Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

When the first version of the 2012 400NG was released, it contained some changes under the Unpacking section of the tariff that caused some confusion.  There was this following note on Page 44 of the 2012 400NG:

NOTE 2: The appropriate full unpack amount due, should be billed as miscellaneous item code in lieu of item code 105 until otherwise announced.

We were confused about the intent of this statement, and concerned that it could be interpreted more broadly than may have been intended. We asked SDDC to clarify the change, and when Change 1 of the 2012 400NG was released, they had changed the note we had questioned. It now reads:

NOTE 2: When billing for Item 105J (Reinspection fee) in lieu of full pack (105A), the appropriate full unpack amount due, should be billed as miscellaneous item code until otherwise announced. Billing of both item 105A and 105J should not occur on the same shipment.

This revised version is obviously more specific than the first version, and alleviates our concerns about it being broadly applied. However, the added line of “Billing of both item 105A and 105J should not occur on the same shipment” has caused new concerns about this item.

There are legitimate reasons why TSPs would need to bill both 105A and 105J on the same shipment. The most common example is when part of a shipment comes out of residence and the rest of that shipment comes from a warehouse. In that example, we need to bill 105A for the portion picked up at residence, and 105J for the portion picked up at the warehouse. The wording in the current version of the tariff would prevent us from billing it properly.

We have raised this new concern with SDDC, and hopefully they will address this issue in an upcoming change to the 2012 400NG.

Do you have any concerns about the changes to unpacking in the 2012 tariff? If so, please use the comments below to share your opinion.

Related Posts

1. Tariff Changes: Unpacking Rates to Be Based on Block 18 - February 11th, 2011
2. SDDC Issues Notice on DPS Rating Problems - June 28th, 2011
3. Block 18 Clarification Leads to Additional Questions - February 8th, 2011

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

“But I’ve never been to Fairbanks Alaska
That’s the only place I’ve never been”
- Joe Walsh, “Fairbanks, Alaska”

In a song titled, Fairbanks Alaska, Joe Walsh sings how he has been everywhere in the world except for Fairbanks, Alaska. While the former member of The Eagles may not have made that trip, there are service members who relocate to Fairbanks each year. Due to some changes in the 2012 400NG, TSPs moving those service members face some uncertainty about how to bill for those moves.

Shipments destined for Fairbanks normally travel via water to the port of Anchorage, and then are transported via truck up to Fairbanks. Until the 2012 changes, we billed them exactly as they occurred, with the waterhaul portion to Anchorage and then the Alaska portion of the linehaul from Anchorage to Fairbanks. The previous version of the tariff  stated:

Although there are 7 BPC’s in Alaska, only 6 are considered as “AK Waterhaul” ports (Fairbanks is not considered a waterhaul port).

When looking at the location of Fairbanks, that approach made a lot of sense. However, in the 2012 400NG, that particular line has been removed, and SDDC has added the following language to the application of transportation charges:

Shipments to/from Alaska must utilize the nearest BPC to the requested pickup address (block 19 of the PPGBL/BL) and/or the requested delivery address (block 18 of the PPGBL/BL) at the time the shipment is offered and accepted by the TSP.

While this change seems relatively straightforward, there are a number of questions that have been raised. Since almost all the OBLs we see for shipments destined to Fairbanks show Anchorage as the port, there will be a conflict between what actually occurs and how we interpret these billing instructions. Based on the new language, we will have to bill it as if it went via water to Fairbanks, even though the OBL will show something different. While SDDC has become less concerned recently about billing based on actual shipment information, it does create some concerns and challenges down the road for the GSA post-audit process.

Also, the shipment will most likely still be transported via truck from Anchorage to Fairbanks, but we will not be able to bill for this service. The transportation cost will theoretically be included in the waterhaul portion billed all the way to Fairbanks, but there will be no way to recover the fuel surcharge on that portion of the shipment. The bunker surcharge on the OBL will only cover the fuel cost on the water portion, which will end in Anchorage.

And even though the TSP is being paid for transportation to Fairbanks, it will be at a lower rate. To compare the transportation cost under the two tariffs,  we rated a 1,000 pound shipment from Norfolk, NE to Fairbanks, AK. Under the 2011 tariff, we used the port of Seattle and Anchorage, but for 2012, we had to use the port of Seattle and Fairbanks. The new requirements for the 2012 tariff resulted in a 15% decrease in the TSPs transportation charges compared to the  2011 tariff. That is a substantial decrease in revenue of which TSPs need to be aware.

