Hows the the new FedEx CC FSC program working for

[mystictrans]

After living under the program there are things we have noticed. A lot of the same customers
we service, doing the same exact loads are paying the same per mile(d/h and FSC included)
as they were when fuel was around 2.99 a gallon. I have asked why the total per mile was the same even tho the FSC has gone up per mile by almost 30 cpm.Did they lower the rates?
We were told that no the rates have not been lowered. So we asked why the total per mile was the same even tho the FSC was so much higher and were told if we did not like it well you know the rest.. It seems in a lot of cases we are paying our own FSC by having it cut out of the base rate then givin back as the FSC.We have compared dozens of the same runs we are tapped to do over the last 3 years and this is what we have found.
a run that payed 2.10 all miles with a 25.25cpm FSC2 years a go still payes 2.10 all miles with a 54.8 FSC.

 

[TeamCaffee]

The fsc plan has only been in affect since August of 2006 so part of the rates not going up is due to the economy and the increasing number of owners getting their own authority and bidding lower than the companies can. Our pay per mile compared to last year is much higher. We have found that we are being offered lighter loads then in years past in 2006 we had more D then C loads and in 2007 more C then D loads which will affect our ppm. Even when we pick up the same load the load does not pay the same due to dead head to layover pay and also dead head to pickup.
Our fsc takes us our fuel down to 1.20 all authorized miles which is dead head and also all load miles. Under the old program some loads the fsc paid for all of our fuel and on other loads we did not receive any fsc.
This does not seem normal when talking to contractor relations and I believe a lot of the conversation was left out:

We were told that no the rates have not been lowered. So we asked why the total per mile was the same even tho the FSC was so much higher and .......?........ were told if we did not like it well you know the rest..

 

[davekc]

We were told that no the rates have not been lowered. So we asked why the total per mile was the same even tho the FSC was so much higher and .......?........ were told if we did not like it well you know the rest..
==============================
Linder,
Ummm???? I think that said more than you think.
I won't say any more.

 

[terryandrene]

I feel the same as Linder. There had to be a whole lot of conversation between that first and last sentence.

 

[ATeam]

It all comes from the fsc collected from the customer. Fedex gives you part of it on loaded miles, part on empty miles and probably keep a part for themselves.[/QUOTE

I would say it is what the total FSC is. Regardless, I am not a fan of the carrier pocketing a portion of it. That has nothing to do with whether "it is enough, so it is ok" philosophy.
Unless you do a ton of empty miles and deadhead, I would prefer a decent rate on the loaded miles. Why? Hopefully one is running more loaded miles than empty therefore the total compensation is higher.

In the interests of clarity, let's be a little more precise about who gets what portion of the fuel surcharge.

fastrod said "Fedes gives you parot of it on loaded miles, part on empty miles and probably keep a part for themselves. "Probably" and actually are two different things. As I understand the system at, FedEx Custom Critical, there is no "probably" about it. 100% of the fuel surcharge money collected by FedEx is paid out to the trucks.

DaveKC quoted fastrod's reference to FedEx and the "probably" comment, and then said he was not a fan of "the carrier pocketing a portion of it."

I trust DaveKC did not mean to imply with his words that FedEx Custom Critical is doing anything other than paying 100% of the fuel surcharge money out to the trucks. The TRUTH is FedEx Custom Critical pays out 100% of the fuel surcharge money it collects. I believe most, if not all, major expedite carriers do the same.

Dave, if you know of expedite carriers that in fact do pocket a portion of the fuel surcharge their customers pay, it would be a service to readers here to name the carriers. I know of none.

 

[davekc]

Since I am not at Fedex and only doing a occassional load for them, it would be unfair for me to comment on what they do with their contractors. Broker loads are done differently.
I don't think you know either way since you don't see the customers actual bill. Or, do they provide you with a copy for your review now?

For review of numbers, you would be better served to do a search on your former fleet owners posts from NC, and he would provide the actual differences with revenue numbers provided at the time he switched carriers because of a change in their FSC program.

