IS MY THINKING WRONG?

[dhalltoyo]

FastRod,

It is cargo van freight. 80cpm plus a decent FSC is a fair rate in today's world of "B" unit loads.

My decision is based on principle. I just have to draw the line someplace.

The guy who took the run said, "Well, I have bills to pay, so I took the run." Does that mean because of his inability to manage money that next week he willing to run it at 60cpm? There are already several carriers who have cut their rates down this low. Of course, they will simply say, "We just use these customers to keep you moving." The operative word is "USED." And it is the unknowing O/O that is getting used, because a quick review of their settlements will immediately prove that they are often running more than half of their loads at these substandard rates; although the carrier advertises a higher loaded mile rate.

The carrier I am leased to has done an excellent job of living up to everything that they said they would do. Successful businesses do not rest on their laurels. They keep striving, they keep open lines of communications and they listen to those who affect their bottom line. It is my desire to make them an even better carrier, because it will benefit me also.

 

[davekc]

.80 cents and a decent FSC is a competitive rate for todays van rates.







Davekc
owner
22 years
PantherII
EO moderator

 

[Jefferson3000]

Once up a time, fuel was cheaper. Fuel over the years may have climbed a bit, but it basically was considered as part of a rate increase. In the last five years, we have seen more dramatic increases and decreases in fuel prices. Some of these have come on suddenly, bringing the need for a TEMPORARY fuel surcharge, otherwise known as FSC. Originally, at the former LOWER prices for fuel, your rate had figured within it the idea of buying your fuel. With the recent advent and popularity of temp fuel service charge, you can now offset the effect that buying fuel at a higher rate would have on your profits. It is not meant to be a separate thing from the rest of your rate: Rate = What I keep, FSC = what I spend. It is all a part of your overall gross.

IMO, if a fuel charge pays for all of your fuel on a load, then woohoo! That should help pad you for those unfortunate deadheads. I agree with the Colonel. Concern yourself with the overall rate, not just the surcharge. It will help you continue to make money by not sitting.


Drive Safe!

Jeff

 

[dhalltoyo]

Let's look at you analogy regaarding there not being a big difference between 76cpm and 80cpm.

So far this year I have driven 63,000 miles. Suppose I were to yield on every load offer and run them for 76cpm.

That translates into $2520.00 less revenue.

How many tires could that buy?

How many oil changes and tire rotations?

How much reserve capital to purchase a replacement van?

It makes a huge difference in the long run.

 

[davekc]

David,

That is exactly the point I was trying to make. It makes a huge difference in the bottom line. On a annual schedule, that 200,000 truck is now doing 150,000. No point in a specially equipped truck when you can do that in a dry van somewhere else. What I find annoying is that the difference is going back to the carrier. Fuel surcharge costs are designed for the person paying for the fuel. Not for the carrier to profit off of the backs of their drivers.
Doesn't really matter whether there was a profit in that run or not.
As mentioned in another post, good for stockholders, but not necessarily good for owner operators.







Davekc
owner
22 years
PantherII
EO moderator

 

[Asilynot]

First off the only way to judge a load is total load pay regardless of where the money comes from.
Examples:

1289 loaded miles @ $1.30 mile = $1675.70
72 Dead Head Miles
Border Crossing = $37.50
F.S.C. 1289 miles @ $.12 mile = $154.68
Total load pay = $1867.88
Total miles = 1361
Rate per all miles = $1.37 per mile

This is a run worth taking period.

762 loaded miles @ $1.30 mile = $990.60
197 Dead Head Miles @ $.50 mile after 1st 100 miles = $48.50
F.S.C. 762 miles @ $.29 mile = $220.98
Total load pay = $1260.08
Total miles = 959
Rate per all miles = $1.31 per mile

This run is worth taking too, but notice the difference the load with the smaller f.s.c. actually pays more per loaded mile then the load with the higher f.s.c., these are 2 runs that my trucks have done this last week.

When you look at F.S.C. it is to help with the higher price of fuel not to pay for your fuel or even to pay for 70% of it.
Fuel should be costing us around $1.40 a gallon. When or maybe I should say if it ever hits that price again most if not all of the F.S.C.'s will go away. So if you look at it this way here:

Average m.p.g. on a van should be about 18.
Average m.p.g. on a straight truck should be about 9.
Average m.p.g. on a Tractor should be about 6.

