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|
A
COMPARISON OF LOGISTICS
MANAGEMENT
MODELS
IN
UPSTREAM OILFIELD
AND
PIPELINE ENVIRONMENTS
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EMPIRICAL
MODEL
|
ALLIANCE
MODEL
|
THIRD PARTY DISPATCH MODEL
|
IEX GROUP REGIONAL PRIMARY
CARRIER MODEL
|
|
A
|
B
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C
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D
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1
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Sales tax applies on freight costs
|
YES
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NO
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NO
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NO
|
|
2
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Single-Point-of-Contact, (“one call does
all”) service is provided free of charge
|
NO
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YES
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NO
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YES
|
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3
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Invoice process compiles, eliminates errata,
and prevents deliberate inflation of charges
|
NO
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NO
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NO
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YES
|
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4
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Freight costs are discounted from the highest
possible level (tariff)
|
NO
|
YES
|
YES
|
YES
|
|
5
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Brokerage is commonly employed
|
|
YES
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NO
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NO
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6
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Model can be immediately and routinely deployed
in any geographic operating region
|
YES
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NO
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NO
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YES
|
|
7
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Model is acceptable to carriers, and Client
exercises complete control of logistics
|
NO
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NO
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NO
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YES
|
|
8
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Exacting prepayment audit of freight invoices
is provided
|
NO
|
NO
|
NO
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YES
|
|
9
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“Value-added” features
|
NO
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YES
|
YES
|
YES
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| 10 |
“Value-subtracted” features
|
YES
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YES
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YES
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NO
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|
1
|
YES
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(A)Purchase terms are
F.O.B. Destination or F.O.B. Origin, Freight Prepaid & Added. Sales
tax applies on freight costs. TOP
|
|
NO
|
(B)
(C) (D) Purchase terms: F.O.B. Origin, Freight Collect are standard.
Sales tax on freight is eliminated. TOP
|
|
2
|
YES |
(B) Larger carriers – mostly agency
types - serve as Single-Point-Of-Contact “alliance” carriers.
(D) The most reliable,
Single-Point-Of-Contact service available is provided on a 24/7/365 basis,
free of cost. TOP
|
|
NO
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(A)
Vendors individually arrange carriage with truckers of their choice. Carriers’
business loyalties devolve to vendor/shippers, rather than end user payers
of freight.
(C)
Single-Point-Of-Contact service is provided, but with accompanying fees
which must be added to freight costs. TOP
|
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3
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YES
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(D) Clients
receive highly detailed, completely accurate invoices, compiled and summarized
according to individual accounting requirements, and presented in any
format desired. TOP
|
|
NO
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(A)
Carriers bill vendors, which pass individual freight charges through to
clients. Vendors are free to take hidden discounts or increase profits
from otherwise inflating freight charges – and can be depended upon to
do so.
(B)
Some alliance models require alliance carriers to compile all invoices,
including those of brokered carriers. Others require only the alliance
carrier’s invoices to be compiled. Since carriers generally profit from
invoice errata and specifically profit from artificially inflating invoice
values, any claims that carriers would strive to eliminate invoice errata,
or curb a natural tendency to inflate invoice value, should be closely
examined.
(C) Invoice audit and
compilation service is not provided. TOP
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4
|
YES
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(B) Alliance carrier contracts
with major E & P Operators are discounted an average 15% from tariff;
but such discounts are generally limited to the short-haul environment.
TOP
(C) Since carriers routinely
offer discounts over a broad client base, it is assumed that some discount
from tariff would be negotiated.
(D) The
most efficient, completely remunerative rate structure in the short-haul
environment is available at an approximate 18% discount from carriers’
tariffs. Alternatively, this model can utilize clients’ negotiated rates.
