Fuel Surcharge & Carrier Obligation

[panthercub]

Does a carrier have a legal obligation to share any amount of fuel surcharges with owner/operators? This is in regards to a courier company that is paying a 60/40 split, even though they obviously incur no extra expense when drivers are the ones paying for the fuel. I don't believe they are obligated to give 100%, even though it seems like a horrible business practice not to. Thoughts from the current expeditor perspective? Thanks.

 

[tbcabs]

As a wise old expediter told me once (ovm). It is all in the contract. If you sign a contract that says you get $1 per mile and that is all then the company does NOT have to pay a fuel surcharge. If you sign a contract that says they will pay you a fuel surcharge then you will get it. The fuel surcharge is based on what you and the company agree upon.

 

[panthercub]

I'm aware of a contract situation. This is a courier company that I doubt has their drivers sign contracts. There is no transparency with them whatsoever. The driver who asked me about it was not aware until recently that the company was keeping any amount of the surcharge. I was just hoping to hear from others if it was unusual for anything less than 100% to be given to o/o's.

 

[moose]

by law ?
only on certain DOD & gov. loads .

 

[xiggi]

There is no law saying a company has to give one penny of a fuel surcharge to drivers. Back to needing that pesky contract. I would think any courier company would have a contract drivers sign, it could be the only thing to protect them in court under varied circumstances.

 

[panthercub]

Allow me to make one more point. The operations person who this driver talked to told him that if the company tried to give the owner/operators the full 100% of the fuel surcharge, then they would no longer be contractors, and would have to be considered employees. That statement makes no sense to me. Anyone have an opinion or insight on that, I'd appreciate it.

 

[cheri1122]

That 'operations person' is blowing smoke - passing along a surcharge collected for fuel to the person paying for fuel does not an employee make.
The law doesn't require all the surcharge be passed along [efforts to pass it have failed] but IMO, it is an ethical obligation - keeping any of it is morally indefensible.

 

[wimpy007]

The FSC is pass to the person purchasing the fuel, that is my understand.

 

[dletheridge]

Legal obligation to pass on the FSC?

It all depends on the contract that the owner operator signed with the carrier and the contract that the drivers signed with the owner operator.

It also depends on whether or not the FSC was actually collected.

 

[chefdennis]

1st not all clients of the carrier wil pay a FSC..most do yes, but there are those that wont't.. Then it is my understanding that there is no obligation for the carrier to give up any of it...except for as stated earlier, "certain Gov lads and DoD loads...."moral obligation??" please..this is business and nothing more or less.

Keep in mind, the FSC is to be an "offset" not an amount that will pay for the fuel used to compete a loaded delivery from pickup to delivery..now that being said, yes all of o/o ca make money on the FSC, depending on the amount paid, the price of gas, the mileage the truck gets and the driving habits of the driver...

Yes the one paying for the fuel should get atleast a portion of the FSC, but we all know that most only get a portion and some don't get any while others get it all, but the all i imagine is pretty few and far inbetween..

As for anyone being considered an "employee" because the carrier turns 100% of the FSC over to them, thats BS..but if the carrier can get the driver to believe that...LOL..

 

[Moot]

... it is an ethical obligation - keeping any of it is morally indefensible.

Ooooh, nice font!

I agree, fuel surcharges should be passed on to the party paying for the fuel. Originally fsc's were established to help carriers deal with unpredictable swings in fuel prices. Carriers could adjust the fsc as necessary without constantly changing their published tariffs. Below is an interesting excerpt from a large carrier's 2010 annual report to shareholders. This carrier is not in the expedite business. It's core business is LTL and TL using almost exclusively employees and company owned power.

Historically, The Company's fuel-surcharge program has enabled it to more than recover increases in fuel
costs and fuel-related increases in purchased transportation. As a result,The Company may be adversely affected
if fuel prices fall and the resulting decrease in fuel-surcharge revenue is not offset by an equivalent increase in base
freight-rate revenue. Although lower fuel surcharges may improve The Company’s ability to increase the freight
rates that it would otherwise charge, there can be no assurance in this regard. The Company may also be
adversely affected if fuel prices increase or return to historically high levels. Customers faced with fuel-related
increases in transportation costs often seek to negotiate lower rates through reductions in the base freight rates
and/or limitations on the fuel surcharges charged by The Company, which adversely affect The Company’s
ability to offset higher fuel costs with higher revenue.

