Some honest questions about FSC

[CharlesD]

There is a lot of talk around here about fuel surcharges and how much a driver should get, etc., so I have some questions to bring up just to see exactly what the expectation is.

1. If a carrier is obligated to pass on a surcharge to the driver, is a carrier obligated to charge a FSC? What about brokers that ask for an all inclusive bid?

2. If your carrier didn't charge it, do you still want part of your pay labelled as such?

 

[LDB]

As long as the amount paid is the same as the amount offered who cares what it's called? One carrier has at times been bad about offering a load with .xx fsc and later paying the load with .yy fsc and .yy is less than .xx offered. When called down about it they have some excuse about the customer blah blah but bottom line is they cheated the truck on that run.

I know guys that if offered a load at $1.50 plus .10 fsc would turn it down saying they won't run for such low fsc but if it was offered at $1.30 plus .30 fsc would take the same load. I'll run your freight for free provided it's paying $1.60 fsc guaranteed. I'll run your load with no fsc provided it's paying $1.60. What do I care what you call it? It's the total pay per mile that matters not what you call it.

 

[Vash14]

I'd just be happy to get a fuel surcharge. For whatever reason my company pays it for local runs but not for OTR.

 

[Slo-Ride]

There is a lot of talk around here about fuel surcharges and how much a driver should get, etc., so I have some questions to bring up just to see exactly what the expectation is.

1. If a carrier is obligated to pass on a surcharge to the driver, is a carrier obligated to charge a FSC? What about brokers that ask for an all inclusive bid?

2. If your carrier didn't charge it, do you still want part of your pay labelled as such?

I agree with Leo, It dont matter how ya label it.
As long as there is fuel left in my tanks after the run. (and it aint been happening lately)The money has to be right to do it. Either fsc or rates need to be adjusted as fuel keeps going up. I know what I get as fsc, it seems it isnt coming close to keeping up or off setting my increase of fuel & oil cost.

Not trying to derail your Qs Charles but,
What I kinda what to know is,
Are carriers obligated to pay a surcharge? And if so,,Who says so? Where does it say so?
Reason I ask is so many times I hear the shipper isn't paying so we cant pass it on.

 

[chefdennis]

What Leo said...as long as the total per mile is enough, i don't care what you call it....

 

[cheri1122]

There is a lot of talk around here about fuel surcharges and how much a driver should get, etc., so I have some questions to bring up just to see exactly what the expectation is.

1. If a carrier is obligated to pass on a surcharge to the driver, is a carrier obligated to charge a FSC? What about brokers that ask for an all inclusive bid?

The obligation for a carrier to charge a FS is, if I read the link Yesteryear provided correctly] a legal one, meant to prevent some from undercutting others on bids.
The obligation to pass it along is a moral and ethical one - the party that pays for fuel should get all the FS, no excuses.

2. If your carrier didn't charge it, do you still want part of your pay labelled as such?

I personally do, as it's a part of the pay that isn't split between the owner & myself.

 

[greg334]

The obligation for a carrier to charge a FS is, if I read the link Yesteryear provided correctly] a legal one, meant to prevent some from undercutting others on bids.
The obligation to pass it along is a moral and ethical one - the party that pays for fuel should get all the FS, no excuses.

Cheri,
There is absolutely no legal obligation for the carrier or an owner to charge a FSC. Moral one yes but not legal.

The link that was provided is not the US code, it is a discussion about an amendment to one of the highway bills. Never passed and never made it into law.

 

[cheri1122]

What you say is what I understood to be the facts, but the link wasn't explicit on where [in the process of law making] it was - it could have been read as settled, rather than proposed. Thanks for clearing it up.

 

[greg334]

From that other thread;

The Congressional Record is the minutes of the congress, not the legislative record.


So let me clear this up.

CFR 39, part 137 has no section in it about FSC. It has to do with rates, who does what and how rates are passed on. The house in 2005 passed as part of the highway bill a proposed FSC amendment to CFR 39, part 137 which would have been CFR 39, part 137.13714 but it never made it out of the senate subcommittee. Both the house and senate have to pass it to become law.