For long-haul operations, rates are individually negotiated for each instance
of carriage. TOP
|
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NO
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(A) Freight costs (tariff)
are the highest possible and cannot be reduced. End user payers of freight
are at the mercy of the market. TOP
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5
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YES
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(B) The alliance model
cannot function without brokerage, which is generally cost-additive in
the long-haul environment and which, in the short-haul environment, can
ONLY serve to increase freight costs. TOP
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NO
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(A)
At tariff rates, every load is a “good” load; and brokerage is seldom
– if ever – an operational consideration. TOP
(C) Third party dispatch
employment of brokerage constitutes an oxymoron. A third party dispatch
operation which requires brokerage is utterly useless.
(D) Brokerage
is unnecessary and is not an operational consideration. TOP
|
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6
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YES
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(A)
Works dependably, without involvement of client, in any geographical operating
area. Client bears no logistics staffing expense. TOP
(D) The
IEX Group model is ready for deployment - with carriers already in place
- in every domestic geographic region.
|
|
NO
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(B) Opreations in geographic
areas other than the Gulf Coast are left unaddressed. TOP
(C) Nothing prevents such
a deployment, but no existing third party dispatch agency is possessed
of the geographic reach and expertise to execute competently on a multi-region
basis; and it is highly unlikely that one ever will. TOP
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7
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YES
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|
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NO
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(A) Control of rate and
service initiatives devolves to vendors. Clients exercise NO control over
their logistics operations or freight costs.
(B) Clients and alliance
carriers split control of clients’ logistics efforts, with alliance carriers
in control of brokered carriers’ operations. Brokered carriers generally
have little regard for less desirable loads handed down to them by a competing
carrier – more often than not at reduced rates - and uniformly resent
working for competitors instead of clients. TOP
(C) Logistics control
devolves to the third party service provider. TOP
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8
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YES
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(D) The
most exacting prepayment audit process in the industry is accorded each
invoice. Clients receive ONLY those invoices which exactly reflect actual
operations, at price values mandated by controlling documents. TOP
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|
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NO
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(A)
Audits - if performed at all - are performed post-payment, with recovery
subject to significant fees. Invoice errata and duplicate billings are
either unaddressed, or accorded minimum attention. TOP
(B) Any claim that carriers
can effectively audit their own invoices is illogical, and should be questioned
closely. The alliance model is essentially a dispatch model, and provides
no reliable audit capability. Other problems can include varying service
costs among brokered carriers, increasing the difficulty of critical review
even for professional auditors. Corrective attempts are unlikely at the
alliance carrier level. Even should such attempts be made, an uneven
effort will produce unpredictable results. TOP
(C) It is unlikely that
exacting prepayment audit can ever be a feature of third party dispatch
models if fee levels are to remain acceptable.
|
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9
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YES
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(B)
The alliance model reliably capitalizes on most load combination and
backhaul opportunities. TOP
(C) The third party model
reliably capitalizes on most load combination and backhaul opportunities.
TOP
(D) The
IEX Group model captures ALL available load combination and backhaul
opportunities of benefit to clients. Additionally, including all fees,
IEX averages 30% savings in the long-distance environment by individually
negotiating each instance of carriage, and by using client-approved carriers
with advantageously positioned equipment. Similarly, including all fees,
Datanalysis’ exactingly thorough invoice audit averages 13% savings in
the short-haul environment. All savings analyses are calculated using
six volume-weighted and rate-averaged alliance contracts as a benchmark.
Considering all operations, clients’ net savings equal 21%. TOP
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NO
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(A) There are no "value
added" features. What you see is what you get. TOP
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10
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YES
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(A)
The empirical model provides the standard from which “added values” can
be both qualified and quantified. It has no feature from which value
could be subtracted. TOP
(B)
This model allows alliance carriers to “report” the savings achieved by
their operations. A classic “fox guarding the chickens” syndrome is an
unavoidable result - which makes claimed savings highly subjective and
difficult to defend. TOP
(C) Third party dispatch
agencies do not individually negotiate rates or prices; and insufficient
opportunities for combined loads and "backhauls" are available
to offset their fees. This model can only be supported at an increase
from actual freight costs. TOP
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NO
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(D) If
a negative aspect or feature of this model can be identified, we'll list
it. TOP
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