 

[Dynamite 1]

as far as carriers keeping a part of the fsc and not knowing any who do, i will make a short list. any of them who base fsc on a flat rate corresponding to the natl. avg. of fuel. that is plain simple common sense. this plan is bad it is good it is everything if you look at the overall picture. i for one accepted this when we were at conway and found that when i looked at repeat customers we had before the change and then after the flat rate fsc was in place we averaged the same if not better. for instance if you carried 3 loads at 21 fsc and 1 at 40 that would be an avg of 25.1 if you are on a flat paying 28 that is a 2.9 increase overall. sometimes it is better sometimes not. sometimes what the carrier pockets builds up and other times in runs to zero but they are keeping a bit or alot or none or even losing some depending on the customer, but the one thing that stays true is that you always get a fsc on every load that will cover at least 50% of your fuel. i for one have always been leaty of fsc paying for all my fuel. tends to make you feel better than you should, promotes a sense of wealth that you should not count on. if you dont account for some of it on your own and a change takes place such as this one such as the one at p2 and you dont have those huge fsc's buying all your fuel then that creates an expense that some are not prepared to deal with. saving money is not something alot of people do very well. the more available the mor they spend or the more they increase their budget in the payout dept. for things that are not related to saving or the business. the flat rate fsc has alot of skeptics, but on the other hand unless you see or better yet unless you are privey to the actual conversation when the load is called in how do you know you are truly getting 100% of the fsc. yes we would all like to think so, but !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! so look back at your records and take a sample and avg. it against the flat and see where it ends up. take a legitamate sample to not all extremely high or low fsc. also figur in some you turned down because of the low fsc cuase if it would have payed oh lets say WHAT THE FLAT RATE PAYS you would have accepted it. well just my 2 pennys worth for whatever good it does any of you since i dont post on a daily basis and my post count is miserably low. no matter how you look at it that was wrong, sorry. TNT

 

[jaminjim]

a run that payed 2.10 all miles with a 25.25cpm FSC2 years a go still payes 2.10 all miles with a 54.8 FSC.

If your running a non refer unit, straight truck, then it does not matter if you are running at $2.10 per mile all miles two years later. Thats a decent rate per mile.

 

[greg334]

100% of the fuel surcharge money collected by FedEx is paid out to the trucks.

No it is not paid out at 100% - they could not provide unpaid miles (meaning unloaded) FSC at the rates they are giving to a truck for a authorized relocation or DH. They did away with passing along the FSC 100% with this new system and it has worked for the company quite well.

One thing that FedEx can do but won't because they don't think it is worth the effort is to open the fuel isles (if they even still have them) at Ground and Freight locations to CC contractors and sell the fuel to the contractor at the base price - the savings is instant and worth more to the contractor.

 

[davekc]

I would say 2.10 average for a dry van is very reasonable as well.

 

[pjjjjj]

Agreed that 2.10/mile is reasonable, three years ago it would've been a lot better!
But the point is being missed. The point is, 3 years ago, the total revenue was the same as it is today for the exact same run; the same, even tho fuel prices have soared.
They have stated the fsc has been raised to help offset the rise in fuel prices, yet the total revenue on a given run remains the same as before they raised the fsc.
Maybe I'm missing a 3rd or 4th possibility, but to me, that only leaves two possibilities:
i) the mileage rate before fsc has decreased from 3 years ago (and the carrier is saying this is not so);
or
ii)the fsc rate has increased, but less of a percentage of the total fsc is being given to the OOs, than what was being given 3 years ago.

 

[fastrod]

Phil I do not know for sure that Fedex keeps any of the fsc for themselves nor do you know for sure that they pay out everything they collect. On top of that there is no law that says they have to pass along any of the fsc they collect, so if they keep a portion that is there business and there business only. There are only 3 reasons why a carrier would go to a flat rate fsc. 1. To get the loads which were cut with little or no fsc moved, 2. To keep a portion for themselves to prop up there bottom line. 3. a combination of 1 and 2. If you know of any other reasons I would like to know them.

 

[RLENT]

One thing that FedEx can do but won't because they don't think it is worth the effort is to open the fuel isles (if they even still have them) at Ground and Freight locations to CC contractors and sell the fuel to the contractor at the base price - the savings is instant and worth more to the contractor.

