Test your math skills

[Coco]

My Carrier's Website quotes the following:

Boston to St Louis
24' straight truck
1181 miles
line haul $3031.64
fsc $453.67

According to the carrier's fsc chart, updated 9/18/06, the fsc rate is 15% of the line haul.

According to the carrier's addemdem to my contract dated the same date I get $.144/mi. of 1181. That is equal to $170.06

My math skills show me $283.61 is still in the coffer.

ASSUMING my layover options after delivery are Memphis or Elk Grove Village ( my layover options since the new contract have been at least 300 miles away even though I am sitting in a good express center) the DH and fsc would be $93.20. More than likely I'm going to stay put where I land, so the fsc and dh are "saved" money but if I did the unthinkable and headed to either layoer option there is still $190.41 left in what now looks like a slush pot.

NOTE: I attended a small school surrounded by oil refineries and probably suffer from some effect of breathing fumes for most of my life but I did graduate from high school and completed the required four years of math.

What am I missing?

 

[greg334]

Well I still am trying to figure that one out, but here is one.

I am sitting in my home express center (DBN) with a <75.

I check the stats on the VRU at 6am - 7 b units including me and another <75, 1 c unit I am number 8 - nothing dispatched.

I check the stats again at 11am, 4 b units, no c units - 1 a load, 2 b loads and 1 c load dispatched. I am now number 6.

These numbers don't add up and I know that someone cold sneek in here without checking in and get a run.

So I do something I try to aviod to do, I called my CC. I got another one who told me the following;

The one <75 got dispatched because of dwell time - ok he was here with some hours before I was checked in.

Another <75 got dispatched from another express center (PON) and was 45 miles away from the pickup, where I was less than 18 miles away because I am told of dwell time and the customer didn't ask for the nearest truck.

One Canadian driver was dispatched with a US to Canadian run because they are not allowed to run in the US (which I know a few Canadian drivers who have been getting US to US loads).

I can understand the first and last one but the middle one really bothers me. going outside the express center defeats the express center concept.

So now I check I am number 4

and there are 4 B units - 2 <75s', 1 C unit - nothing dispatched.

Some one please tell me what am I missing here.

 

[tec1959]

Greg when I was with Fed Ex CC I remember that If your In your home express center you will the last out If other trucks are there...I don't know If this changed...

 

[barbaba704]

Well said! So far our layover options have been at least 300 miles and as much as 450 miles. Yesterday we were in Houston and both options were Little Rock, over 350 miles away. We rejected those and stayed in Houston. There were 8 trucks there and within 3 hours we had a short run to Kilgore at a decent rate. After delivering the options were Memphis, over 300 miles, with no second options. We were just 100 miles to Dallas which is where we went. We are now number 3 in dwell time and number 1 WG. There is a whole lot of saving goin' on in the slush fund!

We are wondering if our math skills are up to the task. I grew up in a southern mill town with a couple of toxic waste dumps in the area, so I am sure I am affected too, but somethin' don't smell right (and it ain't the waste dumps either!)

George and Barbara (Barbara is the one from a southern mill town, Kannapolis, home of Dale Earnhardt, which explains a lot of things!) George is just demented!

 

[guest]

Well, it's not adding up to what we was told. Is it just me or does it seem that the rates went down not up. How can FedEx take 42% of the fuel surcharge that is being charged to the customer's,and their not paying one dime in fuel. Don't they understand that this is just going to make all the owner's pull thier trucks and go to Panther. I already know a few white glove owners going to Panther and many other will go too. I really think someone at fedex better look at this before the fleet size is under 1000 trucks.


Drive Safe
David Mayfield

 

[mrgoodtude]

Great post CoCo,
I am usually one of the 1st to get paranoid when things get slow but your observations (and all of those who posted) are in line with what I am seeing. I just wonder if this (as before) is a sign of the evolution in expedite? Revenue should be through the roof and even though we are doing ok for now we are now where close to business projections of 10% growth in fact I would estimate a 20% decline overall.
Do the powers that be know something we do not? I am just a dumb country boy at best but get the feeling that the "big 2" are culling the herd for lean times to come...
Perhaps those that survive will have $1.20 a mile freight to look forward too, or better yet .90 a mile all miles.
Mike :'(

 

[terryandrene]

Coco: Nice post, BUT

What are you missing?, you ask. The rest of the story!

When FedEx Custom Critical announced their new contractor revenue package, they could have done a better job of explaining the mechanics of the revised FSC. They should have stressed the fact that all of the monies collected from the customers would be returned to all of the contractors; those running for the FSC paying customers and those running for the non-FSC paying customers. Before going on, let's talk about where we were on the day before the revenue package took effect.

