Fuel Surcharge

[AccountsReceivable@DRC]

I am impressed with all of these posts and the knowledge regarding fuel, how to handle it and proper calculations.

Please forgive me...this has to be one of the most boring topics I have read on this forum in a long time.

And I won't be editing it....I have tried....just fall asleep after the first few sentences....

TGIF

 

[Manitoba Moose]

Ouch...

That hurts lol...

 

[AccountsReceivable@DRC]

Ouch...

That hurts lol...

Oh no Manitoba Moose...you keep going with this...the info is valuable to many members...

I'll just keep changing the "slides" when the next chart, graph or calculation is required for the "presentation"...

ALX can advise me "next slide please".....

 

[Bulldog5221]

Bulldog, I think you are assuming that the people who gave you this load are pocketing a percentage of the base rate plus the 30% FSC. My question is, how do you know this? In my case, and I think in most other carrier's places rates have either remained unchanged or gone down over the last few years. The FSC has become the only increase a carrier can expect from most customers. How the FSC gets distributed is not your concern. Whether there is a 5% or 50% FSC or the base rate is $1000 or $2000 should not matter to you, what should matter is that you got what you needed to come home. If you didn't, then that is your mistake not theirs.

I`m assuming nothing. I know what the base rate was because I asked the customer I delivered to and he showed me his invoice for the load . It showed his freight cost, plus his FSC for having the load delivered to his store, so I know exactly how how much I did not get.

 

[T800]

Hi Warex
My point is that the broker/carrier quoted me x dollars for a load that is not including the FSC. Their quote is so many % of the freight for the load and there is no FSC in the quote. If they want to quote so many dollars including FSC fine, if they want to quote so many dollars and FSC on top of that fine. Just don`t quote me a rate and tell me you are paying so many % of gross when you are not.
And to clarify I am not an o/o, I own a trucking company , and we have moved many brokered loads as backhauls. I agree that if you agree to the quote than that`s what you agreed too. My post was a heads up to all who may come up short on their share of the load. Check the shippers FSC and make sure your agreed upon rate includes it.Why leave 24.5% on the table.?
Just my opinion, excuse me for making it look like a rant.
Have good one!

BULLDOG What is a backhaul??????? Can you tell me where i can buy backhaul fuel or backhaul licence or insurance or GET A GOOD DEAL ON BACKHAUL TIRES.

 

[Bulldog5221]

BULLDOG What is a backhaul??????? Can you tell me where i can buy backhaul fuel or backhaul licence or insurance or GET A GOOD DEAL ON BACKHAUL TIRES.

Dear T800,
Sorry to have upset you. I have used a term that you seem to find offensive. I consider a backhaul as a load moved on the return phase of trip that will place my equipment at a location where we will load another FRONTHAUL load. My FRONTHAUL loads are always priced to pay for moving the truck to the next FRONTHAUL location. I use BACKHAULS as an expense reduction for my FRONTHAULS, and if they do not contribute to reducing my expenses, they can stay where they are.
I use the same FUEL, LICENSE, INSURANCE, TIRES, as well as the same DRIVERS: FRONTHAUL or BACKHAUL!

Have a great day T800

 

[T800]

Dear T800,
Sorry to have upset you. I have used a term that you seem to find offensive. I consider a backhaul as a load moved on the return phase of trip that will place my equipment at a location where we will load another FRONTHAUL load. My FRONTHAUL loads are always priced to pay for moving the truck to the next FRONTHAUL location. I use BACKHAULS as an expense reduction for my FRONTHAULS, and if they do not contribute to reducing my expenses, they can stay where they are.
I use the same FUEL, LICENSE, INSURANCE, TIRES, as well as the same DRIVERS: FRONTHAUL or BACKHAUL!

Have a great day T800

Hmmmm If your customer is willing to pay you enough to returm empty to your home base or to go get your next load then why screw up the market in other areas by cutting the rates for your so called BACKHAUL. The last time i checked it cost me the same to go both ways. Its rate cutters like you that have put this industry in the predicament it is in. Keep it up and all the load brokers and shippers will think every load is a BACKHAUL.

