COMPANY:
Mystic Tank Lines Corp. Astoria, NY
OPERATION:
Bulk hauler in the Northeast and Mid-Atlantic specializing in fuels
Problem:
Mystic Tank Lines operates 250 power units and about 200 tank trailers to deliver heating oil, jet fuel, liquid asphalt, ethanol and other liquid and bulk cargoes in the New York City area and throughout the Northeast. It has been using a software suite from Carrier Logistics Inc. since 1993 for dispatch, accounts payable, general ledger and other functions. The fleet's in-house IT department, headed by CIO Jack Lebovic, created management reports using the suite's database.
“We'd create ”canned' reports on trip times, driver wages and other operational aspects,” says Lebovic. “We didn't draw on general ledger data, and our reports were heavily weighted towards the hourly component of delivery activities.”
“It wasn't very flexible,” says vp Salvatore Sammartano. “If we wanted something special, we'd have to have our IT department create it. A regular report might be 500 pages long, but if I needed information on just one customer or lane, we had to ask for a custom report.”
Solution:
Working with Carrier Logistics, Mystic implemented the activity-based cost analysis tool FACTSview provided by Transportation Costing Group (TCG) as part of an overall cost-analysis service.
“I export all fleet activity — times, miles, tolls, even general ledger entries,” says Lebovic. “TCG runs activity-based cost analysis and spins it off to a flat file that FACTSview uploads into a Sequel service with an Excel spreadsheet application. That produces a familiar, easy-to-read spreadsheet with total cost information for every load.”
The report offers full details on driver, vehicle and administrative costs associated with each load. “I can get an operating ratio on every load, lane, single run or customer,” says Sammartano. He can look at fleet activity as a whole and “drill down or filter if I see an anomaly and want to identify the cause,” he adds. “And since it all ties into the general ledger, we're looking at real money.”
The combination of detail, flexibility and complete integration has turned up some surprises as Mystic has worked to understand the true costs of its operations. “We've always looked at miles run,” says Lebovic. “But it turns out mileage is a bigger factor than we thought. We were misallocating costs, particularly energy-related costs, to shorter runs that could be priced lower.”
Costs related to volume also revealed some surprises with activity-based costing analysis. “We always accepted that large customers provide more volume and so they cover more of our operating expenses,” says Sammartano.
But with TCG, Mystic discovered that those large fleets also tended to account for more deadhead time.
“Those large accounts had more first loads and last loads, which means more deadhead miles,” he says. “We weren't allocating deadhead times fairly between larger and smaller customers. That made us look at pricing. It helped us set rates that are fair to all of our customers and enhance our profitability at the same time.”
