Do you remember when ”they” said workweeks would be shortened from five to four days?…when computers would make our jobs easier ?…moving tariffs have also escaped simplification… until now.
The role of the relocation manager has become more demanding, pressuring those involved in mobility management to reduce costs, increase satisfaction among transferring employees and simplify processes. The latter has been particularly difficult to achieve as moving tariffs have evolved into voluminous documents. These complex tariffs have increased the time required by movers to prepare estimates and invoices, and by corporate employees to verify and authorize moving expenses.
There is a shift taking place in the industry, however. Through recent RFP’s, we have assisted a number of corporations in simplifying tariffs and invoicing processes, thereby achieving a better balance between the need for the audit of moving expenses and the time required to do so.
How tariffs evolved
Tariffs originated many decades ago, when the industry was fragmented and regulated. Transportation companies were required to file rates for services rendered, and consequently, listed in their tariff every possible expense that might occur throughout a move. Only then were they allowed to charge for these additional expenses under the regulated environment. Many surcharges were attributed to geography: toll roads, ferries and remote locations, for instance. When deregulation occurred, surcharges remained and a multitude of discounts were applied, albeit at different levels, to various items throughout the tariffs. This added significantly to the complexity of tariffs.
The impact of complex tariffs
Mastering a Canadian household goods moving tariff takes time; time not easily afforded particularly since the responsibilities of the relocation manager extend far beyond the verification of moving invoices. The complexity of tariffs and the time required to master them increases for US cross border rates (rumor has it someone once put their back out lifting the 400N tariff!) and international rates which are based on an entirely different concept. Tariff complexity also has an impact on the training required for drivers, administrative staff and front-line personnel, van line distribution and invoice preparation. The cost of this training is inevitably passed on to corporations.
Many support the use of the current tariffs and cite their primary objectives for maintaining a large number of detailed charges within the tariffs, as:
- Ensuring the customer is charged correctly for the services provided, and not charged for services not provided ( i.e. unpacking).
- Ensuring that service providers (drivers, packers, etc.) are properly compensated.
- Allowing customers to select from a menu of services that suit their needs.
A shift to simplification
The solution is to create a system by which the individuality of the shipment is maintained with respect to compensating the service providers (drivers, packers, etc.) appropriately and ensuring that corporations are invoiced for the value of the services received. The major variables affecting shipments are:
- Required services
- Required route [ferries, remote locations, etc.]
- Time of year [seasonal surcharge]
In an effort to stop micromanaging the tariff process, we need to look at the global picture, make a commitment to remove onerous tariff items and fold them into a single factor rate. A single factor rate encompasses all or some of the following:
Transportation Extra Pick Up and Delivery Packing Hoisting Unpacking Long Carries Valuation Stair Carries Area Service Charges Claim Settlement Charges Surcharges Bulky Items Appliance service Waiting Time Ferry Charges Transportation of vehicles Overtime Loading and Unloading Storage
Companies are eliminating the use of scale tickets, folding many of the hundredweight charges right into the transportation table, eliminating the use of inventories, and even going as far as eliminating the paper backup to an invoice completely and working on an honor system with a very strong audit trail.
This may be easier to achieve for corporations with many moves, i.e. building a tariff that deals with 80% of the common shipments, with revenue in the total package to fund the 20% with unique requirements. An analysis of past shipments provides the type of information required to ensure that the amounts folded into the transportation rate are equitable.
Corporations with fewer moves can also benefit from a simplified system. We have assisted a number of corporations who manage from 15 to 30 moves per year to integrate a number of items (from 6 to 16 items) into a triple-factor rate or much-simplified tariff, thereby reducing their administrative effort significantly. Service was not compromised and, in many cases, costs were reduced by 15% to more than 25%.
While not all movers have totally embraced a single factor rate, many have recognized that simplifying tariffs benefits both their clients and themselves. With each RFP process, this latter group adjusts their proposed tariffs along the “spectrum of simplicity”.
Simplified tariffs reduce the time required for training, invoice audit and general administration. The resulting savings will ultimately be passed on to the client and lower costs overall for the corporation.
Analyzing the history of a corporation’s shipments, combined with benchmarking its tariff, determines the degree to which that corporation can benefit from a simplified tariff and estimate its potential savings. This prepares the corporation for a review of its agreement with its current household goods mover, assist in discussions for a less onerous process, or preface a request for proposals.
The emphasis shifts to moving families, rather than rifling through complex tariffs.