You can see if you go to Thomas that there is a CFR 39, part 137.13713 but no 13714.

 

[davekc]

As I said in another thread. One will know that law exists when companies do away with fixed or flat rate FSC programs.
The ones that engage in those programs are usually keeping a portion of it.
It is true that it is the bottom line dollar per mile that makes the biggest difference.
Although............I am mindful of the ones that say you get 100 percent when that actually isn't the case. If they show deceit on the FSC, how much of a stretch is it that they are deceitful other places?
A thought to ponder.

 

[str8trk]

The shipping community will play games with FSC's as long as it remains a deregulated aspect of industry. IMHO FSC's are driven by the preferences and/or motivations of individuals in the decision making chain more so than the price of fuel at the pump.

 

[nightcreacher]

As I have stated before,when FDCC decided to change how they paid their FSC, I contacted OOIDA.Unlewss there is something in your contract,no company is obligated to pay any fuel surcharge.If your getting one without it being in your contract,just feel lucky your getting any

 

[CharlesD]

I personally do, as it's a part of the pay that isn't split between the owner & myself.

That's a good point, but what really is the difference between an owner/operator getting .75 + .15 fsc from one company or getting .90 all included from another?

 

[LDB]

My earlier comments were based on an O/O who gets the full pay. Obviously in a situation where a driver works for an owner it matters how things are identified since a good contract pays 60% of the load plus 100% of the fsc to the side paying fuel. If it's $1.20 plus .30 fsc the fuel buyer gets .72 + .30. If it's $1.50 all load pay the fuel buyer gets only .90 and if it's 0 pay and $1.50 fuel the fuel buyer gets $1.50. An O/O gets $1.50 no matter how it's labeled.

 

[Turtle]

That's a good point, but what really is the difference between an owner/operator getting .75 + .15 fsc from one company or getting .90 all included from another?

To the owner/operator, nothing.

The whole reason for the FSC coming into being in the first place was many shippers and carriers had contracted rates set in place, but rising fuel prices rapidly made those contracted rates unacceptable to the haulers of the freight. The contracts couldn't just be willy-nilly altered, so the addition of a surcharge for fuel was added, with the surcharge itself being tied to the price of fuel. Without the FSC, no one would haul their freight for the outdated contracted rates.

There are some accounting issues for how companies record FSC, even for those who bid on freight with a flat bid, as well as those bidding out the freight. Some account for FSC as overhead expenses, for example. So while a load may be bid on as all-inclusive, the winning bidder may very well break it down artificially to a more normal rate for the contractor (unless the contractor is paid on a percentage, then maybe not), so they can account for a certain percentage of the revenue as being separated out at line haul and FSC.

A carrier will get loads from bid boards, just like someone with their own authority does, and it's bid on a flat rate to haul the freight, then some of the revenue gets broken down artificially into the line haul and the FSC, even though one lump sum was bid. There are some bid boards where a carrier will bid the line haul, and then after the bid is won, a FSC is automatically added based on the contracted FSC rate they already have in place with that customer. NLMI is like that with some carriers, where the carrier may bid $1 per mile, and then after the bid is awarded a contracted, pre-determined FSC rate gets thrown in. Let's say the contracted FSC is 14 cents. The bid that gets placed is $1.00, but NLMI sees $1.17, so it's not like one carrier is bidding a $1.00 against everyone else who doesn't have contracted FSC rates who are bidding $1.20 or so. (The numbers are fictional, and should not be confused with real numbers, living or dead).

So whether you're shipping or hauling, the freight all gets bid on at basically the same rate, which is what it takes to haul it from A to B. The FSC is then separated out, either up front or at the backend, for accounting and distribution. Some carriers have to deal with FSC, some don't. But to the owner/operator, all that matters is the total of the line haul and the FSC, and whether or not it makes the load profitable.

When they make it a law that 100% of the FSC must be passed on to the contractor, then with many carriers the FSC will simply disappear. That way they only have to pay whatever-percentage of the FSC (which is what many of them do already, especially those with flat-rate FSC, like FECC).

 

[Oilerman1957]

There is a lot of talk around here about fuel surcharges and how much a driver should get, etc., so I have some questions to bring up just to see exactly what the expectation is.

