Fuel Surcharge: Where Does The Baseline Come From?

Discussion in 'Ask An Owner Operator' started by Nootherids, Jan 25, 2011.

  1. jdrentzjr

    jdrentzjr Road Train Member

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    I will agree that a FSC would be a valuable tool for negotiating long term contracts. I wish you much success.
     
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  3. Markmo

    Markmo Bobtail Member

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    A lot of folks still use the $1.15-$1.30 baseline. It doesn't matter what you use as a baseline value as long as you have the right total compensation.

    Those values being from the 1990's don't go out-of-date as some here have suggested. Some shippers may prefer the $2.00-$2.50 baseline. But if your mpg is set correctly, last years or last decades fuel formula will still give valid results.

    As one application suggests, you can set your baseline to zero and calculate your fuel costs for the entire trip. For comparison with historic data, it is best to just stay consistent and not mess with the baseline.
     
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  4. Nootherids

    Nootherids Light Load Member

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    You have a point. Many people are still using the 1.15-1.30 baseline but for me that seems unjust to the shippers. There needs to be a number that is more representative of the past 2 decades which all carriers should've learned to adjust to. But you are right that there should be some level of consistency in the baseline. I'm thinking of declaring a set baseline equal to that set by the DOD which should be reviewed every several years and adjusted accordingly to fair pricing standards. For those carriers still declaring a baseline of 1.30 they should not have ANY complaints about fuel prices since the make the shippers cover way more than 50% of it. Just not fair business practice in my opinion. And in the end it hurts the entire society with the higher costs of consumer products for all, unfairly.
     
  5. Blackjack

    Blackjack Light Load Member

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    Any baseline you choose is completely arbitrary. The customer is ultimately paying for all of the fuel (and all of the truck's other expenses), regardless of whether you have a low rate and a high FSC, or a high rate and a low FSC. Using zero as a baseline makes the most sense to me.
     
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