Average cost per gallon = $2.59
Standard price per gallon = $1.40
Leaves a difference of $1.19 per gallon

Van 18 divided by $1.19 = $.066
Straight 9 divided by $1.19 = $.132
Tractor 6 divided by $1.19 = $.198

Any F.S.C.'s paid above these we should be happy.

My own personal thoughts and opinion here,

Thanks,
Tony

 

[ATeam]

>I didn't want to point out that a load might be unprofitable
>or profitable. You can paint it any color you like, but the
>reality is if that load paid $2,000 a month ago and now pays
>$1500, you are getting hosed if they are keeping a
>percentage of the fuel surcharge as they indicate. It
>doesn't mean one didn't make a profit, it just means you are
>operating at less numbers than were previously offered. That
>would have a significant impact on operating costs and
>purchasing of expensive equipment.
>

I don't think it helps much to put things in emotive terms like "getting hosed." The proof is in the pudding (objective, factual numbers), and at this point it is simply too early to tell.

We know exactly what our daily, weekly, monthly and even annual average revenue is over a three year period. Until we run freight under the new compensation schedule for a meaningful time period, we will not know if the new schedule helps us (more money), hurts us (less money) or leaves us pretty much the same.

I can say (factually, backing it up with our numbers) that we have done better under the new pay schedule than we have in numerous other time periods of the same duration. But I in no way want to suggest the trend will hold. I can also say (factually, backing it up with our numbers) that we have had previous time periods of the same duration where we have done better under the old pay schedule.

Too many variables apply to do a meaningful analysis. In time, the variables will blend together and become less significant. More time is needed to do a meaningful analysis.

After a month passes, we can compare that month with the month before and the same month one year ago. The same applies for two months and through year end. The new schedule took effect September 18th. I believe our year-end numbers will provide the answer to the good-deal/bad-deal question that is on people's minds.

Kindly note that Diane and I are one-truck owner-operators. We are not fleet owners. Fleet owners have a whole different game to play.

To us, as one-truck owne-operators, it does not matter if FedEx is holding back fuel surcharge money that we used to receive. What matters is how all components of the pay (tolls, deadhead, fuel surcharge, tarriffs, reefer differential, and anything else that may apply) combine into the load offer.

Over time, that will prove to be more, less or about the same as we had before. So far, and for our particular truck, it's more. But again, it's simply too early to tell.

If at year end the new deal proves to be bad for us, the next question will be where we can do and do as well? So far, no one has suggested that we'd do any better anywhere else than FedEx. If they did, I'd be most interested to see the factual data used to justify that claim.

 

[fastrod]

That is a big difference but look at the difference between a dollar per mile and 80 cpm. 12,600 dollars for 63,000 miles. I just think that with the amount of requirements to lease on to a carrier you should make 1.00 per mile plus fsc. I agree some companys will keep driving down rates and these companys are major players.

 

[davekc]

Good points. The difference is, you are getting 100 percent of the FSC rather than 58 percent of it. If Panther said they decided to keep 42 percent of your future FSC's I think there would be some irritated drivers. That was my opinion.
I do agree that the total run amount is what is required to determine if a run is profitable or not.





Davekc
owner
22 years
PantherII
EO moderator

 

[dhalltoyo]

Hopefully some O/O's will consider a class action suit against those carriers who advertise one rate, but in turn, pay a lower rate.

All I would ask is that a carrier simply be honest with the O/O's who may consider entering into a business agreement with that carrier. Don't bring O/O's into your organization with advertised rates (Both in print and on the Internet) and then after a few weeks start throwing them bones (Cheap Freight). The body needs meat (Advertised Rates) to function properly.

Hey, if your company wants to pay 20cpm less, just reprint your little color brochures reflecting the truth.

Thanks Dave for continuing to help others see the BIG picture.

Any wise business decision is always based on:
"COST PER THE RETURN."

 

[dhalltoyo]

Uh, Tony

How could the FSC be based upon 1289 miles in both examples of the runs you cited when the loaded miles are different for each run?

Do you work for load planning at FedEx?