These calculations are based on our interpretation of the 2012 400NG rules, but there a lot of different opinions about how this change will actually affect the billing of shipments destined for Fairbanks. We have asked SDDC for the opportunity to discuss this issue with them in order to clarify their intent, but to date we have not had that opportunity.

Do you share our interpretation of the 2012 tariff changes related to Fairbanks shipments? Are there any other concerns you have about this issue? Please use our comments below to share your opinion:

Related Posts

1. 2012 400NG Baseline Rates Posted - December 20th, 2011
2. 2012 Tariff Changes To Be Detailed - January 17th, 2012
3. Daycos Inaugural Webinar: The 400NG Linehaul Calculation - March 10th, 2010

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

Our experience with diversions in the DPS computer system has led us to the opinion that they have never really worked as intended. Since the launch of DPS, there have been a number of challenges for users that makes diversions difficult to handle. The task of putting a shipment into diverted status, and getting the charges paid in full takes a lot of work and time on not only the TSP’s end, but the PPSO’s as well. This can be especially time-consuming in situations when a diversion results in a change in the destination rate area, which may change the GBLOC, or require a change in the applicable single factor rate (SFR).

In the latest update to the International Tender, SDDC has addressed these concerns with extensive changes to the diversion language. At the risk of generalizing, SDDC decided that instead of diverting shipments and dealing with the hassles that comes along with handling new destination GBLOCs and SFRs, they would instead terminate and rebook the shipments whenever possible. This is certainly an easier, quicker fix than the programming that would have been required to get the DPS computer system to handle the previous rules properly.

Ideally, the shipment is rebooked with the same TSP, though the tariff guidance only states “PPSO can attempt to book with original TSP”, not that they should attempt to do so.  In order to book the “new” shipment with original TSP, that TSP must have rates on file in the new channel that is being rebooked. If the TSP does not file rates in that channel, which is common especially for International TSPs in Domestic channels, then the shipment will have to be booked with a new TSP. Even if the original TSP has rates on file in that channel, they must also be in the same DPS shipment distribution quartile as the new booking. If they are in a different quartile, then the shipment will have to be rebooked with a new TSP.

If a shipment transfers to a new TSP, there are some potential problems to consider. The original TSP needs to recover their lift vans. The new TSP may want to transport it in a van as opposed to a lift van. A transfer of liability occurs, and that is always cause for potential problems. While terminating and rebooking the shipment is an easy way to avoid the current problems with diversions in the DPS system, it is not without problems for the TSPs involved.

One final thing to note about the tariff changes for diversions is SDDC decided to take much of the language dealing with different diversion scenarios out of the International Tender and placed in a new document entitled “Item 526 Diversion Table.” The tariff only includes instructions on how to find this document on the SDDC website. We are not sure of the reason for removing this set of instructions from the International Tender, but TSPs need to be aware that there is another document they will need to review to be up to speed on the changes to diversions.

Do you agree with the changes SDDC has made to diversions in the International Tender? Use the comments below to share your opinion:

Related Posts

1. Help Desk Email Addresses Changed - February 17th, 2009
2. Update to IT Adds Confusing Reweigh Language - March 1st, 2011
3. Tariff Changes: Shorthaul Calculation Simplified in 400NG - January 18th, 2011

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

During last year’s series of blog posts on the upcoming tariff changes, we posted an article entitled “Did SDDC Change the 400NG Linehaul Calculation?“. The article’s title was in the form of a question because we weren’t sure of SDDC’s intent on how mileage should be calculated on the 400NG. Our reading of the tariff led us to believe that linehaul mileage should be based on the distance from Block 19 of the GBL to Block 18 of the GBL, not actual pickup and delivery locations.

However, it was an interpretation that was not based on any clear guidance, rather it was a judgement based on a number of different sections in the tariff. It is likely there were TSPs who disagreed with our interpretation, and were billing based on actual mileage. And the actual rating done by DPS provided no clue which interpretation was correct, since DPS uses the mileage provided by the TSP to calculate linehaul, and does not independently calculate the miles to be used.

It was a less than ideal situation to have the largest and most frequently billed line item being calculated with unclear directions, so we looked forward to seeing the new 2012 400NG  with the hope this issue would be clarified. When the new tariff was released, we were disappointed to find out that the new tariff actually made the situation less clear. Much of our conclusion from the prior tariff was based on a definition of “Total Shipment Miles”  which appeared in Appendix A of the 2011 400NG. This definition was removed in the 2012 tariff as part of extensive changes to the Appendix A sections.

