General questions regarding the current fuel situa

[Loose_Cannon47]

Hi...I'm looking at a possible future 3rd profession as an expedite driver...just a couple questions for Recruitment for your input...

How has the dramatic increase in fuel prices lately affected your ability to recruit or keep O/O's?

What, if any, steps is your company taking to help reduce the impact of these price increases on your O/O's?

Thanks, and keep up the good work...

Loose

 

[X1_SRH]

RE: General questions regarding the current fuel s

That's a great question LC...
In times of outrageous fuel prices like we are experiencing now, fuel surcharges are the only way to keep O/O's in the market. An aggressive fuel surcharge program shows the O/O that his or her company is working FOR them to ensure they are making the best revenue per mile - regardless of price per gallon at the pump.

At Express-1 we evaluate the fuel surcharges every week and adjust in accordace with the average cost for a gallon of diesel in the midwest. A lot of customers have their own surcharge matrix, but for those who don't we have a global charge which is currently 12% of the total charge to the customer. Every penny of fuel surcharge that is collected is passed along to the truck at 100%. The ones buying the fuel should get the surcharge.

Times are definitely tight right now thanks to our friends in the desert with all the oil - but there are ways to stay competitive in a challenging market. Fuel surcharge is a main (if not THE main) factor to evaluate when shopping around for companies to run for.

I hope this helps - Have a great day. Scott

"My Old Ride"



http://www.expeditersonline.com/hotnews/images/scott_han_sig_file.jpg


Questions About Express-1?
Call me 1-800-800-5161
-----------------------------------------

 

[Loose_Cannon47]

RE: General questions regarding the current fuel s

Scott,
I appreciate your response...I think that for anyone going into the transportation business as an O/O, signing with a company that understands the fuel expense situation, and deals with it in a manner that is fair and equitable to the person buying the fuel is a prime concern...while not a driver at this time, I have several friends who are, mostly OTR TT drivers and they have certainly have voiced their opinions regarding this issue...FSC's seem to be all over the map, and many hardly make a dent in the per-gallon price for fuel...I'm glad to hear that your company is taking a proactive stance...Thanks again for your contribution...I hope to hear from some other recruiters on this issue...

Loose

 

[JohnMueller]

RE: General questions regarding the current fuel s

Loose Cannon;

As always, Scott did a great job replying to your post.

I wanted to expand on Scott's post to include an example so that all can see exactly how fuel surcharge works. This morning an O/O called saying he would not move his tractor until we increased the fuel surcharge. I sat down to compile this example to show him the details.

Owner Op of tractor is dispatched on a 500 mile trip. He is compensated at $1.05 per loaded mile PLUS fuel surcharge, currently at 15%. His truck averages 6.5 miles per gallon. The average price of diesel is $2.25 a gallon.

500 * $1.05 = $525.00 base pay

$525.00 * .15% = $78.75 fuel surcharge

$78.75 fuel surcharge + $525.00 base pay = $603.75 total pay


500 miles % 6.5 avg mpg = 76.92 gallons of fuel used

76.92 gallons * $2.25 / gallon = $173.07 paid at pump for fuel

$173.07 paid for fuel - $78.75 fuel surcharge = $94.32 O/O actual expense for fuel

$94.32 actaul fuel expense % 76.92 gals fuel used = $1.23 PER GALLON ACTUAL O/O EXPENSE FOR FUEL

I hope this makes sense and eliminates some of the unnecessary complaining about the price of fuel.

If your carrier has a good fuel surcharge program you should continue to have ACTUAL fuel expenses about $1.25 per gallon. Here at PTL, the fuel surcharge applies to ALL vehicles - both gas and diesel.

Thanks for reading this post.

HotFr8Recruiter


Questions about Premium Transportation Logistics LLC? Call me at 1-800-661-3166.

 

[Loose_Cannon47]

RE: General questions regarding the current fuel s

Thanks HotFr8...
I understand how the FSC works...or is supposed to work...I also am aware that not every contract pulls in the 15%...some much less, some none at all...and not all companies pay 100% to the truck...I was more interested to find out which companies are getting the full 15%, and paying it in full to the truck...on all loads...I picked up some info at MATS...pretty enlightening...and some companies indicated that they have, to put it simply, prefered customers, who do not pay 15%, and this trickles down to the truck owner, who must then make up the difference..but thanks for the very clear example...you can plug in the appropriate percentage and figure out your fuel CPM pretty easily...thanks again...

