IS MY THINKING WRONG?

[dhalltoyo]

The vast majority of my load offers have a FSC of 20 cpm or more.

I am sitting at home in a good freight area and I get a load offer at 9 cpm. The load was going 304 miles into a fairly decent area.

I turned it down.

I sent a QC message as my reason for the refusal: FSC too low.

I am of the belief that properly worded QC responses will have a trickle up effect and somebody in marketing will begin to pass these types of loads to XYZ Xpress who has their cousins working for 50 cents per loaded mile. XYZ Xpress will eventually go out of business and if the shipper wants their freight moved by a reputable company, that can actually provide service, they will have to step up and pay a decent FSC.

What do you think?

Page Two

 

[dieselphreak2K]

Nope, If they can't offer a reasonable rate, they apprently don't want me to haul it that bad. I turn down loads like that alot. I also refuse to run for HG miles. I don't drive 100 extra miles for free.

 

[pantherii]

yes wheres the team concept?
you help them out and YOU HELP THEM OUT
come on you know the game

 

[x06col]

What I think is - an fsc is to help off-set the price of fuel. NOT PAY FOR IT!! You are running a van I presume, and your fuel cost should be somewhere ten cent per mile. If, nine cent per mile, or, 90% of your fuel cost is not enough i'd probably hold out for gett'in double my fuel paid for, and keep setting. I believe your thinking is in fact, wrong.

 

[fastman_1]

The bottom line is Were you gonna make Money or Lose Money? Make Money you take it Lose Money you take a pass on it. But Sitting is not Making you any money either sometime after sitting a few days I'd take it if it got me into a hot area. So my answer is MAYBE.








































Owner/Operator since 1979
Expediter since 1997
B Unit Semi Retired
Somedays are Diamonds and Somedays are Stones
Home is Wherever you Park.

 

[dhalltoyo]

The 304 miles would have required approximately 14.5 gallons of diesel fuel. At $2.59/gal that would cost me $37.50.

A FSC at 9cpm would have returned $27.36. I would have to absorb the $10.14 from my loaded mile rate. That makes my loaded mile rate drop from 80cpm to 76cpm.

Somehow that does not seem like a wise business decision.

So let's talk about FSC's:

“High fuel prices are never welcomed in this industry, but how much of an impact they have on a fleet depends on how much they are getting recouped for that expense through fuel surcharges,†Bob Costello, chief economist for the American Trucking Associations (ATA),told Fleet Owner magazine.

Kenneth Farer, an analyst with Standard & Poor’s, told Fleet Owner, “Fuel surcharges help fleets keep fuel costs relatively stable, giving them ongoing price protection.â€

Standard & Poor’s Farer said that, on average, carriers with fuel surcharge programs in place are recouping about 70% of their fuel cost.

“Fuel surcharges are already a widely accepted practice in this industry,†said Farer. “But add to it the fact that [truck] capacity is so much tighter and you see why most fleets are able to recoup much of that higher fuel cost.â€

Yep, 70% is my target number. Based upon my average FSC reimbursements the load would have to pay a minimum of 14cpm to be at 70%.

The previous excerpt was taken from FleetOwner magazine. So if it is fine and dandy for the Fleet Owner to recoup 70% of the fuel cost, then why not little old me? Hmmmm. Hey, x06col aren't you a Fleet Owner?

And if any carrier is not aggressively getting equitable FSC’s written into their contracts, then they need to hire a more proactive negotiator to assure that their O/O’s will receive a fair reimbursement. If XYZ Corporation says, “That is all we will pay, because there is someone else who will haul the freight at that rate,†then my response would be, “Great, let them!â€

Of course, when Adulah’s Expedited Freight has service failure after service failure and it actually ends up costing XYZ Corporation many more thousands of dollars in lost production time, then those higher FSC’s will begin to look pretty good. I saw happen at a local Big Three Auto Plant time and time again. It has always amazed me how small minds will trip over bars of gold bouillon to pick up a few copper pennies.

The old adage is so true: Penny wise…pound foolish.

 

[DAN]

When I refused a load for low fsc,the dispatcher told me that I need to be happy with that because this fsc is just somme $ to help me with the gas and this is not a good reason to refuse the load.
If you get a load from GE or EATON the fsc is almost 0,but I don't know if I will refuse a 300 miles load....(Yes I drive a van for TRI-STATE)

 

[LDB]

I have a general formula of fuel price divided by 10 as my desired fsc rate. I get 8mpg average so that isn't getting my fuel paid for it's getting it to a reasonable level. If I were running a van getting 15mpg I'd divide fuel price by about 18 or so to get the minimum fsc I'd usually run for. Right now that would be about 13cpm fsc.