 

[greg334]

Government loads are required to GIVE a FSC but there is absolutely no obligation for the carrier to pass that onto the contractor.

It it simple, if you have a contract that has a FSC clause in it, then expect one. IF you don't, then don't expect one.

There is no moral or ethical obligation that needs to be met nor should there be.

As for customers not getting charged one, that is the defect with the carrier, all of them should be paying one with no excuse.

 

[Moot]

Government loads are required to GIVE a FSC but there is absolutely no obligation for the carrier to pass that onto the contractor.

GIVE a FSC? Or is the carrier required to charge a FSC?

It it simple, if you have a contract that has a FSC clause in it, then expect one. IF you don't, then don't expect one.

Exactly!

There is no moral or ethical obligation that needs to be met nor should there be.

I don't believe Cheri meant that the carrier was morally obligated to pass along the FSC. I certainly didn't. It would just be the nice thing to do.

As for customers not getting charged one, that is the defect with the carrier, all of them should be paying one with no excuse.

Or covering the increases in the cost of fuel through their published rates.

 

[Jefferson3000]

One of the silly games that some carriers have recently begun in lew of skyrocketing fuel prices, but not necessarily skyrocketing profits, is to show an increase in FSC (especially those who pay a contract rate and sliding scale FSC), but lower the contract base rate on newly recruited owner ops. In other words, instead of offering owner ops the old standard $1.20 straight truck rate and a current FSC of $0.27 per mile, they raise it to $0.35 when it's time, but then lower their base rate on new trucks to $1.12 per mile for a large straight.

Silly, huh?

 

[cheri1122]

1st not all clients of the carrier wil pay a FSC..most do yes, but there are those that wont't..
'Clients' who won't pay more for shipping when the cost of fuel goes up appreciably should have to find someone willing to haul their freight cheap, and they deserve the service they get.
Then it is my understanding that there is no obligation for the carrier to give up any of it...except for as stated earlier, "certain Gov lads and DoD loads...."moral obligation??" please..this is business and nothing more or less.
Perhaps I should have used the word 'ethics' instead. Is it your belief that ethics have no place in business? Or maybe they're fine, as long as they don't negatively impact profits?


Keep in mind, the FSC is to be an "offset" not an amount that will pay for the fuel used to compete a loaded delivery from pickup to delivery..
The fuel surcharge is intended to help cover the cost of fuel. The carrier does not pay for fuel, they have no justification for keeping any of it from the persons it was intended to benefit.. And none of their rationales are any more truthful than the 'employee' argument.
now that being said, yes all of o/o ca make money on the FSC, depending on the amount paid, the price of gas, the mileage the truck gets and the driving habits of the driver...
The only way to make money from the FS is to pay strict attention to one's driving habits and routing - and even then, such factors as topography, weight, wind, and congestion can toss it all down the drain. If one can come out ahead, they earned it.

Yes the one paying for the fuel should get atleast a portion of the FSC, but we all know that most only get a portion and some don't get any while others get it all, but the all i imagine is pretty few and far inbetween..


As for anyone being considered an "employee" because the carrier turns 100% of the FSC over to them, thats BS..but if the carrier can get the driver to believe that...LOL..

You may be amused at the ways honest people get cheated by those who will do it, but I'm not. I don't cheat the carrier for whom I drive, and I expect the same in return. Is that asking too much?

 

[chefdennis]

I lease to one of the most ethical carriers/owners in the business, based on the experience of those that have contracted elsewhere and are now here and my own experience, most of us CV / Sprinter drivers make money on the fsc because we get most all of it, if not all of it. They pays the way they do because their is a mutual resspect for each other, enough to where alot of contractors here (not all but i would be willing to bet most) take a load offer over the phone withput even knowing what it will pay...we don't get burnt...so from that point, we do the best that we can and beyond to make sure that we get our end of the deal done in a that makes everyone involved confident in the carrier and his contractors...

