RE: Hows the the new FedEx CC FSC program working
First month into new and improved pay plan.
>
> Loaded mile avg down 13% In revenue
> Avg miles down 11% In revenue
>
> I do believe it is still too early to give a true
>evaluation but early indications do not look good. This 13%
>and 11% is the profit portion of the income. Could be
>something I am doing different as I will be looking into
>this.
I am glad to see you using the loaded mile figure as a a basis for your analysis. I've been thinking too about how best to guage our first calendar month (October, 2006) under the new FedEx compensation schedule against previous months under the old schedule.
Numbers are funny things. People use them all the time to make the numbers say whatever they want them to say; sometimes to the point of self-delusion. A loaded-mile analysis is straightforward and objective.
However, FedEx pays money on deadhead miles too, and under the new schedule, it also pays fuel surcharge on deadhead miles. Those need to be factored in as well.
When we deliver on Monday, our October will be over. We're going out of service on the 31st for a day of truck maintenance. As I display the numbers on my spreadsheet and try not to impose my bias on them but instead let the numbers speak to me, I grow more convinced than ever that it is too soon to draw any meaningful conclusions about the new schedule. One month is simply not long enough to accurately guage the results.
Note that guaging the results is something entirely different than falling into rants about justice issues like FedEx keeping some of "our" fuel surcharge money, FedEx lining their pockets at driver expnse, or FedEx forcing us to haul cheap freight. With numbers, there is no good way to quantify justice issues. The numbers simply say what they say. The trick is to interpret them well.
In an attempt to do a meaningful, objective, and accurate analysis, I have been looking at our "all miles" number; meaning, the total of all deadhead and loaded miles, as stated on the load offers we accept.
My purpose is to guage one month's new-schedule results against previous month's old-schedule results. It is not to calculate our cost per mile, net results, or to factor in our relocation strategy or in-service figures. Those are different questions. This is about evaluating the new and old FedEx pay schedules, not our way of doing business. More specifically, it is about evaluating the revenue received under the old and new pay schedules, expressed as pay-per-all-miles.
For example, If we drove a total of 10,000 miles (deadhead and loaded combined) in a month, and received $15,000 in revenue, that month's all-miles figure would be $1.50. If we drove 10,000 miles and received $20,000, the number would be $2.00. If we drove 10,000 miles and received $10,000, the number would be $1.00.
While FedEx slices up the money differently under the new and old schedules, "all miles" under both schedules factors in all revenue sources under both schedules (tarriff, tolls, deadhead, fuel surcharge, accessorial charges, reefer differential, reefer relocation pay, and any other type of revenue FedEx pays under either schedule. Thus, "all miles" provides an apples-to-apples basis for old and new-schedule comparison, I believe.
So, with our October revenue and "all miles" numbers already known, and thinking I was really onto something, I went to work comparing our results under the old and new schedules.
I discovered that while I may be onto something using "all miles" as a basis for comparison, I also found out it would take several months of new-schedule history to draw any meaningful conclusions. That is because our monthly pay-per-all-miles figure varies greatly month to month.
I looked at the months from January, 2005 to October, 2006, with October 2006 being the only full month of numbers we have under the new schedule.
If I compare October, 2006 to September, 2006, our October "all miles" number is higher. If I compare October 200, to October 2005, it is lower. If I compare the October 2006 "all miles" number to each month since January, 2005, it was higher than some and lower than others.
I did see October, 2006 was the second-best gross revenue month we had in over three years with FedEx (November, 2005 was the best). While it is fun to see that, the analysis is not about fun. It is about comparing the two schedules.
I was quite surprised to discover how much our "all miles" number varies from month to month. The spread between the highest and lowest was $1.11. When I threw out the highest and lowest months to try to factor out anomalies, the range fell to $0.51.
With monthly "all miles" numbers varying by $0.51 or more, it seems to me that an "all miles" analysis is valid, but it will only be valid over a period of three months or more; six to twelve months would be better still.
Two final points:
1. Based on what I see in the numbers so far, one conlusion I have made remains sound. There is nothing there to motivate us to seriously consider a change of carriers. If the new pay schedule was as bad as some people would have us believe, it would have been evident by now.
2. The fuel price difference from October 2005 and October 2006 is significant, and it should be part of any fuel surcharge analysis that is done. The average highway price for number 2 diesel fuel in October, 2005, was $3.10. The October, 2006, average will be available in a few days. September, 2006, was $2.78. October's will likely be lower. (Source: Department of Energy).