If I'm sitting in an area that has a good amount of load offers I'd probably decline the 9cpm offer and tell them why just like you did. I'd consider where it went, load chances there, etc. before a final decision. There would be times I'd take the 9cpm job in a heartbeat because of where I was and where it went. Waiting a few hours or till the next morning isn't always a wrong decision.

Leo Bricker, 73's K5LDB, OOIDA 677319
Owner, Panther trucks 5507, 5508, 5509
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
----------
Support the entire Constitution, not just the parts you like.

 

[dhalltoyo]

It wouldn't have taken me into a hot area, but I understand the logic.

Also, if I had been out 2-3 weeks and it would have gotten me by the house...then yes, I would have taken the offer.

I do thank you for your response.

Drive safe.

 

[dhalltoyo]

My friend who lives on the other side of town took the load.

He is always complaining about not being able to pay his bills.

My guess is that he makes poor business decisions.

I have to consider not ONLY the cost of fuel, but my actual operating expenses. Keeping good records helps me to make an informed decision. Conversely, my friend just throws his receipts in a big box and hands them to a tax preparer. He has NO idea of what it is costing him to operate his van.

He jumps at the high mileage runs that often take him to dead areas. He calls me and says, "I just got a 600 mile run to Mississippi. Three days later he is still sitting in Good Ole Mississippi and then deadheads home without a run. Gee, what is profit on those types of runs. And he does it all the time. And he complains everyday that he isn't making any money.

Thursday I turned down a run from Toledo to Iowa because I didn't want to watch the corn grow until Monday. I then turned down a run that picked up in Canada. Finally, I turned down a run going to Wisconsin. I looked at the map a few minutes later and realized that the delivery point was actually close to civilization. I called back to see if it had been covered. It was covered but they offered me a run from Adrian, Mi to within 2 miles of the house. My friend would have said yes to any of the longer distance runs, but he would have deadheaded home on Saturday morning.

Patience is a virtue hard to come by.

"You can lead em' to school, but you can't make them think."

 

[greg334]

David Said;
"The 304 miles would have required approximately 14.5 gallons of diesel fuel. At $2.59/gal that would cost me $37.50.

A FSC at 9cpm would have returned $27.36. I would have to absorb the $10.14 from my loaded mile rate. That makes my loaded mile rate drop from 80cpm to 76cpm."

Wrong thinking! The fuel surcharge just lowered the pr1ce of fuel for you to $ .70 a gallon.

($37.50 actual cost - $27.36 FSC suppliment)/14.5 gallons = $.70 per gallon.

As X06COL said, it is a suppliment - not to pay for all your fuel.

 

[ACE]

I could be wrong but I think Dhalltoyo refused it because with the fuel charge he would only have a run that paid .76pm.

True the fuel surcharge is only to help compensate for higher price fuel. But if a O/O as a independent business person believes .76pm is not profitable then he or she should refuse the run because of the .76pm not the fuel charge.

 

[dieselphreak2K]

I take the current fuel cost, divide by the 10mpg low ball mpg figure for my truck, and then minus 5 cents. If it's not that, and I'm in a decent area where another load wont be long, then i don't take it. Now, obviously, if it gets me movin after sitting too long, I'll just run.

 

[dhalltoyo]

Greg,

If you will read my previous post where I gave information by folks who crunch numbers and know this industry probably better than you or I, it may help you to more comprehensively understand my position.

Standard & Poor’s Farer said that, on average, carriers with fuel surcharge programs in place are recouping about 70% of their fuel cost.

I just want parity. If UPS, FedEx, Panther, or Foster Trucking are average carriers (I’ll let the readers be the judge of that) then why would expect me, as a business owner, not to operate by the same guide lines?

A 70% recouping of my costs translates into 14cpm, not 9cpm.

IF YOU DON’T STAND FOR SOMETHING, YOU ARE DESTINED TO FALL FOR EVERYTHING.

Sometimes you just have to take a stand. You have to send a message. It is like casting your vote at the ballot box. And I vote NO on low FSC’s.

Like the Colonel said, “It’s Finger Licking Good.†Oh, sorry, wrong colonel. Considering his comments about FSC’s I’d bet he offers a flat rate FSC which is the biggest rip off to come down the pike. Well, I am preaching to choir now, because you Greg should already know that considering FedEx’s latest two-step to increase their bottom line with fixed rate FSC’s…FSC's that are negatively impacting the bottom line of FedEx drivers. Carriers do not contract at flat rates, but some like trying to pay O/O's at flat rates. If a carrier is paying a flat rate...RUN AWAY!!!! Because they have their hand in your pocket.

