On January 1, 2006, building materials supplier Owens Corning Corp. (www.owenscorning.com) will institute a new fuel reimbursement program for its carriers. The shipper spends $350 million on freight per year, mostly for truckload, spread among 400 carriers. The goal is to provide better and more predictable transportation budgets and forecasts, explains John Gentle, Owens Corning's global leader, transportation affairs. It will also help the company recover a portion of the fuel supplement paid to carriers.
Owens Corning will change the formula it uses for its current base fuel program, converting from the standard weekly DOE/EIA (Department of Energy/Energy Information Administration) retail survey of pump prices to a PADD-adjusted NYMEX (New York Mercantile Exchange) base. The advantage of the new program is that carriers will be able to monitor their fuel reimbursement throughout the month.
"This program will help carriers learn how fuel prices are established and how the system works," Gentle points out.
There will be no change in how much Owens Corning pays the carriers; the change will be in how the information is accounted for — a result, Gentle says, of the increased scrutiny on all business processes resulting from Sarbanes-Oxley compliance measures. Owens Corning will offer side-by-side comparisons of the two fuel programs on its web-based supplier portal.