 

[alx]

All done with the rant on fuel tax

I beleive I have vented enough about the FSC issue.
Now , that backhaul issue sounds interesting!! Finished my work too fast today. ( hope the US Economy picks up soon!!!

 

[noproblembuddy]

For those of us that can remember that far back, fuel surcharges were intended to be a temporary measure to help cushion dramatic spikes in crude oil prices caused by political turmoil abroad. At the time, everyone believed that oil prices would eventually settle back down and the surcharge wouldn't be required any longer. Funny, that's what they said about Income Tax that was introduced to help pay for the First World War and would be abolished once the bills were paid! I have always thought the best way to compensate O/O's, was to pay them strictly a percentage of the load revenue. They're the ones using the fuel as they see fit, so they should be the ones paying for it. The company should ensure that they are charging their customers enough, either all inclusive rates or an additional FSC, to compensate the O/O properly. Really, 80% of a $2000.00 load is still 80% whether or not the $2000.00 is made up of base rate + FSC or not.

Fuel surcharge is here to stay for sure and there's really no way it will be abolished if one is familiar with how fuel surcharge pay charts are constructed. One issue I know of is when you end up negotiating an "all in" rate, which is always to the broker's advantage, because fuel surcharge essentially is the gross margin. Most brokers end up giving away what is their base rate and count on fuel for profit. I agree that it is wrong to charge "fuel" when you didn't buy any or didn't pass it along to the chap who did. It really should be named for what it is: customer markup, not fuel. A carrier can legitimately call it a fuel surcharge because they are the ones purchasing it.

When I was brokering freight, I know that companies with lean rates would have to do some fancy "gazintas" as Jethro would say. You'd have to calculate a rate to sell a load for so that you make an acceptable profit but not give away most of your base and hopefully none of your fuel surcharge. This was always true for customers that had fuel surcharges that were set either once a month or had fuel surcharge rates that were just at the poverty line, if you know what I mean. It's the classic "trying to make a dollar out of 15 cents" thing. This kind of thinking will always keep rates as "all in" to the carrier. Some brokers still quote all in rates to their customers just to capture revenue and secure an order, so there really is no room to add fuel when they've boxed themselves in from a margin perspective.

I think owner operators get the short end of the stick when it comes to fuel surcharge and everything else, to be quite frank.

 

[noproblembuddy]

Forgot to point out one really great example I know of when it comes to wanting fuel surcharge but not paying it (or doing so begrudgingly) and that is Kriska. They expected to be paid their base plus their border surcharge (come on! really!!! who is getting this fee these days anyway!?) AND their mileage fuel surcharge when a load was being given to them...which they practically demanded, like it was their load. But when they had freight, they didn't pay in the same manner that they expected from the people who gave them freight.

 

[Groupe Levasse]

Well guys let me jump in this crunchy subject;

As a carrier, I charge the customer the fuel surcharge and pocket it as we are the ones buying the fuel too.

When it comes to brokering out a load, I ask that they give me an ALL IN rate, and go from there. For the carrier and the broker really there is only one important thing: The Bottom Line. Are you making a profit?? I don't know too many people running for free. Even at the lowest rate someone HAS to make a profit.

When a business asks me for a rate, they usually want an all-in rate too. I make them a rate and ALWAYS consider the FSC in my ''all-in'' price.

Bottom line is that a carrier who bids on something is free to make up any calculations he wants, as long as he's making a profit, it's all good. Why go into elaborate calculations???

As far as backhauling goes...I don't think you should run under when taking a load to come home.... costs the same to run down as it does to come back up...But I do understand that some load brokers will try to cut your rate if they know you're stuck far from home empty...

