Fluctuating
fuel prices have made it necessary for carriers to adjust their CIS unit costs
to either (1) bring fuel cost up to the level reflected in the current fuel
surcharge or (2) reduce fuel costs to a pre-surcharge level so as to exclude the
surcharge from certain analyses.
Such adjustments can be made when developing unit costs using the CIS
Maintenance item Proforma Adjustments, found under Unit Cost Development.
This option has fields for changes in equipment and freight volume as well
as adjustment ratios for major expense categories, including fuel.
Expenses and statistics, both company-wide and by terminal, are modified
by these Proforma adjustments so that the unit costs subsequently calculated
will reflect their impact.
The
source of labor cost adjustments is your own contracts.
Fuel prices can come from your own experience as well.
Other non-labor, non-fuel expense changes can be estimated using a
general inflation factor such as the consumer price index or producer price
index, which can be found on the Internet:
U.S. Bureau of Labor Statistics:
www.bls.gov
(click on Consumer Price Index, and then on All Urban
Consumers then click on "all items").
Statistics Canada:
www.statcan.ca
(click on Canadian Statistics, then on Latest Indicators, and then on Prices).
With
any or all of these indicators, update ratios are developed by first determining
a base index, representing the average for the period reflected in the
expenses being used for unit cost development.
For example, if expenses represent the first half of the year, then an
average index for that six-month period must be developed, perhaps averaging
monthly price indexes or averaging weekly fuel prices for the period.
Once this base is established, divide the current, projected or, in the
case of deflating fuel, pre-surcharge price or index by the base to obtain the
update ratio.
Detailed
instructions and worksheets for updating unit costs are in CIS Technical Paper
#4, Prospective Costs and Performance.