Once again, we requested that SDDC clarify how mileage on linehaul was to be calculated, and in the release of Change 1 to the 2012 400NG, we believe they have finally done that. They have changed the definition of the “Base Linehaul” element of the linehaul charge to read as follows:

Base Linehaul (BLH) is the charge element for the transportation of the shipment from origin (block 19) to destination (block 18), through any stops along the way. BLH is computed using the total weight and total miles of the shipment.

While there are still concerns with the growing reliance of SDDC’s usage of Block 18/19, we are pleased that at least they have clarified this important issue. The fundamental building block of the cost of moving a shipment for the DoD should not be left to guessing and interpretation about its calculation. With Change 1 to the 2012 400NG, SDDC has finally added the clarity that was needed.

Do you agree with SDDC’s decision to base linehaul mileage on Blocks 18/19? Please use the comments below to share your opinion:

Related Posts

1. Tariff Changes: Did SDDC Change the 400NG Linehaul Mileage Calculation? - January 26th, 2011
2. Tariff Changes: Delivery Out of SIT Mileage Based on Block 18 - January 13th, 2011
3. Tariff Changes: Shorthaul Calculation Simplified in 400NG - January 18th, 2011

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

Friday, we covered the change in the 2012 400NG that will base the origin and destination service fees on blocks 18/19 of the GBL instead of the actual pickup and delivery location. (To read that article, click here.) Today we are going to examine some of the implications of SDDC making this change.

Our assumption is that the reason for this change by SDDC is to make the tariff more consistent, by basing more and more charges on Block 18/19 of the GBL.  Adding origin and destination service charges to storage and related charges as items based ob Block 18/19 certainly does add consistency.

However, there is a difference between the storage related charges and these items. Some of the rationale for the previous changes was to prevent TSPs from selecting a storage location that was favorable for billing purposes. If the TSP has to bill based on Block18/19, then there is no incentive to store the shipment in a warehouse that allows the TSP to collect long delivery charges. (How often this actually happened in the real world may be debatable, but it seems SDDC did not want to allow the possibility of it occurring.)

This change is different from those previous changes in that the billing is already being done based on something that is completely uncontrollable by the TSP, the original pickup and final delivery locations. There is no way for the TSP to manipulate these points for more favorable invoicing terms, so there is no potential problem there that SDDC needed to address. Therefore, the only goal in making this change that we can see is consistency.

While we applaud the goal of consistency within a tariff, we do see some challenges with the continued move to base more items on the requested pickup and delivery address, instead of the actual addresses. These changes continue to move the billing process towards the expected movement of a shipment, and away from the actual movement. We are approaching the point where we could accurately calculate the entire invoice for a shipment at the time the GBL is printed, even before the shipment has picked up.

The problem occurs when a shipment doesn’t always go as planned, and the change results in a diversion or a long delivery. In these scenarios, the destination service charge may be based on a completely different geographical area than the one where delivery services actually occur. In fact, the tariff language specifically states that in the case of diversion, the charges are still based on the originally requested delivery address:

On diverted shipments, the requested pickup address (block 19 of the PPGBL/BL) and/or the requested delivery address (block 18 of the PPGBL/BL) at the time the shipment is offered and accepted by the TSP (not the point of diversion) shall be the applicable points for the determination of charges under this item.

Of course, the TSP is going to be contracting with an agent for the actual delivery location, not the originally  requested delivery location, and will likely be paying the agent based on a compensation schedule for that geographic area. This will create a situation where there will be a discrepancy between what the agent’s charges are based upon, and what the TSP is actually able to bill the government. It might work to the favor or the detriment of the TSP, depending on the shipment, but it will always add a layer of complexity and confusion to the transaction between agent and TSP.

Do you agree with the changes SDDC has made on the origin and destination service charges? Are there other consequences of this change? Please use the comments below to share your opinion:

Related Posts

1. Tariff Changes: Delivery Out of SIT Mileage Based on Block 18 - January 13th, 2011
2. Tariff Changes: Unpacking Rates to Be Based on Block 18 - February 11th, 2011
3. SDDC Expands Block 18/19 Usage to Origin and Destination Service Fees - January 20th, 2012

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

Two years ago, SDDC changed the 400NG so SIT rates were based on Block 18/19 of the GBL, instead of actual storage location. Last year they changed the tariff to state that mileage calculations, primarily for SIT, would be based on distances from Block 18/19 of the GBL, instead of actual locations. This year they have continued the trend, and have changed the calculation of the Origin and Destination Service Charges to be based on Block 18/19 instead of the actual location of pickup or delivery.

