Fuel surcharge

[theoldprof]

I am planning on running a gasser cargo van. Could someone explain the what, why, who, and how much of fuel surcharge? Who determines it, how is it tied to pump price, when do you get it, etc?
Thanks, :+ :+

 

[terryandrene]

The fuel surcharge is based on the cost of diesel. I suspect most companies that apply it to their tarrifs do so in a manner similar to FedEx Custom Critical; I can speak only to their methods.

The surcharge (fsc) kicks in when the average cost of diesel fuel is $1.78. The surcharge increases as the prices increase. It applys to all non-negotiated tarrifs and to some contracted prices. Some customers pay no surcharge, most do. The surcharge is currently 7.2% nationwide except for the west coast which is 9.0%. The charge is applied to the tarrifs without regard to the type of fuel a truck uses. The gasoline vans receive the same surcharge as the diesels.

If a customer's freight bill is $1000, the surcharge will be $72. FedEx Custom Critical owners get 58% of the tarrifs so, in this case, I would receive $580 + $72 = $652.

I think it unconscionable for a company not to give 100% of the surcharge to the owner or from the owner to the driver paying for the fuel.

 

[theoldprof]

terryandrene,

Are the terms tarrif and freight bill the same? How much driving does it take to earn this $652 income?

Thanks, :+ :+

 

[terryandrene]

Prof Tariffs are the published rates the carriers charge. I reckon the freight bill would be synonymous unless a discount from the tariff is given.

Earning $1000 differs greatly from carrier to carrier. PantherII, for example, pays a flat rate of 77 cpm so, a PantherII van would have to drive loaded for 1298 miles. I understand Con-Way Now is now at 80cpm so they'd have to drive 1250 loaded miles. Last year, I averaged 119 cpm so I drove an avg 840 loaded miles. So far this year I've averaged 926 miles for the same $1000.

All of the above is meaningless unless you factor in the required deadhead. That would be deadhead from dispatch to Pickup AND from delivery to layover or home location. I suspect that most of the national carriers are about equal in the deadhead category, about 30% of the total mile travelled in a year. Some of the smaller carriers are at 100+% deadhead because they don't get any frieght back to the starting point. Others claim to be as low as 3%.

 

[theoldprof]

Terry,

How do you manage to earn 119 cpm when two of the larger carriers are paying 77 or 80 cpm? :+ :+

 

[davekc]

As Terry mentioned, there are many factors to consider when looking at rates. There seems to be a wide gap when just looking at fuel surcharges. Some pay a few cents while others pay .20. Also, the amount of deadhead, and total monthly miles have to be considered.
Are you being paid for deadhead miles and how much?
Lots to consider
Davekc

 

[terryandrene]

5 or 6 years ago, most of the nationwide carriers paid at or about $1.00 per revenue mile for all van freight. As competition increased, the payouts decreased.

In 1989, Roberts Express' (now FedEx Custom Critical) full tariff was 99 cents to a van owner. At a modest 2% inflation, that $.99 should be $1.36 today. So, I guess that my carrier has kept up with inflation better than most.

Our overhead has more than doubled since 1989. My first van cost $15,000 and fuel was $.80 per gal.

My comments, I believe, apply to any size expediter truck. Are we being fairly or appropriately compensated for our investment of time and money. I think not! As the cost of consumer goods rises in proportion to inflation, the cost to the customer, of getting those goods has decreased. We are supporting that decrease.

 

[theoldprof]

Terry,

Your comments also apply to the guys and gals making these products. Years ago a person in an auto plant made a good wage. As these people retire and croak, the two tier wage system pays the new people less money. The twenty dollar an hour job is also now being done by some guy in a third world country making twenty dollars a day. Productivity is up also. Why aren't our cars much cheaper today? The employee is making less, and the folks who move this stuff are making less. Wonder where the money goes. Does Inron ring a bell?

:+ :+

 

[davekc]

As costs continue to rise and and less people enter the transportation business (every sector), only then will we start to see an increase in rates. Supply and demand on this one rules.
I think that is why the large common carriers are going to foreign labor in order to curb alot of there costs. They can keep their rates competitive and address their driver shortages at the same time. Unless there is some type of government regulations put in place, I don't see that approach changing. Like everyone, no one wants more goverment, but there isn't alot to chose from to address a long term problem.
Davekc
owner
20 years

 

[mvbn1]

>Earning $1000 differs greatly from carrier to carrier.
>PantherII, for example, pays a flat rate of 77 cpm so, a
>PantherII van...

I don't know if I'm not reading this correctly or not, but Panther does pay their drivers a fuel surcharge. I've been paid everything from .06/mile to .19/mile. I'm not sure what determines the amount, but all of the loads I've taken have had a fuel surcharge applied.

 

[terryandrene]

mvbn1:

Sorry for the ommision. None of the examples I mentioned included a fuel surcharge. I was giving examples of the base prices I know of.

Terry

 

[theoldprof]

I had a question that was previously answered.

Thanks, :+ :+