Loose

 

[Loose_Cannon47]

RE: General questions regarding the current fuel s

HotFr8...
Point well made on Rule #2...I wouldn't consider giving away ALL my secrets either...Thanks...

 

[woobergoober]

RE: General questions regarding the current fuel s

This may sound like a stupid question, but in an NLM load considered a brokered load? I did not know if that is how they are categorized or not, but what I do know, is it always seems that the NLM loads are the ones that do not pay squat for fuel charges, and furthermore, that also depends on which company the load is set up for.

If memory serves (it has been several months since I have had one), American Axle loads do not pay any fuel surcharge, followed by GM, which is in the single digit surcharge. Automotive is the backbone of the expediting industry (so I have been told anyways) and it seems like they are the ones who pay the least.

So, am I right in saying that NLM has set surcharges for whichever company they are setting up the load for, and that is non-negotiable?

Scott

 

[JohnMueller]

RE: General questions regarding the current fuel s

Loose-Cannon;

In reply to your response - see your rule #2. Just couldn't resist.

You are very correct in stating that not all loads pay the full fuel surcharge, some pay lesser amounts. Those paying lesser amounts are generally brokered. Majority of loads are full surcharge, customer loads here.

Thanks,

HotFr8Recruiter

 

[terryandrene]

RE: General questions regarding the current fuel s

HotFr8Recruiter:

Your explanation goes a long way towards explaining the relationship of the 15% FSC to the driver's cost of fuel. But, your example indicated the driver is getting a 15% FSC based on his pay only, not the customers tarrif. When the O/O discusses Fuel Surcharge percentages, we generally talk about the surcharge being on the customers tarrif, and the driver hopefully getting 100% of that.

So, if I read your example correctly, your FSC paying customers pay a smaller percentage than 15.

Example: a company pays O/O 60% of Tarrif. FSC = 9%. O/O gets 100% of FSC charged the customer, or $9.00 per $100.00 tarrif. 9/60 = 15%

Does your company add 15% to all driver pay regardless of the charges to the customer? That would be a great example for the rest of the trucking industry to follow.

Is there an industry standard for determining the FSC, or does each carrier have its own formula? Your example suggests your company used $1.25 as a cost basis for starting the FSC.

Perhaps the other carriers would weigh-in here and explain their company policy and answer the following questions:

What is the cost of fuel when the FSC is implemented?

What is the Percent of the customer tarrif charged?

Does the O/O get 100% of the FSC charged the customer?

How much does the fuel cost have to increase/decrease before the FSC is raised or lowered?

How often is the fuel cost reviewed, monthly/weekly/daily?

The fuel surcharge issue is perhaps the most talked about, and least understood concern of the trucker today, online, on the road, in the truckstops and on the truck related radio shows. But, hardly ever in other media.

Terry

 

[JohnMueller]

RE: General questions regarding the current fuel s

Terry and Rene;

Since we pay contractors by the loaded mile basis, we pay fuel surcharge based only on those miles, not a percentage of revenue (or in your terms - tariff rates). To attempt to base fuel surcharge as a percentage of our revenue would be an accounting nightmare when paying the contractor by the loaded mile. I think the most important thing being that one hundred percent of any charged fuel surcharge is passed to the contractor.

We call every tuesday for the national average price of diesel. Using a matrix or chart we look at the average price of diesel and use the fuel surcharge for that price. Again, the chart is designed to keep the price of diesel around $1.25 per gallon. In the example above that I listed, it was I believe around $1.23 (Can't see the earlier post).

How does FedEx CC do their fuel surcharge? Being one of the leaders in this industry they must have every angle covered. Do they have any customers that do not pay as much of a surcharge as others?

I would also be interested to see posts from all the other companies to explain their methodology in determining fuel surcharge. I'm sure that there is a variety of formulas used based on the method of compensation (percentage vs. mileage). Again, the most important issue being that 100% of any fuel surcharge be passed to the independent contractor.

Terry, when (and if) I get a little more caught up I will take a few moments to research the regulations on fuel surcharges and post them for everybody's convenience.

