Blog January 15, 2014

Ten ways to make cost savings throughout the intermodal leasing process

By Nicola Byers

Here at the Intermodal Eye Blog, we love an article that helps readers in the intermodal industry to improve their business processes and consequentially save money and increase profits. Therefore we have come up with ten suggestions as to how container and tank lessors can make cost savings throughout the intermodal leasing process:

1. Ensure that billing is automated and run from centrally stored costs and charges.

The reduction of manual checking during the billing process can help companies save on their administration costs. For example, to manually monitor and enforce just two types of contract restriction would take about 30 minutes for every unit returned. If 100 units are returned in a month, there would be 50 hours of cost savings, equating to around $6,000 per year.

2. Use a management system that can calculate all extra charges from contract information.

If 100 units returned each year are missing a drop off fee of $50, the loss would be $5,000 per year. By eliminating this type of manual error and saving on office costs, profits will be dramatically increased.

3. Optimise Container On-Hire time.

Use your management system to analyse demand for each tank type by region, depot and time of year. Intelligent reporting may be required to get the detailed information needed. You can then use the data to facilitate better planning decisions concerning equipment purchase and depot recruitment.

4. Automate the production of documents.

Intermodal leasing requires documents for on-hire, off-hire, repair authorisation, test due notification, invoice generation and total loss notification. Manually producing 1,000 documents per month could take up to 250 hours in total if each one took an average of 15 minutes. By using automated document production, you could save $30,000 annually.

5. Automate turn-time monitoring during the Maintenance & Repair process.

Make sure that the turn time monitoring of equipment is completely automated so that administration time is reduced and units are ready promptly for the next lease or job. To capture and report on turn time manually could take 5 days per month, wasting around $5,000 per year.

6. Don’t miss recharges.

Automated reports can flag up and automatically re-allocate costs from third party suppliers and highlight depots or repair workshops that provide the most efficient turnaround of units. Importantly, they ensure that all costs are charged to the end customer. Some examples of the impact on unit revenues reported include over $10,000 per year on recharges that would otherwise have been missed and a similar amount saved in administration costs.

7. Include DPP (Damage Protection Plan) coverage.

It is estimated that one out of ten contracts has missed DPP (Damage Protection Plan) coverage. Make sure that DPP is automatically transferred from the contract to the Maintenance & Repair system. An increase in revenue of $1,000 for every ten contracts could be made by automating this process.

8. Identify manufacturing defects

Effective management of the M&R process helps to identify unknown manufacturing defects by recording recurring problems. If just 2% of a 10,000 unit fleet had a $50 repair defect, the elimination of such defects would save $10,000 per year.

9. Use EDI

Without EDI, maintenance and repair lines must be entered manually using faxes or emails from various depots. This is a labour intensive process and relies upon an administrator to summarise tens or often hundreds of lines because it is too costly to type out every single line of detail. EDI processes enable automated updates to guarantee accuracy and improved turnaround times. If 1000 units a year are delayed for 4 days as data is entered manually and repairs are authorised, a system using an EDI solution would save $14,000 per year. For 200 tanks, savings of $20,000 could be made in one year.

10. Use Business Discovery Reporting

Unfortunately, most reports present a static view of the data and ask predefined or “old” questions – ‘What’ and not ‘Why?’ Business Discovery takes data analysis one step further. Business Discovery is user driven Business Intelligence (BI) that allows data to be explored, rather than simply reported on. A major feature is that data is visualised using graphs, charts and tables to show current corporate statistics against any number of Key Performance Indicators (KPI’s).  A KPI may be the daily lease rate per unit type that is needed to hit profit targets. Drilling down through a visual report that identifies contracts below the KPI will highlight possible common factors such as regions, customers and contract managers, enabling fast action to be taken and the enhancement of profits.