Use of Purchased Transportation for linehaul can be handled in the Cost Information System in a number of ways, based on how and where it is utilized in your company:
If purchased transportation is used only occasionally or erratically throughout your system, the unit cost development should be set to include the purchased transportation cost with the company linehaul cost, clicking on that question on the traffic statistics entry screen. Purchased transportation miles must also be supplied on that screen. The resulting cost per mile will then reflect a weighted average of both company and purchased transportation, to be used in all lanes.
If purchased transportation is generally used in specific, identifiable recurring legs, then it can be excluded from company unit cost, by clicking off that item on the traffic statistics entry screen, and then specific trips can be set up in the legs where they occur using the Purchased Linehaul option found under Linehaul in the CIS Profile Maintenance. Legs set up with this routine are loaded into the CIS Profile automatically each time unit costs are updated.
If a mixture of the two options above is required, then miles and expenses to be averaged with company linehaul should be assigned to the "Purchased Linehaul Mileage Rate" CIS expense category (26), and subsequently included in company linehaul unit cost, and expenses for purchased legs to be specifically set up in the CIS Profile should be assigned to the CIS expense category "Other Linehaul Purchased Transportation" (80).
If purchased transportation is to be set up in specific legs, use the Purchased Linehaul routine found under Linehaul in the CIS Maintenance. That routine allows the specific rates paid to third parties for linehaul to be stored by leg, along with additional company costs (including drayage for rail) which will be applied to the CIS cost profile with each update. It includes options for how the costs are loaded into each leg:
If the linehaul leg is run with purchased transportation exclusively, enter 100 for the percent of linehaul dispatches. If multiple carriers/operators run the leg at different rates, set each up and be sure the percentages sum to 100. When the data is subsequently loaded into the CIS profile, a weighted linehaul unit cost will be calculated by the system for the leg.
If the linehaul leg is run with both company drivers and purchased transportation, enter the percent of dispatches run by each outside linehaul vendor. When the purchased data is subsequently loaded into the CIS Profile, if the sum of the percents for the leg is less than 100, the system assumes the remaining dispatches are by company drivers, and includes the company unit cost in the calculation of the weighted average unit cost for the leg.
On Legs with multiple types of purchased transportation, or a mix of both purchased and company linehaul, a final option with CIS is the ability to specify, on a shipment-by shipment basis, which purchased transportation, if any, was used.
This is done by setting up an extra cost code, and selecting "special linehaul leg code" as the application, with the amount being the code specified in the purchased linehaul setup. In shipment costing, use of that extra cost code will cause the cost program to check each leg for the code, and substitute the purchased transportation cost when a match is found. If the freight so coded represents all shipments utilizing this mode, set the percent of linehaul dispatches to zero in the purchased linehaul data, so that the linehaul unit cost in the CIS Profile for the leg will remain that of company drivers for all remaining shipments.
Updated February, 2005