I trust that nearly all of us agree that the purpose of a fuel surcharge is to have the customer supplement those of us that purchase fuel, not to have the customer pay all our fuel costs, beyond the base charge for the shipment. The FSC of FedEx Custom Critical was set to take effect when the cost of diesel fuel exceeded $1.18. It's my understanding that the FSC percentages charged the customers were based on the desire to keep a 6 mile per gallon tractor operator's cost at that $1.18 mark. I suspect the other major carriers had comparable FSC programs. Unfortunately for the FSC paying customers, but fortunately for van and straight truck operators, the FSC was paid at the same percentage for all freight regardless of the truck size receiving the monies. What did this mean for a typical D truck using Coco's example?

Using a FSC of $453.67 for a run of 1181 miles and a diesel cost of $2.75, a 10 mpg truck would use 118.1 gallons of fuel for a total cost of $324.78. That's a nice $128 profit after all fuel is paid. That was never the intention of a fuel surcharge.

On the other end of the gravy train perspective is the gasoline powered van using $2.25 fuel. With a customer paying a $15 FSC for every $100 tariff, a van would get $58 plus the $15 FSC. In order to earn $58 a FedEx Custom Critical van on standard tariff would have to drive about 53 miles. At an average of 15 mpg, that van would use 3.5 gallons of fuel at $2.25 per gallon and spend a whopping $7.78 for each $15 received

It was great for about 6 years. Even though not all of the carrier's customers paid the FSC, the average of the revenue from those that did and those that did not pay was enough to cover the greatest part of our fuel cost. All of the van and straight truck operators went from having a great deal with the FSC profits to, what today is a fair deal and this fair deal is about as good as it gets in the traditional expedite industry. That fair deal is a FSC that gives us an effective cost of $1.20 per gallon for every truck, for every shipment.

Is there a slush fund? I would imagine that there must be monies kept in reserve to ensure that there is sufficient funds to pay all trucks the FSC on all of our authorized deadhead and revenue miles. Given the cyclical nature of this business, I suspect that the FSC account will be in the red and the black about equally until a good set of statistics can produce the optimum distribution formula.

 

[fastrod]

Or could it be that this fair deal came about because Fedex CC had to lower costs to be competitive with other companys. Fedex CC appears to be a great company to work for, but without competitive rates there will be no runs. It seems that with more carriers out there the rates are going down.

 

[guest]

Terry

Most D units are class 8 trucks and they don't get 10 MPG. My D Unit that was just in and had the rack set only gets 8.2 mpg. not 10 mpg.

Sorry Terry this is not a Fair Deal. They should give all the agent's more pay now that they have Extra money from the Fuel surcharge. And if we was making money on it then why should the customer still get charged the same thing. Just make the FSC lower and give us 100% of it. Not 58% We all are in this business to make money.

If they felt we was making money on it and it was to high for the customer and it wasn't fair that some people was making money on then why didn't that just lower it.

Drive Safe
David Mayfield

 

[RichM]

My 2cents on this issue.. I believe they were having trouble covering the runs from the large Contract Customers who refuse to pay the FSC.So they established a FSC fund that is funded by the customer base that does pay the FSC. Then by reducing the percentage paid out there will be funds available that the General Customers have paid in that can be used to offset the Customers that will not pay.

This way they can offer some type of FSC on ALL runs thus making the big guys happy and the contractors can't complain and refuse trips for lack of a FSC.

I feel that overall rates are way too low,most of the basic rates are still paying what trucks earned back in the 1990's. I can remember GM discounted D Loads at 46% paying $1.21 and that was back in 1988.

 

[kg]

This concept of "share the surcharge" will only work until the paying customers get tired of subsidizing the customers that don't pay a surcharge.What happens if a majority at contract time decide not to pay a surcharge?


just a thought

 

[TeamCaffee]

We have seen the other side of the coin on this issue! We took a discounted automotive load that normally would not have had a FSC. With the added FSC on this load it brought the ppm up to what is an acceptable run for us to take. This benefited us, the customer and also the dispatcher who did not have to ask several trucks before they would take this load. I believe the FSC will level the playing field and hopefully we will not have to turn down as many discounted runs which will in turn benefit all.

 

[terryandrene]

Dave, et al:

I'm not suggesting that I like the course that expediting has taken, or not taken. My response to Coco's thread was intended to give a rational explanation for the way I think the FSC is affecting the drivers within our group. It's no secret that tariffs have not kept pace with the cost of transportation, but for carriers to give O/O's unrealistic fuel cost subsidies is not the answer.

When we put on our first van in 1989, the standard tariff of a typical B load was 99 cents to the truck. Today, that same load's tariff is about $1.10 to the truck. Our first van cost less than $15k and our last van $30k. The price of fuel and most other commodities have tripled. So, while our overhead has tripled, the revenue received for non-specialized surface freight has only grown about 11%. The reason is competition.

When we joined Roberts Express, the only nationwide expedite carrier was the up-start Tri-State that had about 75 trucks. The only other so called expediters were the local couriers like Fred's Fast Freight and Eagle Logistics (both now defunct). A straight truck with a sleeper was advertised as a "Roberts Express like straight truck". The sleepers were little more than a 36" coffin like box between cab and box, with a crawl through opening.

