FSC and publicly traded companies

[TeamCozumel]

I just spent about two hours reading this FSC thread and toward the end I wondered about something based on a post:

...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... so if they keep a portion that is there business and there business only....

If Fedex is a publicly traded company don't they have to share with their stockholders how the business is being managed - like where the funds are coming from or where they're going? So if a driver owned FDX, wouldn't she/he (the stockholder) be allowed to attend an annual meeting and ask about the FSC and whether or not it's being used to increase their bottom line? Or could this information be requested by a shareholder? The Fedex Investor Relations page has a link for Requesting documents. I wonder if the FSC question(s) could be discovered this way? I would look myself but I'd be lost pretty quick. Hoping someone with more stock-like insight can answer the question before I start chasing a goose.

 

[moose]

hey Team C...
this is only my opinion , and i know i am in a minority .
yet:
why do you care.
this is non of your business ,
forget about it , no way the feds will pay you the same FSC as they charge the costumer , no mater what they say , they dont ,they all lie. !!! ,and dont believe any other company that say they do , they dont .
if they think there is enough money in the load ,they will broker it between another 2 sob company (own by the same FX) so the contractor will get 100% from the FSC charged by CC,
totally legal.

your job is to run a small business ,knowing your expenses and the costs of moving the truck.
the FSG is nothing more then a part of your pay check.
just like a toll reimbursements, Canada border crossing ,lay over pay, detention pay ,and the smiley driver of the month reward...
if the load pay 1$/M base rate + 30 C/M FSC ,
you just got payed 1.3 $/M .
if it costs 50 C/M to move your truck this week , then you just saved 80C/M.



Moose.

 

[chefdennis]

Moose, I think You and I went to the same "Business 101" class!!

What Moose said is how i run my business. I don't care where the money comes from, it i except the load offer at the rate it pays, thats my decision, and that all the matters. I could care less how the company gets to the # they offer me!

 

[LDB]

If my rate to run is $1.25 all miles I don't care if that's $1.25 per loaded mile and 0 fsc or it's $1.25 fsc and 0 per loaded mile, as long as they pay that amount of money. Does the company pay 100% of the fsc? If they are a major player with a reputation to uphold they do. I know my company does. I can examine the documents to confirm any time I want to.

 

[Turtle]

FedEx has many divisions, with Custom Critical being just one really small one, practically a footnote on the quarterly and annual reports. The company divisions, like Ground and Freight, for example, 100% of the FSC that customers are charged goes to the bottom line, which in turn benefits the stockholders. For Custom Critical, which is a non-asset based division, things work a little differently, as there are contracts with independent contractors that are involved.

Custom Critical moved to a model where the FSC that gets paid out is based on miles and the average price of fuel, as well as including toll reimbursements and deadhead pay, many things. The FSC collected from customers is placed into a pool. Some customers will pay a low FSC, lower than the paid-out rate to truck, and some will pay significantly more than it paid to trucks. It's concievable that at the end of the year exactly 100% of the collected FSC will have been paid out, but it's highly unlikely. In fact, if the accountants at FedEx are even remotely competent, it's a lock that there is money left over in the pot.

So insofar as the question of FedEx being publically held and thus answerable to its shareholders, yes, they are, and the question of FSC can be asked, but the contracts that Custom Critical has with its contractors make the question meaningless. The paying party is charged a certain amount for the line haul, and then, as Moose pointed out, depending on how much it is, it may be sifted through one or more in-house companies and brokerages to get the amount paid out to an acceptable level to both Custom Critical and the contractor, and any paperwork will show the "customer" as the final company that Custom Critical is brokering the load for, which may or may not be the actual, original paying party. And there's nothing wrong with that. Or, rather, there's nothing illegal about it. Make no mistake, very few carriers don't engage in some form of legal sifting and siphoning. Make peace with that, or it'll be a rough long haul.

