Fuel Surcharge Question

M

mbentler

New Member
Jul 13, 2009
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I have a question regarding the FSC.

A carrier quotes me a rate of $2.77 per mile for 2000 mile load, prior to the FSC being applied, or $ 5,540.00. Using the FSC of today, 31% and 5 MPG this should mean that I have an FSC charge of $ 310.00 (the cost over the 2.50 gallon that fuel is (where the FSC started), but that is not the rate I am given. I am given a rate of $1,717.00 which is 31% of the truck total truck rate, making my total quoted rate $7,257.00. Big difference between $5,850.00, with the FSC applied to the fuel, and $ 7257.00, with the FSC applied to the truck rate.

The reason this is a question in my mind is a client sat down and figured out he wasn't being charged the FSC on the fuel consumed but on the truck as a whole. Now he thinks we should supply him with fuel receipts to backup the charging of the FSC.

Anyone have any thoughts on this?
 
First the 31% is cheap on the FSC (Canadian for next week should be 37.3% and the US should be 48%)and the carrier is charging correctly, if your customer is such a whiz tell him to buy a truck and operate it and figure out how it really should be charged. I love these people who have never owned a truck thinking they know how things work. Last month fuel was 32% of our expenses by far the biggest expense and it's only going to get worse.
 
Does this customer want to see your phone bill, property tax bill, lease payments, driver wages, etc?

I couldn't help it.

Quote them all in and advise it's good for 5 days, then update your quote weekly.

Happy Thursday (more like a Friday).

Mike
 
The rate

If this is really the rate , Call me anytime. I doubt I would get $2.77 a mile with the FSC included on a 2000 mile run.
Would this be for oversize double drop stuff?
 
mbentler said:
I have a question regarding the FSC.

A carrier quotes me a rate of $2.77 per mile for 2000 mile load, prior to the FSC being applied, or $ 5,540.00. Using the FSC of today, 31% and 5 MPG this should mean that I have an FSC charge of $ 310.00 (the cost over the 2.50 gallon that fuel is (where the FSC started), but that is not the rate I am given. I am given a rate of $1,717.00 which is 31% of the truck total truck rate, making my total quoted rate $7,257.00. Big difference between $5,850.00, with the FSC applied to the fuel, and $ 7257.00, with the FSC applied to the truck rate.

The reason this is a question in my mind is a client sat down and figured out he wasn't being charged the FSC on the fuel consumed but on the truck as a whole. Now he thinks we should supply him with fuel receipts to backup the charging of the FSC.

Anyone have any thoughts on this?
Click to expand...


I use a fuel surcharge system by the mile that uses the Dept. of Energy (DOE) weekly retail diesel price, which is the standard that others use. It should be about $0.67/mile. Calculate your fuel that you want to charge based on that and compare it to your fuel cost. If your fuel cost is more than the fuel surcharge revenue, calculate what percentage of revenue the fuel represents and then charge a percentage fuel surcharge that will cover that cost and then some. I always base fuel on 6.5 miles/gallon as a worst-case fuel consumption average then multiply by 3.785 and then the cost per litre you're paying to get a rough fuel cost if you're (hopefully) buying all your fuel in Ontario. Otherwise, feel free to use your gallon estimate and multiply by the DOE fuel average.
 
alx said:
If this is really the rate , Call me anytime. I doubt I would get $2.77 a mile with the FSC included on a 2000 mile run.
Would this be for oversize double drop stuff?
Click to expand...

If I don't get over $3.00 per mile for legal flat/step freight it can sit where it is and if they want it tarped that is another $200.00 to $500.00 per load depending on how ugly it is.
 
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mbentler said:
I have a question regarding the FSC.

A carrier quotes me a rate of $2.77 per mile for 2000 mile load, prior to the FSC being applied, or $ 5,540.00. Using the FSC of today, 31% and 5 MPG this should mean that I have an FSC charge of $ 310.00 (the cost over the 2.50 gallon that fuel is (where the FSC started), but that is not the rate I am given. I am given a rate of $1,717.00 which is 31% of the truck total truck rate, making my total quoted rate $7,257.00. Big difference between $5,850.00, with the FSC applied to the fuel, and $ 7257.00, with the FSC applied to the truck rate.

The reason this is a question in my mind is a client sat down and figured out he wasn't being charged the FSC on the fuel consumed but on the truck as a whole. Now he thinks we should supply him with fuel receipts to backup the charging of the FSC.

Anyone have any thoughts on this?
Click to expand...

A fuel surcharge regardless of what calculation is used to arrrive at the number is based on the cost of the freight charges. If it is a $1000.00 load plus 30% fsc then it will now total $1300.00.
The increased cost of fuel as a percentage of the running costs of the truck is only used to calculate what the % fuel surcharge should be, but it is always applied to the total freight rate.

This scenario works best when the all carriers are charging similiar rates to begin with such as the old NFTB system. But today when rates are all over the map it is tough to pin point a % for fsc that is right for everyone.
 
fsc

Carriers generaly, work with their owner operators. They are vewied as an important asset and shafting them in any way would not be very productive.

O/O's are not as stupid as certain people want to make out. They generally talk amongst themselves and are pretty knowledgeable about their operating costs.

It would serve no purpose to mislead them as the good ones would leave.

The fuel surcharge is a complex animal and depending on who the client is that is paying, it varies.

One of our accounts is one of the largest companies in N.A. and they shaft us with the fuel surcharge with a very complex formula that deviates from the norm. Their terms are take it or leave it.

We swallow the disparity and simply pay our O/O's the difference.

Trucking companies do not succeed by not paying their O/O's their due.
 
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Alx thank you for the response. It never sat well with me when the contract was sign at 80% of ALL revenue....but they were the only ones hiring.
 
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