Sunday, May 29, 2011

SLEX Rate Horror! Fuel Price Shock!! - - - - Shipping & Trucking Managers Should Read What Might Happen Next!!

courtesy of ofwnow.com
I used to pay already a high P69 One-way from Nichols to Susana Heights.  Now, I was shocked that I have to pay P120 One -way or a 174% increase.  And that is not all, the new Toll Rates do not include yet the 12% eVAT in which case my Cash Out for a One-Way trip is P134.40 or a 195% Increase.

Fuel is now P54.20 per liter (Petron XCS) and my Toyota Innova G Gas gets only 8km per liter and since I travel from the boundary of San Pedro to SM North (about 100km est) or 12.5 liters times P54.20 or Total Fuel Cost of P677.50 One-Way  plus Parking fee of P60/day plus the above Toll Fee of P134.40 One-Way for a Total Cost of P1,683.80 for One Roundtrip.  Gads!!!!

The other side of the coin is of course, traffic flow along SLEX has really improved and I can tell all, Travel Time has been shortened although the Northbound Lane (going into Manila) still gets jammed with cars and trucks all the way from Nichols to beyond the Alabang Bridge and this is a limitation of the EDSA/Quirino Hiway. Though not the fault of the SLEX but it does negate some of the benefits of the SLEX.

Another is that having 6-lanes or more from Alabang to Calamba is not so good as all the vehicles have to narrow down to 3-Lanes and it causes a funnel-effect and PRAY there is not accident at the chokepoint that will cause right away a monstrous traffic jam.

From a Logistics point of view, a 200% increase in Toll Fees and the ever-spiralling cost of Fuel, tires and spare parts may not be offsetted by the Savings from a  shortened travel time on the SLEX as trucking freight rates will not go up correspondingly.  The Travel time, for most trucks, will not translate to more trips as trucks are still governed by the same Truck ban rule and in fact, like endangered animals, heavy trucks can only travel along Truck Corridors.  Add to that is the Maximum Load Limit imposed by Road Truckscales which limits the revenue that a truck can carry (albeit overloaded).

As an example on the limits to Truck revenue, I have a Logistics Manager who asked my help to source trucks for him.  When I asked the rate from Laguna Province to Manila, it is a certain rate plus only the increased portion of the SLEX Toll fee. Hmmmmmmmmmmmmm.

To make up for the increase in fuel and toll fees while trucking or hauling rates remain flat, Truckers may resort to:

1.  For toll gates without truck weighscales, the truckers may choose to overload their trucks;

2.  Truckers will be choosy about the trips they get (i.e. pick One-drops instead of multi-drops and avoid difficult supermarkets that take too long to unload) to the horror of  Supply Chain, Logistics or Shipping Managers;

3.  We will probably see truckers continue giving Bribe money allowances to their drivers/coordinators so they can get better trips from the Client-company's dispatchers;

4.  For companies that still pay on a per case or per kg, truckers will insist the truck is filled to the brim even if the cases start getting crushed;

5.  Truckers will start adding Chassis Extensions and increasing the Roof Height of their trucks which will overload the truck and make them very unstable on the highway;

6.  Another bad tactic is to give Rebates to shipping personnel for every good trip given to the trucker;

7.  Trucks may avoid the SLEX/NLEX and travel along the traffic-prone Service Roads to avoid paying the toll which results in delivery delays.


Am sure you Supply Chain,  Logistics or Shipping Mangers know all of the above and probable can add 100s of ways to my list but what to do?

During my time. FMCG companies used ot work on a 3% (of total sales) for Distribution costs which includes Warehousing and Transportation.  I do not know if this still holds true.

I hope I can hear from you  guys.  JUST CLICK ON THE TITLE OF THIS POST AND A COMMENT BOX WILL APPEAR BELOW.  PLEASE WRITE YOUR COMMENTS AND PRESS "POST A COMMENT"

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