Thanks,

HotFr8Recruiter

 

[JohnMueller]

RE: General questions regarding the current fuel s

To All;

I had to stop to find the true answers to the fuel surcharge dilemna. Below is a portion of the total statement released by Annette Sandberg of FMCSA on April 5, 2005.

STATEMENT OF ANNETTE SANDBERG, ADMINISTRATOR
FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
April 5, 2005
MANDATORY FUEL SURCHARGE
The Nation has benefited enormously from our economic deregulation of the transportation industry. In the last 25 years, the free market for motor carrier services in particular has made important contributions to the growth and efficiency of our economy and helped to sustain its remarkable ability to create new jobs. Although the price of diesel fuel has risen sharply in the past few years, the allocation of those costs among the buyers and sellers of transportation is best accomplished through the working of the marketplace, not by government prescription. The mandatory fuel surcharge for truckload transportation prescribed by section 4139 of H.R. 3 would insinuate government into commercial relationships in a way that is ill-advised and that would reverse a quarter-century of U.S. economic policy. For these reasons, the Administration strongly urges the members of this Committee, and other Senators, not to include language supporting a fuel surcharge in its reauthorization bill.

I also spoke with our Sales Manager regarding how fuel surcharges are determined when dealing with the customers. He stated that many of the larger customers "pre-determine" the fuel surcharges they are willing to pay. If you want to haul their freight then you are forced to accept their fuel surcharge. Other customers accept our formula for determining the fuel surcharges. There is no one industry standard for any "one correct formula".

To help you find the average price of fuel you may want to check out this site:
http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

Hope this helps everyone better understand fuel surcharges.

Thanks,

HotFr8Recruiter

 

[JohnMueller]

RE: General questions regarding the current fuel s

I found additional information while viewing a post on CLASS A DRIVERS.com. Thanks to the author - "GMAN" out of Tennessee.

I thought you other owner operators might want to take a look at the new FUEL SURCHARGE BILL. Too much government intervention or a Blessing?

SEC. 4139. TRUCKLOAD FUEL SURCHARGE .

(a) In General- Chapter 137 of title 49, United States Code, is amended by adding at the end the following:

`Sec. 13714. Fuel surcharge

`(a) Requirement for Fuel Surcharge - Any contract or agreement, providing for truckload transportation or service involving a motor carrier, broker, or freight forwarder subject to jurisdiction under chapter 135 of this title that regularly provides such transportation or service, shall include a requirement that the payer of transportation charges pay a fuel surcharge that is no less than the amount of the Increased Cost of Fuel as determined under subsection (c).

`(b) Implementation- The surcharge required by subsection (a)--

`(1) shall apply during any period in which the Current Diesel Fuel Price surpasses, by $0.05 per gallon of diesel fuel , the Benchmark Price determined under subsection (c);

`(2) shall expire when the Current Diesel Fuel Price equals or is less than $0.05 above the Benchmark Price set forth in subsection (c);

`(3) shall be calculated on the date the applicable shipment is physically tendered to the motor carrier, broker, or freight forwarder;

`(4) shall be itemized separately on the invoices of the motor carrier, broker, or freight forwarder;

`(5) shall be paid to the motor carrier, broker, or freight forwarder by the payer of transportation charges;

`(6) shall not apply to any transportation contract or agreement, in effect on the date of enactment of this section, that provides for a fuel cost adjustment or surcharge ; and

`(7) may be expressed on a mileage basis, as a percentage of the freight charge, or in any other manner the motor carrier, broker, or freight forwarder elects.

`(c) Calculation of Increased Cost of Fuel -

`(1) INCREASED COST OF FUEL - For purposes of this section, the Increased Cost of Fuel shall be the amount determined by subtracting the Benchmark Price from the Current Diesel Fuel Price and then multiplying the difference by the number of gallons of diesel fuel used in the transportation or service provided.

`(2) BENCHMARK PRICE- For purposes of this section, the following apply:

`(A) INITIAL PRICE- For the period beginning on the date of enactment of this section and ending immediately before the effective date of the first adjusted Benchmark Price under subparagraph (B), the Benchmark Price shall be $1.10 per gallon of diesel fuel .