Today's straight truck is often, not mostly, a class 8, C or D truck with sleepers that rival a small Winnebago in size, amenities and comfort. They are certainly nice, but not necessary to get the job done. For anyone to suggest that expedite customers should subsidize drivers' tools that are not necessary to get the job done is, I think, expecting too much. As a shipper, I would certainly balk at paying extra because and O/O showed up in a huge class 8. That would be analogous to paying $200 and hour for a plumber because he came to our house in Winnebago. That comment is not intended to be facetious.

Today there are several hundred carriers calling themselves Expediters or large carriers with Expedite Divisions, ala UPS, CRST, etc. Every one of them is vying for the same piece of freight, and everyone of them is bidding lower and lower in an effort to snatch that customer from the competition. Not only are the standard tariffs growing at a pace well below that of inflation, carriers are being required to develop discounted contracts with big businesses that promise large volumes of freight throughout the year. If any one of our carriers were to drop all of their discount customers, they would soon need to decrease their fleet size; not be able to support their full tariff customers; lose some of those customers to a carrier that could support them; they'd need to further reduce their fleet size to a point that they would have to start hauling cheap freight to get the customer back from the competition.

In summary, I think that FedEx Custom Critical and the other major players in this business are constantly juggling their lessor/lessee provisions to keep or increase their customer base and keep or increase their fleet size. Our recent FSC, DH, toll provision to our lease is just such an action. Give it a year and something else will change, but one thing is certain, discounted freight prices are here to stay and if we all refuse to take a share of that freight, our carrier will join Fred's Fast Freight and all the other defunct carriers that didn't keep pace with the competition.

 

[Coco]

Ok, I understand where everyone is coming from here but let's factor in one more part of the puzzle. Layover Options. Our last 6 runs have ended up with both layover option 1 and 2 being identical. All of these options were in excess of 250 miles. Express Centers like Wilkes Barr, Little Rock, St Mary's are not desireable places to be, especially when you have just delivered in a perfectly acceptable Express Center. I am not going to DH 250 miles to sit for 24 hours and then be sent somewhere else for $.34/mile. So FDCC keeps the money and I stay put and get another run.

Exception: After delivering in Atlanta where 21 other trucks were sitting, we took the one and only layover option of Knoxville, 213 miles away. Upon arriving we were dispatched on a run to Allentown. Atlanta to Knoxville to Allentown, $1.16/mi.:'(

Share the wealth!!!!!!!

 

[Coco]

memo to my previous post

I did check the freight in the three Express Centers above for the time I would have been checked in.

Little Rock
C-there were none
D-there were done
E- 1 load it was not a WG unit

St Marys
C-there were none
D-there were none
E-there were none

Wilkes-Barr
C-1 load it was a WG unit
D-there were none
E- 3 loads

 

[davekc]

Exception: After delivering in Atlanta where 21 other trucks were sitting, we took the one and only layover option of Knoxville, 213 miles away. Upon arriving we were dispatched on a run to Allentown. Atlanta to Knoxville to Allentown, $1.16/mi.
================================================
I think I just read something in the "Bashing " thread that is much different than this version. Too many trucks?

You made the right call. Being number 22 can't be a good thing.










Davekc
owner
22 years
PantherII
EO moderator

 

[guest]

Sorry Terry if you felt I was bashing you. I have the ute most respect for you and your wife. I just feel there are better ways to do things. Why charge one customer more money (meaning the FSC) and not charge the other, then take FSC money from the one that will pay it then add it on to the customers load that wont.

I think We All Should Say NO TO CHEAP FREIGHT


Drive Safe
David Mayfield

 

[terryandrene]

I never thought you were, Dave. I value your opinion and I was just attempting to share another opinion.

I don't like cheap freight anymore than the next O/O, but cheap freight comes with the very competative expedite business when we are leased to one carrier. Like I said above, if we each say no to all the cheap freight our respective carriers have to offer, we'll all eventually lose.

Individual expediters can say no to cheap freight and do very well financially; those expediters with their own authority can be selective and shun the cheap freight; and, expedite carriers can solicit the freigh of their choice. Leased owner operators as a group do not have the luxury of refusing all cheap freight. I'm not confusing cheap freight with non-profit freight; I won't take non-profit freight either.

 

[guest]

Good Post


Drive Safe
David Mayfield

 

[guest]

hey let them charge whatever used to drive for some lowlife owner whom everyone thinks is the greatest but yet cant seem to keep his drivers happy.sorry my emotions got the best of me

but anyways never had to worry about the fsc cause it seemed i never got paid what i was told i would be getting
again sorry very upset at what my ex-employer did to me when i left

but is now with a very generous owner who in fact does what he says and means what he does