It is often said that the lack of a proper FSC is the reason that our net revenues are not keeping up with the cost of operating an expedite business. We use this as a reason when the real culprits are many. They include inadequately equipped trucks; drivers operating at greater than economical speeds; excessive deadheading; excessive idling.
The initiator off this thread suggested that the FSC paid a year ago is not increasing at a rate necessary to cope with the cost of fuel today. The cited 2007 FSC payment of 34 cents per mile would have yielded $3.09 for a 9 mpg truck, well above the pump price of $2.79. In reality, a realistic FSC for that truck when the cost of fuel was $2.79 would have been 17.1 cents per mile.
Let us assume that the basis for determining the FSC is realistically set at $1.25. At today's average fuel cost of $4.39, a shipper should be paying 34.8 cents per mile for putting a load on a straight truck. That's $4.39 - $1.25 = $3.14 fsc / 9 mpg = 34.8 cents. A 6 mpg T/T should receive 52.3 cents. A 15 mpg cargo van should get 20.9 cents; a 22 mpg Sprinter, being a cargo van, would also get 20.9 cents or $4.60 for every gallon used.
The real bottom line is knowing your cost per mile to operate whatever type of truck you drive, and accept only those loads with rates that satisfy your operating requirements. With or without a fuel surcharge, the total of the freight rate we accept will determine our profit or loss.
The initiator off this thread suggested that the FSC paid a year ago is not increasing at a rate necessary to cope with the cost of fuel today. The cited 2007 FSC payment of 34 cents per mile would have yielded $3.09 for a 9 mpg truck, well above the pump price of $2.79. In reality, a realistic FSC for that truck when the cost of fuel was $2.79 would have been 17.1 cents per mile.
Let us assume that the basis for determining the FSC is realistically set at $1.25. At today's average fuel cost of $4.39, a shipper should be paying 34.8 cents per mile for putting a load on a straight truck. That's $4.39 - $1.25 = $3.14 fsc / 9 mpg = 34.8 cents. A 6 mpg T/T should receive 52.3 cents. A 15 mpg cargo van should get 20.9 cents; a 22 mpg Sprinter, being a cargo van, would also get 20.9 cents or $4.60 for every gallon used.
The real bottom line is knowing your cost per mile to operate whatever type of truck you drive, and accept only those loads with rates that satisfy your operating requirements. With or without a fuel surcharge, the total of the freight rate we accept will determine our profit or loss.