`(B) SUBSEQUENT ADJUSTMENTS- During each calendar year subsequent to the calendar year of enactment of this section, the Secretary of Transportation shall adjust the Benchmark Price by the percentage change in the previous calendar year's Annual Truckload Producer Price Index as determined by the Department of Labor and shall publish that adjusted Benchmark Price in the Federal Register. The effective date of each adjusted Benchmark Price shall be the first day of the month following the date of such publication.

`(3) CURRENT DIESEL FUEL PRICE- For purposes of this section, the Current Diesel Fuel Price shall--

`(A) be the latest weekly average price for retail on-highway diesel fuel published by the Energy Information Administration for the Petroleum Administration for Defense district or subdistrict where a shipment is physically tendered to the motor carrier, broker, or freight forwarder; and

`(B) take effect the midnight after the weekly average price is published.

`(4) AMOUNT OF FUEL USED- In calculating the number of gallons of diesel fuel used in providing transportation or service under paragraph (1)--

`(A) it shall be assumed that a gallon of diesel fuel is used for each 5 miles of transportation; and

`(B) the mileage of the transportation or service provided shall be the number of miles as determined under the `Defense Table of Official Distances' issued by the Surface Deployment and Distribution Command, Department of Defense or under any applicable mileage guide established under section 13703(a)(1)(D).

`(d) Limitation on Authority- Notwithstanding any other provision of this part, any action to enforce this section may only be brought by the motor carrier, broker, or freight forwarder that provided the transportation services against the payor of the transportation charges or by the payor of the transportation charges against the motor carrier, broker, of freight forwarder that provided the transportation services. In such action, a court shall have the authority to determine whether a fuel surcharge required under this section has been assessed or paid. A court shall not have the authority in such action to review any other charges imposed by the provider of the transportation services. Notwithstanding the publication of the Benchmark Price under subsection (c)(2), neither the Secretary of Transportation nor the Surface Transportation Board shall have regulatory or enforcement authority relating to provisions of this section.

`(e) Definitions- In this section, the following definitions apply:

`(1) PAYER OF TRANSPORTATION CHARGES- The term `payer of transportation charges' means any person who pays for the transportation or service involved.

`(2) PERSON RESPONSIBLE FOR PAYING FOR FUEL - The term `person responsible for paying for fuel' means any person who bears the cost of fuel used for the transportation or service involved.'.

(b) Clerical Amendment- The analysis for such chapter is amended by adding at the end the following:

`13714. Fuel surcharge .'.

(c) Conforming Amendment- Section 14102 of title 49, United States Code is amended by adding at the end the following:

`(c) Mandatory Pass-Through to Cost Bearer-

`(1) IN GENERAL- A motor carrier, broker, or freight forwarder providing transportation or service using fuel not paid for by it--

`(A) shall pass through to the person responsible for paying for fuel any fuel surcharge or adjustment required pursuant to section 13714 or provided for in a transportation contract or agreement at the same time payment for the transportation or service is made to the person responsible for paying for fuel ;

`(B) shall disclose in writing to the person responsible for paying for fuel the amount of all freight rates, charges, and fuel surcharges applicable to that transportation or service; and

`(C) may not reduce, for the purpose of adjusting for or avoiding the pass-through of a fuel surcharge , nonfuel related compensatory transportation payments to the person responsible for paying for fuel .

`(2) LIMITATION ON AUTHORITY- Notwithstanding any other provision of this part, the person responsible for paying for fuel may bring an action to enforce this subsection under section 14704 against the motor carrier, freight forwarder, or broker providing the transportation services with vehicles not owned by it or with fuel not paid for by it. Neither the Secretary of Transportation nor the Surface Transportation Board shall have regulatory or enforcement authority relating to provisions of this subsection.'.

Please not that the legislation talks about the fuel surcharge applying to "Truckload".

Thanks,
HotFr8Recruiter

 

[LDB]

RE: General questions regarding the current fuel s

It seems the Reader's Digest version should be an affirmitive response to the questions "Does your company pass the entire fsc to the o/o?" and "Does your company make available manifests or other documents showing the fsc for any particular run on request?" If the company answers no to either one they aren't a company to work for.

Leo
truck 4958

Support the entire Constitution, not just the parts you like.

 

[Mugg2000]

RE: General questions regarding the current fuel s

>and not all
>companies pay 100% to the truck...


Please address what this means.. I am not sure I understand the meaning.
Who are they paying or not paying when you do not get 100% to the truck