1. If a carrier is obligated to pass on a surcharge to the driver, is a carrier obligated to charge a FSC? What about brokers that ask for an all inclusive bid?

2. If your carrier didn't charge it, do you still want part of your pay labelled as such?

I think it depends Charles, are you asking as an owner of a company? or as a driver?

 

[Crazynuff]

To the owner/operator, nothing.

The whole reason for the FSC coming into being in the first place was many shippers and carriers had contracted rates set in place, but rising fuel prices rapidly made those contracted rates unacceptable to the haulers of the freight. The contracts couldn't just be willy-nilly altered, so the addition of a surcharge for fuel was added, with the surcharge itself being tied to the price of fuel. Without the FSC, no one would haul their freight for the outdated contracted rates.

There are some accounting issues for how companies record FSC, even for those who bid on freight with a flat bid, as well as those bidding out the freight. Some account for FSC as overhead expenses, for example. So while a load may be bid on as all-inclusive, the winning bidder may very well break it down artificially to a more normal rate for the contractor (unless the contractor is paid on a percentage, then maybe not), so they can account for a certain percentage of the revenue as being separated out at line haul and FSC.

A carrier will get loads from bid boards, just like someone with their own authority does, and it's bid on a flat rate to haul the freight, then some of the revenue gets broken down artificially into the line haul and the FSC, even though one lump sum was bid. There are some bid boards where a carrier will bid the line haul, and then after the bid is won, a FSC is automatically added based on the contracted FSC rate they already have in place with that customer. NLMI is like that with some carriers, where the carrier may bid $1 per mile, and then after the bid is awarded a contracted, pre-determined FSC rate gets thrown in. Let's say the contracted FSC is 14 cents. The bid that gets placed is $1.00, but NLMI sees $1.17, so it's not like one carrier is bidding a $1.00 against everyone else who doesn't have contracted FSC rates who are bidding $1.20 or so. (The numbers are fictional, and should not be confused with real numbers, living or dead).

So whether you're shipping or hauling, the freight all gets bid on at basically the same rate, which is what it takes to haul it from A to B. The FSC is then separated out, either up front or at the backend, for accounting and distribution. Some carriers have to deal with FSC, some don't. But to the owner/operator, all that matters is the total of the line haul and the FSC, and whether or not it makes the load profitable.

When they make it a law that 100% of the FSC must be passed on to the contractor, then with many carriers the FSC will simply disappear. That way they only have to pay whatever-percentage of the FSC (which is what many of them do already, especially those with flat-rate FSC, like FECC).

Great post but if the FSC disappears smart contractors will also disappear from that carrier .
100% of the FSC is required to be passed on to the fuel purchaser in government contracts .Federal Register | Defense Federal Acquisition Regulation Supplement; Motor Carrier Fuel Surcharge (DFARS Case 2008-D040)

 

[x06col]

That's a good point, but what really is the difference between an owner/operator getting .75 + .15 fsc from one company or getting .90 all included from another?

Reads to me like Charles is "rassl'in" that math challenged contractor thingie. I guess you'll have to change your accounting so's it reads like they want, or.......move on to the next contractor.

 

[davekc]

It really comes down to how honest the carrier wants to operate. Nothing more than that.
There are several that say they pay "100 percent" Not even close. And the ones that pay a flat rate, that 100 percent claim is a direct lie as well. Freight is not booked that way unless a carrier only has one customer. If they find it easy to lie on the FSC, probably a good chance they are doing the same other places.

With that said, I would just go by what was billed to the shipper and provide a copy to the driver. Very simple.
Regardless of whether there is a FSC, then the driver can determine whether it is profitable to haul it.
And of course the ones that don't provide that information, well.....not hard to figure out why.
And when I say show a copy of the billing, not something that is ran through a dummy third party entity that the carrier owns.
That is just reflective of foolish game playing.

 

[x06col]

Surprisingly freight IS billed "that way". Meaning....all in. It really has nothing to do honesty, or creative math or anything else, it is just straight forward business. If you can't run the freight for what it was offered then don't run it. Pretty simple really.