 

[Dave in London]

I think Groupe Levasse has it right.
IMO what the carrier or broker gets for FSC has no bearing on what the o/o or truck actually gets for FSC.
FSC to the customer, (10 years after FSC started) really has no direct connection anymore on actual fuel price. It's a manipulation of margin/rates/etc. I don't know anybody that calculates their costs on those low fuel price numbers anymore.
Of coursethere are a ton of people I don't know.
When it comes to the o/o, I maintain his FSC needs to be an in house number that makes them whole in relation to the start of their contract, irrespective of what is received or paid out.
I'm just impressed most guys on here are genuinely concerned about treating the owner ops fairly. I hope while they are doing this they aren't using the dispatch software's "delta factor" to reduce the gross of the load before paying out lol.

 

[Bulldog5221]

Hmmmm If your customer is willing to pay you enough to returm empty to your home base or to go get your next load then why screw up the market in other areas by cutting the rates for your so called BACKHAUL. The last time i checked it cost me the same to go both ways. Its rate cutters like you that have put this industry in the predicament it is in. Keep it up and all the load brokers and shippers will think every load is a BACKHAUL.

Dear T800,

You are still upset with me. I believe it is because you don`t understand simple transportation economics. Let me explain it to you. I`m not screwing up the market anywhere, FREIGHT MOVES AT COST. What ever it costs is what it costs. If there is a shortage of trucks covering that lane, then rates are higher and if there are too many trucks for the freight available , then the cost for the shipper is less.Surely you can understand this ?
My truck goes from point A to point B and what ever it costs me it costs me. My truck goes from point B to Point A and whatever it costs it costs me. My rate charged to customer A includes whatever it costs me to get back to A from B plus a profit margin. My load from B to A for a broker offsets my expenses on the original A to B move. Every cent is profit because my costs were covered on the original A to B move.
I have been in business for 38 years and I know how and why to price freight. My business is based on service and that is why I still have several of our original customers shipping with us. I started when you needed customers and their support to get the authority you needed to haul their freight, unlike today when anybody can buy a plate and phone a load broker. I don`t haul broker freight one way and broker freight the other way, I`ll leave that to you. I haul brokered freight when it will make me some money otherwise they can get someone else.
You seem to be hung up on the term BACKHAUL and can`t fathom that it might mean more than just a cheap rate.
My original post was that I had an issue with brokers keeping the FSC when it should be in the quote. Why should they pay you 85% of 72% instead of 85% of 100 %?
And you think I`m screwing up the market, Boy I`m actually laughing out loud as I reply to you.
No charge for the lesson T800, your welcome

 

[lowmiler88]

I agree with you Bulldog, we want to make X per mile, our truck leaves our yard and returns to our yard and for every mile driven we want to make X.........how you make it is not relevant as long as you make your X. The problem people don't seem to understand is that my X is different from the next guys X and the next guys X. My X with 50 trucks is completely different from a guy with 5 trucks. I always tell our customers that we are not the most expensive or the cheapest but we will get the job done. Don't worry what other people are making as long as you are making what you need.

 

[loaders]

Exactly lowmiler! Fuel surcharges, border surcharges, etc., etc. are all just a part of what you need to make your business profitable, a part of what you refer to as "X". Granted, I suppose there are some shippers and some brokers who try to sell rates for return loads to Canada at a discount, which is strange because as was said earlier, it is the same miles there as back and therefore the same cost. The bottom line is; know what your costs are, know what you need as a profit margin, and then price your services accordingly and look at what you are getting for each "round trip". Long term relationships with customers are not built on price, they're built on good service, day in and day out.