Origin and destination service (Items 135A and 135B) are the charges intended to compensate the TSP for items that were billed separately (such as stair carries, long carries, etc.) in the previous tariff. These types of charges were consolidated into the origin and destination charges, and are billed on each shipment, regardless of actual services performed. The rates vary by geographic region to account for the different costs of doing business in different areas. In the 2011 400NG, they are based on actual location that the shipment was picked up or delivered. Here is the relevant language from the 2011 tariff (emphasis added):

This item applies on a hundredweight basis at the origin and destination point of the shipment to compensate the TSP for handling and servicing the shipment at each location.

This has been changed in the 2012 400NG to read (emphasis added):

This item applies on a hundredweight basis at the requested pickup address (block 19 of the PPGBL/BL) and/or the requested delivery address (block 18 of the PPGBL/BL) at the time the shipment is offered and accepted by the TSP to compensate the TSP for handling and servicing the shipment at each location.

Similar language is used in other parts of that section of the tariff, with one exception. Note 2 of the 400NG remained unchanged, and reads as follows (emphasis added):

NOTE 2: On shipments picked up or delivered at more than one place, the initial point of origin shall be the basis for the determination of charges at points of extra pickup, the final point of delivery shall be the basis for the determination of charges at points of extra delivery and the total (combined) net weight of the shipment shall be the basis for the determination of charges under this item.

We are unsure why SDDC did not add the Block 18/19 language into this section, but it appears to us that the only time the origin and destination service fees will not be based on Blocks 18/19 will be if there are multiple pickups or deliveries. Multiple pickups or deliveries present the only challenge in billing origin and destination service fees, and they could have been solved by the Block 18/19 language, but SDDC chose to leave this area unchanged.

Monday we will be discussing the overall effect of this change and the continued movement towards Block 18/19 billing, before moving on to covering the other changes in the 2012 tariff.

If you have any questions about this change, or wish to express your opinion about the change, please use the comments below:

Related Posts

1. Tariff Changes: Did SDDC Change the 400NG Linehaul Mileage Calculation? - January 26th, 2011
2. Tariff Changes: Delivery Out of SIT Mileage Based on Block 18 - January 13th, 2011
3. Certified Copies of Bills of Lading - February 7th, 2005

• 2012 Tariffs to be Detailed
• Post-Audit Recovered Revenue Continues to Increase
• We Are Officially Daycos, Inc.
• NTS Implementation Delay

If you did not receive an email with this month’s newsletter, but would like to receive it directly each month, please feel free to subscribe here: Daycos Newsletter.

Related Posts

1. Daycos January 2010 Newsletter - January 21st, 2010
2. Daycos January 2011 Newsletter - January 19th, 2011
3. Daycos May 2010 Newsletter - May 25th, 2010

The chart shows average revenue per file recovered during the Daycos' post-audit process. (Click for larger image.)

For the first half of our 33 year history, Daycos was exclusively a  post-audit firm, examining closed shipment files to find revenue left behind. While billing and related services now account for most of our work, we still perform the post-audit service for hundreds of SCAC codes each year. During the past year, we reviewed over tens of thousands of shipment records to find revenue that would have otherwise gone uncollected by the TSP.

In 2011, Daycos recovered an average of $42.79 of revenue for every shipment file we reviewed. This is a substantial increase from 2010 and continues a five-year trend of increased post-audit revenue recovery per file. In light of “simplification” of the tariffs, and a move to electronic billing, some might wonder why the unrecovered revenue seems to be increasing. There are several reasons why we believe we have seen this trend continue.

First, the only constant over the past few years has been change, and that is as true in the billing process as the rest of the industry. The invoicing approval process, the tariffs, and invoice submission process has all changed substantially over the past 5-7 years. When there are significant changes, it is more likely that there will be items missed during billing or collections due to the steep and constant learning curve. Most billing and collection departments are learning about the changes as they go, and sometimes those lessons don’t get learned before some revenue is left unbilled or uncollected.

Another reason for the increase in unrecovered revenue is the increased difficulty of getting invoices paid. Today’s environment is very different, and TSPs have to deal with unresponsive PPSOs, rating errors, audit exception, transmission problems, and a whole host of other factors that may prevent an invoice from being paid in full. Prior to these changes, most of the revenue we discovered during the post-audit process was due to incorrect billing. Now it is very common for us to find invoices that were billed correctly but not collected in full, due to any one of the potential problems.

