor in places like Washington, Alaska or the Canadian Maritime Provinces. “We're looking at incorporating time-of-day toll variations that are beginning to turn up,” says Amy Krause, internal marketing consultant for Rand McNally Commercial Transportation. “Users can calculate tolls in base currencies for the U.S., Canada and Mexico or convert them using the most current exchange rates.”
Accuracy also requires frequent updates, especially now that tolls are squarely in the sights of revenue-seeking legislators. PC Miler and IntelliRoute both issue quarterly updates, which can be substantial. For example, the last PC Miler update showed increases or new collection facilities for 43 locations. “We'll do an interim update if a major route like the Pennsylvania Turnpike were to put in a large increase in the middle of a quarter,” says Witkowski.
With a variety of export options, moving the toll data to third-party applications is generally straightforward, adding value beyond routing and rating functions. Whether it's responding to bid requests or conducting a close analysis of operating costs, adding accurate toll forecasts becomes as simple as running the routes through the modules. “Given today's business environment, fleets have to manage every variable cost,” says Krause.
“If you're not adding accurate tolls to your transportation costs, you're missing an important element,” says Witkowski.