 

[T800]

Dear T800,

You are still upset with me. I believe it is because you don`t understand simple transportation economics. Let me explain it to you. I`m not screwing up the market anywhere, FREIGHT MOVES AT COST. What ever it costs is what it costs. If there is a shortage of trucks covering that lane, then rates are higher and if there are too many trucks for the freight available , then the cost for the shipper is less.Surely you can understand this ?
My truck goes from point A to point B and what ever it costs me it costs me. My truck goes from point B to Point A and whatever it costs it costs me. My rate charged to customer A includes whatever it costs me to get back to A from B plus a profit margin. My load from B to A for a broker offsets my expenses on the original A to B move. Every cent is profit because my costs were covered on the original A to B move.
I have been in business for 38 years and I know how and why to price freight. My business is based on service and that is why I still have several of our original customers shipping with us. I started when you needed customers and their support to get the authority you needed to haul their freight, unlike today when anybody can buy a plate and phone a load broker. I don`t haul broker freight one way and broker freight the other way, I`ll leave that to you. I haul brokered freight when it will make me some money otherwise they can get someone else.
You seem to be hung up on the term BACKHAUL and can`t fathom that it might mean more than just a cheap rate.
My original post was that I had an issue with brokers keeping the FSC when it should be in the quote. Why should they pay you 85% of 72% instead of 85% of 100 %?
And you think I`m screwing up the market, Boy I`m actually laughing out loud as I reply to you.
No charge for the lesson T800, your welcome

I understand transport economics very well. That is why i know it costs me the same to run south as it does to run north or to run east as it does to run west . Just because you get a decent rate one way does not mean you have to cut the rate to come back. As stated before it is rate cutters like you that have really made a mess of this industry. As for your term "BACKHAUL" i have not been able to find that word in any dictionary so it must be something that "RATE CUTTERS" invented to try and justify their actions. I am sure the laugh will be on you when you go belly up hauling your cut rate freight. ROFLMAO

 

[noproblembuddy]

I understand transport economics very well. That is why i know it costs me the same to run south as it does to run north or to run east as it does to run west . Just because you get a decent rate one way does not mean you have to cut the rate to come back. As stated before it is rate cutters like you that have really made a mess of this industry. As for your term "BACKHAUL" i have not been able to find that word in any dictionary so it must be something that "RATE CUTTERS" invented to try and justify their actions. I am sure the laugh will be on you when you go belly up hauling your cut rate freight. ROFLMAO

I think what he's trying to tell you is that you look at the round trip, the basic premise is that your miles should average out as close as possible to the desired $/mile figure you need after you've figured in dead miles and so on. For example, a company I know of expects $2.50 to $2.60 per mile on all miles round trip. So if you look at a 500 mile run (let's say to Chicago for argument's sake and ease of math), on paper you'd need to be pulling $2500 (assuming you're a full load carrier.) We know the outbound rate to Chicago on the open market can vary wildly so let's say $750 if you stick to your guns. Therefore, you need to see on the return is $1750. Are you going to get that rate? I know I can get $1600 coming back but I also know a lot of brokers still think $1150 is the rate back from Chicago too. Depends on who you know and who you talk to. If you get $1400 coming back, your trip averaged out at $2.15/mile (assuming you didn't have to deadhead anywhere past your origin and destination) which is respectable. You have to make things pay. This rule quickly goes out the window if you run into any of the cowboy and banjo states where backhauls are not guaranteed.

 

[Bulldog5221]

I understand transport economics very well. That is why i know it costs me the same to run south as it does to run north or to run east as it does to run west . Just because you get a decent rate one way does not mean you have to cut the rate to come back. As stated before it is rate cutters like you that have really made a mess of this industry. As for your term "BACKHAUL" i have not been able to find that word in any dictionary so it must be something that "RATE CUTTERS" invented to try and justify their actions. I am sure the laugh will be on you when you go belly up hauling your cut rate freight. ROFLMAO

