The Cost Information System is designed to recognize that motor carriers don't buy one-way trips from company linehaul drivers. There is an implicit agreement that when you send them out you will also bring them back. Carriers buy round trips, and the cost of freight must take this into account in lanes where more freight is moving in one direction (headhaul) than in the other (backhaul). Headhaul and Backhaul are treated in the model using the Capacity Adjustment Factors in each leg or for each lane.
A
Capacity Adjustment Factor of greater than 1 is applied to the linehaul
cost allocation to charge the freight in a headhaul leg for the empties
being created in the opposite direction. A
1.5 factor is saying, all other things being equal, that for every 10 vehicles
moving in this lane, 5 are coming back empty (or 10 half full: the dispatch data
routine calculates "effective empties" from excess capacity so two
half-full vehicles are treated the same as one full and one empty).
The headhaul freight is thus charged for the cost of returning empty.
A
factor of less than 1 indicates a backhaul leg, and is applied to
the poor actual average load and average cube in that leg to "bump" up
those averages to represent full vehicles.
Another method is to have an average load and average cube which already
represent full vehicles, and have a capacity adjustment of -1, which is not
applied to the leg, but flags it as being backhaul.
In
either case, the calculated linehaul cost in backhaul legs represents the
"best" it could be (as if the vehicle were full).
The CIS cost results displays the linehaul cost in backhaul legs separately,
and displays an operating ratio including the backhaul cost, as well as an
operating ratio calculated covering NONE of the cost in backhaul legs, giving
the analyst an acceptability range.
Capacity Adjustment Factors are calculated from actual linehaul dispatch data by routines within the CIS Maintenance. The routines include various settings for recognition of effective empties, routing and matching of empties when there is triangulation, grouping terminals into regions, and lane basis vs. leg basis adjustments. The routines also use the Traffic/CIS database to recalculate "effective empties" using the portion of “cheap” freight, sold to fill empty capacity, not covering its share of backhaul cost. For example, a lane that looks balanced on paper may be so only because “cheap” truckloads are sold to fill the empties. If the revenue on a “cheap” truckload covers only half of the linehaul cost, the other half is treated in the same manner as empty: it is included in the Capacity Adjustment Factor charging the headhaul for the difference.
TCG's balance formulas have been patented.
Updated February, 2005