Transport companies build their businesses around a key piece of infrastructure. The more time a truck can stay on the road, the more customers can be serviced and the more revenue can be generated. But keeping the trucks moving isn't just a matter of loading up the fuel tank and finding a licensed driver. We travelled to Auckland and spoke with David Laing, the General Manager of Salter's Cartage about how he solves these problems.
Salters has been working with EROAD, a New Zealand-based hardware and software developer that has created a solution that deals with many of the complex issues Salters needs to overcome. Salters and EROAD first started working together in managing Salter's road usage charges. In New Zealand, freight companies need to purchase, in advance, credits in order to drive large vehicles. The charges are based on both the weight and class of the vehicle. In the past, vouchers were purchased and a sticker was placed on the truck's windscreen. If a truck did not have the appropriate sticker in place the company was subject to fines.
One of the challenges was that a truck's usage could not always be forecast. As a result, Salters purchased excess credits so that they would never be caught without enough credit for the usage charges.
Laing explained what the situation was before he looked for a more effective solution. "A lot of the time we'd be buying the maximum as the truck could be carting light one day and heavy the next". Due to this volatility, Laing was having to purchase excess credit. "The worst was that we had to buy so much in advance so we didn't have to be buying every day. We'd have to go to a testing station and get the sticker. If we'd buy 1000km, the truck could do that in a couple of days and we'd have to return and purchase again. So we'd do is buy 10,000km which would cost several thousand dollars for any one of the trucks and the trailer unit as well. So, we'd spend a lot of money and chip away at the credit over time".
The old system Salter's worked under, administered by the New Zealand Transport Agency, was almost entirely paper-based.
With so much money sitting, potentially unused, in vehicles that weren't being used Salters knew they needed to address the issue. EROAD and Salters worked together to address the issue of managing the road usage charges more efficiently. Salters was also then able to get a better handle on a number of other issues such truck maintenance and driver compliance with road laws.
The NZTA used to issue transport operators with a mechanical meter that measured travel distance independently of the vehicle's odometer. However, the mechanical devices were prone to reliability problems leading to the potential for disputes with the NZTA. Laing said that "When the hub meter broke we'd need to get that road user charge refunded and purchase more credit, in advance again, while you waited for the credit to come back. We saw the concept from EROAD and decided we needed to give it a go".
EROAD's solution replaced the mechanical device with an electronic one. Combined with GPS data, this allowed accurate capture of travel information and the exact, current location of a truck. Bruce Wilson, of EROAD, told us that "We had to replace the mechanical device with an electronic one. This required a number of approvals but the electronic device is far more reliable and accurate. This also displays the voucher information. The box looks very simple but has all the smarts". The NZTA has a defined customer data interface, using XML so that the requisite data can be quickly delivered.
The electronic device that's installed to the vehicles is called the Onboard Unit, or OBU.
This system assists Salters significantly. The interface between the OBU, Salter's internal systems and the NZTA means that automation can be used leading to a substantial reduction in the amount of money held in unused transport approvals. Rather than ordering 10,000km of transport approval in order to avoid frequent visits to the NZTA offices, Salters can now order smaller approval amounts as needed. "I can buy in blocks of 1000km and set them as an automatic purchase. So, when it [the pre-paid amount] comes to 250km, the system automatically buys another one" Laing said.
The smaller pre-paid amounts and automated ordering means that Salters is better able to match expenses and income. Before, a pre-order of 10,000km meant that Salters we're spending significant amounts of money well in advance of earning income. Although the system is still based on pre-payment, the liability is reduced. By Laing's estimate he had "between five to tens times the amount" of pre-purchased credit sitting in the truck-yard compared to now. Laing is also able to easily calculate credit he can claim back from a truck that is off the road - something that was too difficult in the past.
Although Salters is completing many more transactions with the NZTA, there are for lower values and the amount of paperwork is reduced. By Laing's estimate, he's saving about "10% to 15% of his time on administration and a lot of stress about worrying whether all the trucks are compliant".
The other benefit Salters has realised that is an increased understanding of exactly what each truck is doing.
The data delivered by the OBU helps Salters better track maintenance issues. For example, all Salters trucks are fitted with speed limiting devices. By examining travel times Salters can determine if the limiters have been calibrated correctly. A limiter that is set at 90kmh rather than the required 100kmh can cost Salters valuable time. Similarly, if the limiter allows a driver to exceed the speed limit they may be liable for a speeding fine.
Salters now has access to significantly more data than previously, enabling the fleet to be run harder and smarter. For example, when a part is replaced it may have a new warranty. They are now able to track maintenance more rigourously.
When we asked Laing how much smarter this has made him in running his business his answer was simply "A lot".
Links
Salters Cartage - www.salters.co.nz
EROAD - www.eroad.co.nz
Photos:
You can see more images of the Salters and EROAD project at Flickr
This was first published in May 2011
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