· AUTHOR: Sheetal Potdar, SENIOR SAP TECHNICAL CONSULTANT · DIGITALG BUSINESS ENGINEERING

Fuel Surcharge in SAP TM (1/2)


SAP Transportation Management –
Charge Management

What is Fuel Surcharge?

This is an additional fee that carriers charge on top of basic shipping rates. These charges are designed to help these carriers cover the costs associated with fuel, especially given the constant fluctuation in fuel prices.

 

Why do we need Fuel Surcharge?

Businesses (Carriers / LSP) that regularly ship packages to customers around the world are aware that fuel surcharges can have a big impact on their profit margins. These charges can be very expensive; they can also be tricky to deal with since they fluctuate frequently in line with fuel prices. Since the cost of fuel changes almost by the hour, and contracts are locked in months or years in advance, a fuel surcharge is a way for carriers to account for variations in fuel prices.

 

SAP TM offers this flexible functionality of determining the fuel surcharge by providing 2 different calculation models so that carriers can choose the best fit model to run their business.

 

Model 1 (Followed majorly in the US)

The fees charged by each carrier are determined by the weekly National US Average on Highway Diesel Fuel Price report, which is compiled by the US Energy Information Administration (EIA). Internationally, the fuel surcharge rates are calculated by the US Gulf Coast (USGC) price for kerosene. Most carriers use these rates with a standard fuel surcharges calculator (Model 1) to figure out an additional charge that helps them protect their bottom lines.

 

Business Action:

The business following this model updates the fuel index based on the report published by the Government which is maintained as a rate table in SAP system (Explained below in detail) with a new entry on a weekly basis.

 

Generic Prerequisite:
  • Basic Master data (Explained below in detail): Freight Agreement, Calculation Sheet, Rate table, Carriers, Locations
  • Charge Calculation relevant settings: Charges Profile, Calculation Profile and corresponding assignment to relevant Sales/Purchasing Organization
  • Basic configuration of Freight documents
 
Master Data Maintenance specific to this model:

Following Master data set up is required specifically to set up this scenario.

  • Index Rate Table
  • Standard Rate table
  • Calculation Sheet
     
  1.  Define an Index Rate Table
  • SAP TM provides a separate column in the calculation sheet specifically designed to support the functionality, called the Index Rate Table. However, the structure of the rate table remains the same as that of the Standard Rate Table.

  • This is the table the business updates on a weekly basis based on the Government published report.

  • This index rate table can be set using any scale dimensions such as location, calculation date, gross weight etc., which provides flexibility.

SAP TM Configuration Path:
NWBC >> Master Data >> Charge Management >> Rate Tables >> Create Rate Table definitions

 
2.  Define a Standard Rate Table
 
  • It is mandatory to maintain a standard rate table with the calculation base ‘FSC’ as the rate table dimension for this functionality to be supported.

  • In addition to FSC, one can maintain other scale dimensions such as Carrier (TSP), Gross Weight etc., as well.

  • Note that standard delivered FSC is an ‘Amount’ based calculation base. Hence user need to maintain a currency value in the Scale Currency column while adding this scale in the rate table.

  • Also maintain Calculation Type as Absolute.

SAP TM Configuration Path:
NWBC >> Master Data >> Charge Management >> Rate Tables >> Create Rate Table definitions

 
3. Define a Calculation Sheet
 

Add a charge line with a charge type relevant for fuel surcharge with the following attributes:

  • Enter the above created standard rate table in the Rate Table field and the index rate table in the Index Rate Table field.
  • Enter the calculation method type as C and calculation method as FUEL_SURCHARGE in the Basic Data tab page.

SAP TM Configuration Path:
NWBC >> Master Data >> Charge Management >> Calculation Sheets >> Create Calculation Sheets


4.  Define a Freight Agreement

Create Freight Agreement between the Purchasing organization and Carrier and assign above created Calculation Sheet to it. Release the agreement.


The Fuel surcharge settings are ready for calculation of Freight Charges.

Charge determination logic

Consider the below freight order for calculating the transportation charges.

  • Calculation Date in the FO: 14.12.2020
  • Purchasing Organization: 5000100
  • Carrier: 7000000020
  • Source Location: YAMS


Step 1:
System first determines the Index Rate from the Index Rate table based on the Calculation Date (14.12.2020) and Source Location (YAMS).

In this case, Calculation Date is specified as Base Scale (>=), system determines the value of 3.04 maintained for 08.12.2020 and source location YAMS


Step 2:
Now, the system considers the above determined fuel surcharge value 3.04 as the data source value for the dimension FSC and does a rate look up from the Standard Rate Table.

In this case, Fuel Surcharge (FSC) is specified as Base Scale (>=), system determines the final value 0.24 maintained for 3.04 and carrier 7000000020.


 Pros:

  • The business following this model only updates the fuel index based on the report published by the Government which is maintained as a rate table in SAP system with a new entry on a weekly basis. No other maintenance required.
  • Since the fuel index is updated on a weekly basis, one can maintain rates based on date along with location/zone/country to provide more flexibility for charge determination.
     

MORE ABOUT THE AUTHOR


SHEETHAL POTDAR
SENIOR SAP TECHNICAL CONSULTANT
DIGITAL BUSINESS ENGINEERING

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