Now when a load offer comes to a contractor, they have the right to turn it down for whatever reason, be not enough for the LH or the FCS..I don't care who pays for the fuel, the FSC is paid to the CARRIER by the client, not the Contractor...should the Carrier adjust what he pays for one truck that gets worse mileage then another?? I mean, if we are all going to carry this out to the "ethical extreme, then no one should get shorted...not one "blanket" amount or %...figure out each unit, be fair and ethical, make sure that everyones cost and payment is the right for their unit.

Yes, in the "all is fair and equal world", the one who pays for the fuel should get 100% of the FSC, but we all know that just doesn't happen for the alot of cases...it is also a "income stream' for alot of carriers...sorry but that is how it is....

 

[davekc]

One of the silly games that some carriers have recently begun in lew of skyrocketing fuel prices, but not necessarily skyrocketing profits, is to show an increase in FSC (especially those who pay a contract rate and sliding scale FSC), but lower the contract base rate on newly recruited owner ops. In other words, instead of offering owner ops the old standard $1.20 straight truck rate and a current FSC of $0.27 per mile, they raise it to $0.35 when it's time, but then lower their base rate on new trucks to $1.12 per mile for a large straight.

Silly, huh?

Lot of gaming going on out there. Some worse than others. I guess your reference of $1.12 per mile is directed at a MI based carrier.

 

[panthercub]

Thank you everyone for your input. This is as I expected. Confirmed that driver does NOT have a contrat; none of the drivers for this company have them.

 

[Monty]

One of my recent dispatches says:

Miles 813
Gross Revenue - $1585.35
Net Pay $1121.94/$1.38 per mile
INCLUDES - FSC 365.85
Line Haul would be - $756.09

Net pay is truck pay

I receive 100% of the FSC

Landstar is very above board with what the charges are, and how much of it is mine. No gueesing.

 

[cheri1122]

I lease to one of the most ethical carriers/owners in the business, based on the experience of those that have contracted elsewhere and are now here and my own experience, most of us CV / Sprinter drivers make money on the fsc because we get most all of it, if not all of it. They pays the way they do because their is a mutual resspect for each other, enough to where alot of contractors here (not all but i would be willing to bet most) take a load offer over the phone withput even knowing what it will pay...we don't get burnt...so from that point, we do the best that we can and beyond to make sure that we get our end of the deal done in a that makes everyone involved confident in the carrier and his contractors...


Now when a load offer comes to a contractor, they have the right to turn it down for whatever reason, be not enough for the LH or the FCS..I don't care who pays for the fuel, the FSC is paid to the CARRIER by the client, not the Contractor...
All monies are paid to the carrier - so what? Does that mean they can keep all of it, if they wish?
should the Carrier adjust what he pays for one truck that gets worse mileage then another??
Fuel mileage is irrelevant.The FS is meant to keep the cost of fuel to a reasonable level, not to compensate for anything other than that.
I mean, if we are all going to carry this out to the "ethical extreme, then no one should get shorted...not one "blanket" amount or %...figure out each unit, be fair and ethical, make sure that everyones cost and payment is the right for their unit.
That's absurd, and you know it. There's no obligation for anyone to "make sure that everyone's cost and payment is right", except for the cost of fuel. How competently the o/o manages their costs is their concern.

Yes, in the "all is fair and equal world", the one who pays for the fuel should get 100% of the FSC,
What about honesty? Or is that a one way street: we are expected to be honest with the carrier, but they are under no such obligation?
If so, the turnover would be
but we all know that just doesn't happen for the alot of cases
I've been doing this more than twice as long as you, and am continually amazed at what an expert you've become. Really - "we all know"? And if that is true, does it follow that we all have to accept it without protest or comment?
...it is also a "income stream' for alot of carriers...sorry but that is how it is....

Call it by whatever euphemism you/they like, it's still unethical, IMO.