Fuel surcharge

OK, back on track. Discussion was about why "I" preferred spot market loads that didn't not break out FSC. And it was all about a strategy that I have had some good success with in getting a rate up on repeat loads.

And I still stand by my statement that in the spot market FSC is meaningless. I did not say that knowing your cost of fuel was meaningless. But I know guys that will not work with good paying brokers because they will not break it out - or as the say they are keeping it.

 

I agree with Bill, I don't care if the load only has .10 per mile built into it or $1 a mile for fuel surcharge. I have a number in my head for just about every load and situation, if the load doesn't pay per mile with everything included what I want I don't haul it. Who cares how much the fsc is, if a load pays $2 a mile plus .50 fsc or just $2.50 a mile total with no fsc broken out whats the difference? Nothing, in the end its all the same money. Bill is on to something here, doing repeat loads for a "all in" mentality is good business. When fuel goes up so does the "all in" rate. When fuel goes down his rate in most cases will not change, but those of you that are so stuck on fsc? You will take a pay cut.

 

Already reaping benefits from this. I could be breaking out a fuel surcharge on every load and have those loads adjusting up or down with fuel prices. A couple of months or longer ago fuel was about the same price as it is now on average, then we had a few weeks period where it spiked to $4 a gallon on average. When it spiked my rate on loads I run regularly went up. The broker was ok with that. Now that it's dropped back down 15 to 20 cents less and back to where it was at I am still getting that same higher rate. They are used to me doing certain loads for that certain amount and don't question anything... I would get 100% of any surcharge that was broken out and have a short term gain, longer term I think having FSC all in on the rate will put me ahead even more, being able to creep the rates upwards like that with fuel fluctuations and yet never going back downwards. Actually that could be a wash I really don't know because I've never done math on it. It just makes better sense to get an all in rate on spot and when your rate goes up with fuel it never goes back down with it. Fuel surcharges are almost like factoring, addictive.

 

Don't even need a spread sheet, a standard ledger works just fine. The world ran fine on paper ledgers for hundreds of years (and stone before that )

 

The SUPERMARKET does it too.

When fuel almost hit $5 (or did, in the NE) a few years ago - everything on the shelves went up. When fuel dropped back down (fall of 08 ) - did the cost of goods on the shelves drop?

NO...

WE had "gotten used to paying it".

EXACT SAME CONCEPT HERE.

WHO CARES whether it's broken out? You haul for YOUR RATE - adjust for increased operating expenses, and if expenses (fuel) goes down - hold your rate (that they're already used to paying).

Rick

 

Oil companies have done the same thing, tho it's not as noticeable. When fuel went from $1.25 back in 2004 to almost $4.50 in 2005 everyone was complaining. But then it went back down to around $2.50 and everyone was happy, even tho the price per barrell was back at the 2004 price, it was up $1.00+ but everyone was so used to the high price that when it went down a bit everyone was satisified. Gas is now $3.45 at most places, but it should be around $2.00, but people pay it saying "thank god it's not $5 a gallon again this year"

 

There is a difference between a single O/O and a company,which he now has. Mutltiple trucks and trying to compare gross revenues over time is an exercise in futility. As a company his employee's(O/O's) should be able to expect a continueing rise in the pay. Thus the remark about memory.

As far as the broker remark(and i broker at a 7-1 ratio to my company and O/O trucks) the very idea that a broker is paying better than direct is ridiculous.(except in the very rare case) With multiple trucks and a brokerage(which he has)the higher paying direct should be no problem. If you can't do it yourself hire,a good salesperson.Expensive but pays off in the long run.

 

I can't speak for his other drivers but in my case I know the spot I'm hauling is paying more than any of the contract every day loads out of the same locations. Granted, it would be paying even more if it was direct but it's not. I'll take what I can get for now and be happy I'm certainly not getting screwed over. You have no idea what you're talking about in my case cause you don't even know what I'm doing.

 

I don't know why people don't want to buy the idea that spot freight pays higher. Remember, this is a one time rate, so a higher one is easier to bite on. On contract, most of the time you bid at an average rate.. not a high one, in order to win. If you understand spot freight, you will understand why it pays higher.

 

When I sell my product, I don't add an "electricity surcharge" (That's been going up). The price is the price. How much can I sell my product for?

Fuel is simply a cost of doing business. I burn about 1000 gallons of #2 oil a week at my plant to run the boilers. Should I start adding a line item for fuel surcharge? No, it would sound and look ridiculous. How it's become accepted in trucking is absurd to me.

If you need to add a separate charge for fuel to make sure you cover your costs, then you probably don't know your costs to begin with. (Perhaps you should also throw on a tire surcharge, reefer repair surcharge, oil change surcharge, food surcharge, inspection surcharge......)