 

[Asilynot]

Better believe it Dave. F.S.C. goes 100% to the person paying for the fuel period. I thought I had heard something about the feds making it a law to give 100% to the person paying the fuel anyone heard anything else about this?

Tony

 

[Asilynot]

David the money is right just messed up typing in the miles there but the dollars are right. and it is edited now.

Thanks for pointing that out for me and no I dont work for load planing at Fed Ex LOL


Tony

 

[davekc]

No Tony, that is not correct. It is not a law or requirement either. That is my problem. If you elected to keep your original contract with Fedex, you are now only to recieve 58 percent of the fuel surcharge. Their option is to take that or accept a version (flat rate) that essentially pays the same.









>Better believe it Dave. F.S.C. goes 100% to the person
>paying for the fuel period. I thought I had heard something
>about the feds making it a law to give 100% to the person
>paying the fuel anyone heard anything else about this?
>
>Tony

Davekc
owner
22 years
PantherII
EO moderator

 

[dhalltoyo]

Glad you have a sense of humor!

FSC's are never going away because carriers have learned how to use them as a source of revenue. Just as vehicles dealers use holdback, advertising fees, processing fees, etc. to bolster their bottom lines as well.

If a carrier only chooses to pay a certain rate per loaded mile that is their prerogative. If I choose to sign on for that advertised rate them they should honor that rate. And they should offer FSC as it is negotiated, not as a fixed flat rate, because it is not collected from the shipper in that manner.

 

[dhalltoyo]

Thanks Dave.

I knew FedEx had some type of Fixed Flat Rate.

Next they will be seeing FFR instead of FSC coming across the QC.

Uh, that is if they allow it to happen.

 

[DannyD]

Actually the $220 @ 29 cents is based on 762 miles. I think he just made a mis-type the 2nd example.

By the way some good arguments on both sides here. I agree w/ those who've said that total pay should be the factor in a run. If a run is going to pay a van $1.50/mile & no fsc it's a good run to take. If a run pays .50/mile w/ .20 fsc it's not.

David, from what I gather ya make pretty good decisions. If you felt that the run wasn't profitable for ya for whatever reason, I'm not going to challenge ya on it. I'm not much further ahead than you are @.90/cpm + fsc but wonder how ya make it at .80/cpm.

When I was at Thompson we were in the 70's & even 60's cpm. That worked out ok when they had me going from Michigan to Toronto & back. Once that pipeline dried up & I had to travel to other states it didn't work. So in the right situation it's not just about how much per mile. I'm wondering how you're making .80 work for ya.

Take care,
Danny

 

[davekc]

That could happen. Never want to assume too much.




Davekc
owner
22 years
PantherII
EO moderator

 

[ATeam]

>Good points. The difference is, you are getting 100 percent
>of the FSC rather than 58 percent of it. If Panther said
>they decided to keep 42 percent of your future FSC's I think
>there would be some irritated drivers.

Judging from recent posts, it seems Panther already has some irritated drivers.

 

[Tennesseahawk]

I was gonna type some figures, but Tony beat me to it. LOL

I'm a firm believer in figuring out all miles involved. FSC was originally implimented to keep fuel prices around 1.25/gal. My belief is this is for ALL miles, not just loaded. So, if the FSC can cover the dh miles at that 1.25/gal as well, it's worth it. Of course, it depends on all of the circumstances of the load, but that's the FSC portion. Having said that, I run with a flat FSC... .25/mi with my truck. Makes it easy to figure out price per mile, as it never fluctuates. My company, like Foster's, doesn't quibble over FSC charges. They bid on freight, which FSC is supposedly incorportated into that. If the bid doesn't go, they don't get it.

Toyo... there's something you said about not wanting Iowa, Wisconsin, and Mississippi loads. Tells me you're either in the wrong equipment, or with the wrong company. I for one know Tri-state gets plenty of loads out of the first two, and an occasional out of the third. So it must be because you're in a van. I know it's trickier working a van, but it's cheaper than a straight truck. I might contend that if you're in IA or WI, and don't expect a load, you might consider a self paid trip to Chicago. Mississippi... Tennessee isn't far. Sometimes you help yourself by helping yourself.

"If I claim to be a wise man, it surely means that I don't know." - Kansas