Yeah, well .... forget that idea ..... the new contracts are coming out for Fedex Home Delivery (a division of Ground) - one of the changes was that contractors can no longer buy fuel directly from the Ground pumps at a subsidized rate of $1.25 a gallon. I assume that this will also hold true for Ground as well.

The way they are going to do it now is that you can buy fuel from the pumps - but at market prices - and then they will rebate you in your settlement the difference for authorized route miles only - and the rebate is only designed to lower a contractor's fuel cost to $1.47 per gallon.

Of course, what they rebate you will depend on someone's assumption of what you get for fuel mileage ......

 

[greg334]

Fastrod,
It's obvious, the program is not about the contractor but about how they can leverage things to their advantage. From time to time with some customers, you can find out what they are paying, just got to talk to them.

Rlent,
Oh well, it was a nice thought when it was around. But I got to buy mine at market prices anyway....and I don't drive for them....

 

[davekc]

Phil I do not know for sure that Fedex keeps any of the fsc for themselves nor do you know for sure that they pay out everything they collect. On top of that there is no law that says they have to pass along any of the fsc they collect, so if they keep a portion that is there business and there business only. There are only 3 reasons why a carrier would go to a flat rate fsc. 1. To get the loads which were cut with little or no fsc moved, 2. To keep a portion for themselves to prop up there bottom line. 3. a combination of 1 and 2. If you know of any other reasons I would like to know them.

Fastrod
I would like to know as well. Maybe Phil knows a secret we don't?

Based on conversations and posts right here at EO, they had an option to opt out of the program and they would give you 62 percent of the FSC. Not sure if they do that now or not, but at the time it certainly told me something.
But of course, maybe they all made it up?

Greg,
You mean they don't pay 100 percent? I may have been misled?

 

[greg334]

Dave,
Let's see....

If they gave 100% to the truck on any given load, how long do you think they can give out a FSC for the authorized moves at an equal rate without having someone in Memphis look at the numbers and fire someone in Green over it?

 

[nightcreacher]

Ok im going to try and explain this as it was explained to me.the old surcharge,the fsc to those who know what an fsc is,was paid on a percentage basis of what the freight rate was.As we all know the discounted,contracted customers didnt pay a fuel surcharge,see I know what fsc means,and the loads were not being covered very well.So along came this great idea,since FedEx Ground is getting to buy their fuel at !.25/gallon,although I was told by one of California drivers thats over 2 bucks a gallon,anyway back to the story,we were going to get a reasonable surcharge to offset the high cost of fuel,and that would be on all dispatched miles,there was no fsc on empty miles before this change.Also for a kicker,we would get toll assistance,if a toll road was in the route.NOw we maynot be getting 100% of what some of the customers pay,but we are getting a surcharge on loads for non paying cutomers,and this is empty miles to layover,empty miles to pick up and loaded miles for the load.I will say,I have found some customers that are getting an awful big discount,but in what loads Ive done that are for the same customer,i havent found the base rates to change.As far as the non discount loads,the tractor freight has a formula,how to determine the rate,yes the longer loads have dropped in price,the shorter one increased,but this all happened long before the fsc change.

As I mentioned Sunday,I dont know how this thread surfaced back to the top.

I'v got one thing more to put my 2 cents in.Fuel surcharge or no fuel surcharge,bottom line is,If the load pays well enough to do, take it,if not turn it down.Some people can make out with less paying loads ,than others.H/W teams,money going into one house hold can do better than any two family teams,so this business is more suited to them,but many of us are two and sometimes three family trucks.Only you know what your bottom line is,use it wisely

 

[nobb4u]

Actually I was wondering if the rate per mile was offsetting the FSC so I did a comparison on my rate last year and this year and I am averaging .20 cents per mile for loaded miles this year over last year. So I am not complaining at how my company is doing business with me.

 

[greg334]

Steve,
The thing is when people make the claim that you get 100%......there has to be someone to explain it, which you did - thanks.

 

[davekc]

Steve

That would almost seem like a dangerous marketing/operating plan.
What I mean is, they are using their best customers that pay a fair rate, to subsidize the ones that won't? Maybe I am not quite understanding it?
It would seem to leave a very large vulnerability with their best customers?
Just an observation with that scenerio.