 

[x06col]

Fuel Surcharge the nastiest thing that's been figgured out lately. Bout like paying our farmers not to grow crops. Seems all it does is confuse the issue of pay per mile. I feel your real issue should be the freight rate not the FSC offered. Why in the world didn't you type the freight rate wasn't good enough instead of the FSC so, you refused the load?? Now, Mr. S&P said that "Carriers are recouping about 70% of their fuel cost". The operative word here is "about". I will submit to you that "if" you got better fuel mileage by tuning up, driving slower, yada, yada, you would be closer to your golden floor of "about 70%". Yes, I am a fleet owner and we drive at rational speeds, keep the tires at pressure, use wind enhancements, don't idle much, DH very, very little, yada, yada, and attain an average 10 - 13 mpg with our heavy D units. We do what we can to keep fuel costs down so we can worry about rate per mile, ALL miles driven. In my book it is never good tink'in to not take care of a customer because the FSC, rate, is off some, or, I don't wanna go there. BTW the corn stopped growing in Iowa some time ago, maybe mid September when it reached it's maturity. There actually is quite a bit of GOOD freight outa there, you should try it sometime. And yes, I have run on to many where you can't make'em tink.

 

[davekc]

I have a couple of different things that I look at with regards to FSC. Many have made excellent comments and have reiterated the fact that it is designed to cover the fuel costs beyond a benchmark price. I do agree with that, but only to a point.
Cost of operating has increased with stagnant rates, but that is a supply and demand issue.
What I do look at is distance to and from the customers location. That does effect my drivers bottom line. Deadheading 50 miles to a location, is different that 150. That adjustment in fuel costs must be calculated into the TOTAL run.
That fuel costs the same to go 150 miles as it does on a 1000 mile trip.
So for me, it isn't just the run, its the TOTAL run.

With regards to the Fedex plan, it is cleaning the drivers clock unless they do considerable deadhead. It doesn't take an idiot to figure that out. If one keeps their old contract and now only recieves 58 percent of the surcharge, its a no brainer. I don't need to drive for them or wait several months to figure that out.








Davekc
owner
22 years
PantherII
EO moderator

 

[ATeam]

For illustration purposes, lets use inaccurate numbers to illustrate a way (one of many) to think about FedEx load offers. For those who may not know, FedEx pays a percentage of the load with some other items thrown in, not a fixed rate per mile.

As I understand it, items that contribute to the revenue offered to the truck for a given load include: toll reimbursement, fuel surcharge, a percentage of the tarriff FedEx charges the customer, deadhead pay, and a couple other items that may or may not apply.

For simplicity sake, let's look at just four; tolls, fuel, tarriff, and deadhead.

Thinking in straight truck terms, let's say the load is 400 miles long with 100 miles deadhead to get to the freight. Thus the load's "all miles" figure is 500 miles.

Now, let's say the offered pay is $500, or $1.00 per mile for all miles. That's a load most straight truck drivers I know will turn down. It does not matter how much of the $1.00 is from tolls or deadhead or fuel or tarriff. $1.00 a mile is not a load worth taking.

Next, let's say the offered pay is $1,000, or $2.00 per mile for all miles. That's a load most straight truck drivers I know will accept. And again, it does not matter how much of the $2.00 is from tolls, or deadhead or fuel or tarriff. $2.00 a mile is a load worth taking.

Perhpas we are the ones who are thinking wrong, but Diane and I are accepting and declining loads now just as we did before the new FedEx compensation package went into effect. If it is a money-making load, we take it; if not, we decline it. It makes absolutely no difference to is what the fuel surcharge may or may not be on the run. We look only at the amount of money offered for all miles and base our accept/decline decison on that.

For a more realistic example, tomorrow morning we pick up a load that is 612 miles loaded, 78 miles deadhead, and pays $1,145.91.

Thus 612 + 78 = 690 miles (the "all miles" figure).

$1,145.91 / 690 = $1.66 per mile, all miles.

I don't even know how much of the $1,145.91 is fuel surcharge. I could find out easy enough but it does not matter. It is a profitable run for us. We'll run freight at $1.66 a mile from here to Sunday if given the chance.

NOTE TO NEWBIES: It would be unwise to use this $1.66 per mile example in calculating your revenue potential as an expediter. Rates vary a lot between carriers, truck types, the loads themselves, the kind of loads drivers are willing and/or able to take, and a host of other variables, one of the most important being freight availability.

 

[davekc]

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.







Davekc
owner
22 years
PantherII
EO moderator

 

[fastrod]

76 cpm or 80 cpm. That is not a lot of difference there when you are hauling that cheap.

 

[davekc]

I agree,
More economical to park it.



Davekc
owner
22 years
PantherII
EO moderator