 

[D Team Brothers]

I agree with the others; you accept a load and it's pay based on your cost to move your truck. If the total load pay breaks down to $1.50 all miles and you have determined that you need $1.30 then it's a doable load. To me I don't care where the money comes from to make the load $1.50; FSC/TOLLS/BASE PAY, etc. It gets lumped together by me and then I decide to take the load or not based on several other factors and the pay per mile. I do keep a seperate spreadsheet to keep track of the total money I spend on fuel and the money each load pays towards this cost, but that is done after I accept the load. As to the FSC that FECC pays; they do NOT pay the full amount charged to a customer directly to the truck. They pay a percentage of the customer's FSC and the rest is put into a pool. The money in the pool is paid out to all trucks whenever a load does not have a FSC assigned to it, or when deadheading after delivering a load to an agreed upon express center. Jack

 

[TeamCaffee]

One thing you forget to mention is that FedEx Custom Critical also pays us a FSC no matter what. If the customer does not pay a FSC we still get one. We get FSC after we deliver to where we are authorized to go wait for next load which sometimes in the west can be several hundred miles. There is another thought to this issue that we are paid on a percentage of what the customer is charged and not on a flat rate. We also look at the bottom line if the DH from customer to layover, the DH to pickup and the run pay enough we take the load. Each offer is different so each time the QC beeps you never know what the load will pay! Sometimes it is great other times well.....

 

[TeamCozumel]

Thank you all. We really appreciate your feedback and insight.

 

[x06col]

I have never been a believer in a FSC. I had anticipated when some Companys started charging a seperate charge for fuel that it would open a can of worms for everyone involved. It would be much simpler to just quote a value to move the freight, pay your contractor whatever the percentage is that has been agreed upon, move the freight, and get to the next load. However, that's just too simple. Way too many get wrapped around the axle about FSC. I once had a Contractor that when all this started wouldn't take a load that paid $1.80 per mile because there was no FSC. Sooo, I changed it to $1.50 plus a $.30 FSC and all wuz fine. Go figure??

Anyway, if your Carrier is the type that does in fact skim some along the way, will skim some no matter what'ca call it. IF you are with one, as the turtle types "get used to it". And, just don't take a load if it don't pay enough, no matter what all is included. It's just anuther numbers (shell) game.

 

[TeamCaffee]

When I finally had an epiphany of why we have a FSC and it was a huge eye opener. I also thought that why have a FSC just charge the customer a certain price and get on down the road. When I finally realized that the loads are not booked one at a time but can be hundreds at a time and they are all booked at one price. Well at the beginning of the year the fuel can be $3.00 a gallon and by the end of the contract the fuel can be $5.00 a gallon. Not many drivers can afford to take the same load with the price fluctuating the way it has for the whole term of the contract. In order for the contract to be able to keep up with costs the FSC is one of the ways the price can be adjusted. Makes it easier on the shipper and the trucking company with the contract.

 

[OntarioVanMan]

Linda..I'd bet my last 2 teeth the carriers ....in the scenerio you described....either have an "out clause" or an "ceiling clause"

Well Express-One is another of them publically traded carriers....and according to our leader aka President E-1 pretty well breaks even over the course of the year...."pretty well" is kinda vague....

 

[TeamCaffee]

OTM I am sure you are correct in that statement but with the FSC the original contract can stay in place for the full term and then be renegotiated.

 

[OntarioVanMan]

OTM I am sure you are correct in that statement but with the FSC the original contract can stay in place for the full term and then be renegotiated.

Yes Linda...many variables that we are not privy to....bottomline as said many times...They operate thier business- we operate ours...and somewhere we'll meet in the middle and satisy both....hopefully.

 

[Turtle]

I have never been a believer in a FSC. I had anticipated when some Companys started charging a seperate charge for fuel that it would open a can of worms for everyone involved. It would be much simpler to just quote a value to move the freight, pay your contractor whatever the percentage is that has been agreed upon, move the freight, and get to the next load. However, that's just too simple.

The reason for the FSC in the first place was that many carriers have contracts with customers that cannot be changed, so they couldn't simply bit up the price, as the price was already set. The FSC was simply a way to add to the line haul price without breaching the contract.

On the back end, the same thing applies to carriers with owner/operators under contract for flat rate per mile freight, like Panther, for example. If the contract I have with Panther says $.77 a mile, then that's what they're gonna pay, regardless of how high they bid up the line haul. If fuel costs are such that no one will haul it in a van for less than $1.05, then other than trying to renegotiate the contract, the difference is easily made up with the FSC. And when fuel rises and falls, rather than redoing hundreds of contracts each week, it's easier to bump and grind the FSC.

For independents and many on percentage deals, the amount of the pay that is the FSC doesn't make that much of a difference, as it's all about total pay. Of course, except when carriers and brokers lump the line haul and FSC together and say here's your 62%. Then it's an issue.

 

[x06col]

I guess I don't understand the issue with here is 62%. If it is not enough--don't run it. Pretty simple. why worry about who's doing what to whom.

Getting into a contract in this dynamic business has to be suicide. I certainly wouldn't do it. Take each day as it comes, because like the weather-just stick around, it'll change.