How a National Specialty Retailer Saved 30% with Fuel Recovery

Taking a fresh look at energy management can lead to positive results for companies still relying on outdated methods. Smart shippers, including one national specialty retailer, have discovered a better way to manage fuel costs.

Breakthrough worked with one of the nation’s top home décor, art, and hobby retailers to implement a successful Fuel Recovery program that could address the lane-level details of a carrier network that covers over 38 million miles every year.

In talking with Breakthrough, the client realized how much diesel prices vary based on taxation, geography, and timing. The organization recognized its need for transparency, fairness, and accuracy in managing their transportation costs down to the day, place, and penny. So, the company turned to Breakthrough for help improving visibility and decision making.

Achieving Transportation Cost Reduction

After implementing a Breakthrough Fuel Recovery program, the client experienced $2 million in fuel savings, which represented a 30% reduction in fuel cost during its first year on the program in 2015.

This savings set the precedent for the value that accurate and transparent fuel cost accounting could create for their overarching freight network strategy. The company continues their work with the Breakthrough team to date.

Benchmarking to Set More Accurate Parameters

Before launching Fuel Recovery, the client wanted to prioritize communication about the change internally and with its carriers.

Breakthrough empowered the client to make this process seamless by providing them with current industry benchmarks and fuel efficiency best practices. This helped the company to determine the a more accurate MPG for its network compared to the industry. Intermodal rates were set to match the truckload efficiency for drayage portions, with rail MPGs to coincide with wider industry performance. Breakthrough designed the program to correspond with specific routes the carriers used, ensuring fair and transparent fuel reimbursement on all of their intermodal transportation.

Communicating the transition from a DOE index-based fuel surcharge program to Breakthrough proved to be no issue for their carrier partners. As with most new clients starting a Fuel Recovery program, the retailer found that 80% of its carriers were already working with other Breakthrough clients. That 80% represented 98% of the company’s freight mileage.

Since the majority of the client’s carriers were already familiar with the program and understood how Breakthrough creates a fair and equitable reimbursement process for all parties, there was little-to-no push back.

Reduced Transportation Costs and Linehaul Rates

The client unveiled its Breakthrough Fuel Recovery program to carriers through its annual RFP process in September of 2015 and announced final carrier awards at the end of the month. Fuel Recovery went live in October 2015.

As Fuel Recovery rolled out to the full carrier network, the client reported a decrease in overall freight rates. After implementing the program in Q4, just in time for the holiday shipping season, the client’s transportation department achieved $2 million in fuel savings, equating to a 30% reduction in fuel spend.

Using Fair and Accurate Fuel Reimbursements

The true value of a Fuel Recovery program comes from its ability to continue to deliver accuracy that promotes more transparent cost accounting. For this specialty retailer, that resulted in a cost avoidance of $2.82 million in fuel spend in 2020 and is continuing to create a roadmap of new opportunities for 2021 and beyond.

With Breakthrough Fuel Recovery, this national retailer’s fuel reimbursement is now based on real-time market prices rather than the distorted DOE Index and a fuel surcharge schedule. Expenses incurred while moving goods to market are now better-aligned with the expenses carriers actually incur at the pump.