Finally, we are constantly getting better at discovering the unrecovered revenue that has been left behind. Some of our most experienced employees comprise our post-audit group, and each year they gain more experience that helps them uncover the money that was left behind. Also, our constant daily work in the DPS system and with PPSOs at each base allows us to  better identify issues that may have prevented the TSP from receiving full payment.

If you are a TSP for whom we are not performing a post-audit review of files, please contact us for more information about the service. There is no up-front costs to you, and we only get paid if we are able to recover revenue on your behalf. In today’s tough economy, TSPs need to make sure they are billing and collecting every penny that is due them, and Daycos can help ensure that happens.

Related Posts

1. Access to Post-Audit Invoices on XRSNet - July 18th, 2006
2. Post-Audit Results - July 27th, 2004
3. New Post-Audit Contractor for GSA - March 12th, 2008

Using software that allows us to compare two versions of the same documents line by line and word by word, we conducted an analysis of the newly released tariffs compared to the most recent 2011 versions. That analysis told us that there were 879 lines that changed between the 2011 400NG and the recently released 2012 400NG. The 2012 International Tender “only” had 525 lines that were different from the 2011 IT.

Now most of these changes were minor, such as a change in formatting, punctuation, or abbreviation. However, when it comes to interpreting the tariff, even minor changes can have an unintended impact on meaning. And unfortunately, not all of the tariff changes are highlighted in red type, so TSPs should not assume that if they review the red ink, they will catch every change made.

We have been reviewing the tariffs since their release, and have tried to review every single changed line item to determine what effect, if any, it may have on the billing process.  Over the next few weeks, we will be sharing our view of the impact of these changes in a series of blog articles about the 2012 tariff changes.

If you would like to be notified when those articles are released, please make sure you are subscribed to our email notifications, which will send you an email whenever a new article is posted on the blog. You can subscribe by filling out the form on this page.

Were there any changes in the 2012 tariffs that surprised you? Are there any specific changes that you would like us to cover in the  series of articles? Use the comments below to share your opinion.

Related Posts

1. 2012 400NG Baseline Rates Posted - December 20th, 2011
2. Tariff Changes: Unpacking Rates to Be Based on Block 18 - February 11th, 2011
3. Rate Filing Dates Set, Solicitations To Be Released Soon - December 22nd, 2011

 While market-research polls have been conducted for decades, customer-satisfaction surveys have proliferated in recent years because of technology, a growing emphasis on getting data to shape decisions and measure results, and a drive to hold onto customers in a difficult economy, experts say.

Julie Pfeffer has sworn off phone surveys and most online ones. She finds most so vague that it’s “impossible to see how they could ever be of any use,” and she questions whether companies are even listening. Pfeffer, 44, who works in money management and lives in Hockessin, Del., recalls trying vainly to provide specific comments to a car-rental company survey-taker who wouldn’t veer from a “totally satisfied, somewhat satisfied, not satisfied”-style script.

The relevance of this trend to our industry is that much of the DP3 distribution methodology is based on the responses given to the Customer Satisfaction Surveys (CSS). It has been a constant struggle for TSPs to obtain enough survey responses to reach “statistical validity”, which allows them to be scored on actual survey results without any market average scores added.

A recent policy change by SDDC (pdf link) makes the CSS response rate even more critical to TSPs, especially for SCACs with just a few shipments. SDDC created a minimum number of 20 surveys to be completed before TSPs are statistically valid. Failure of a SCAC to reach 20 surveys will mean that average scores will be added to their scores to determine their total CSS score. The purpose of the change was to allow a fairer comparison between SCACs handling thousands of shipments and SCACs handling a few, and to prevent TSPs from getting  one or two good scores on a SCAC, and then protecting that high CSS score for a future cycle.

The impact will be felt most by TSPs that may only have a small number of shipments per SCAC. If they have less than 20 shipments, then they are guaranteed to have to add in average scores to reach validity. And if a TSP has 26 shipments, they have to get 20 survey’s completed, which is a nearly impossible response rate, even without factoring in any “survey fatigue” by service members.

Do you think that “survey fatigue” will make it hard to obtain CSS scores in the future? Do you think that the 20 minimum survey policy change was a good idea? Please use the comments below to share your opinion.

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