I know we are not to make this personal, but you use terms like rate cutters like it`s a curse word and tell me I`ve made a mess of the industry, so I think you have stepped put of bounds with your pitiful attempt to belittle me and the points that I have made.
You don`t understand much of anything , as per your posts. BACKHAUL is a term that has been around since the first wagon train was loaded up and sent down the trail, and if it`s not in your dictionary, get a new one.
If I and countless others choose to use it to refer to the load or trip that moves the truck back to base or to it`s next load, so what???
I did not cut any rate, I accepted a load for a agreed price and found out later the price did not include the FSC paid by the shipper. So how did I cut the rate??
My original post was in regards to this!
You can`t understand this ????
The only statement about RATECUTTERS on this thread was by you, and what can I say about someone who stoops to quoting himself. LOL
I do get decent rates and use BACKHAULS to improve my bottom line, I don`t live on BACKHAUL rates, I use them to recover some or all of my OUTBOUND costs. TRANSPORT ECONOMICS : MAKE SURE YOU SHOW A PROFIT ON EACH MILE RUN!!! Another free lesson for you LOL.
You should worry more about your future then mine, I`ve been in business for 38 years and you think I don`t know how to price freight and know how to show a profit??
Dream on T800.
.

 

[T800]

I know we are not to make this personal, but you use terms like rate cutters like it`s a curse word and tell me I`ve made a mess of the industry, so I think you have stepped put of bounds with your pitiful attempt to belittle me and the points that I have made.
You don`t understand much of anything , as per your posts. BACKHAUL is a term that has been around since the first wagon train was loaded up and sent down the trail, and if it`s not in your dictionary, get a new one.
If I and countless others choose to use it to refer to the load or trip that moves the truck back to base or to it`s next load, so what???
I did not cut any rate, I accepted a load for a agreed price and found out later the price did not include the FSC paid by the shipper. So how did I cut the rate??
My original post was in regards to this!
You can`t understand this ????
The only statement about RATECUTTERS on this thread was by you, and what can I say about someone who stoops to quoting himself. LOL
I do get decent rates and use BACKHAULS to improve my bottom line, I don`t live on BACKHAUL rates, I use them to recover some or all of my OUTBOUND costs. TRANSPORT ECONOMICS : MAKE SURE YOU SHOW A PROFIT ON EACH MILE RUN!!! Another free lesson for you LOL.
You should worry more about your future then mine, I`ve been in business for 38 years and you think I don`t know how to price freight and know how to show a profit??
Dream on T800.
.

Ok i will try and explain this as simply as i can. If you are based out of Toronto and you take a load from Toronto to Vancouver for $3.00 per mile and then you load out of Vancouver for $1.50 per mile back to Toronto the rate has effectively been cut in half. Next week a company from Vancouver is looking for a load to Toronto for $3.00 per mile and he can not get one because the shipper tells him that the company that moved it last week moved it for half his price and he should be able to move it for the same price. So i hope that this can make it easier for you to understand what your "BACKHAUL" rate does to a market. Please do not try and tell me this does not happen because i run into it everyday. My usual response to that is "well you better call the guy that moved it for a cut rate last week and get him to move it again this week." About 50% of the time i will get the move for my rate the rest they find somebody willing to work for nothing to move it eventually. As far as you complaining about a broker keeping the FSC he is just adding that to the 50% of the freight rate that was left on the table and laughing all the way to the bank. He now knows he can get his loads moved and he can put 75% profit in his pocket all he has to do is wait for a "BACKHAULER".
This industry can be a whole lot more profitable if everyone would get on the same page when it comes to rates.
As far as your 38 yrs. in this industry then i guess we both have one thing in common we just have a difference of opinion on rates. I am not trying to cut anyone up here but i am very vocal when it comes to this BACKHAUL bs. Hope this explains my viewpoint on this subject.

 

[Bulldog5221]

Ok i will try and explain this as simply as i can. If you are based out of Toronto and you take a load from Toronto to Vancouver for $3.00 per mile and then you load out of Vancouver for $1.50 per mile back to Toronto the rate has effectively been cut in half. Next week a company from Vancouver is looking for a load to Toronto for $3.00 per mile and he can not get one because the shipper tells him that the company that moved it last week moved it for half his price and he should be able to move it for the same price. So i hope that this can make it easier for you to understand what your "BACKHAUL" rate does to a market. Please do not try and tell me this does not happen because i run into it everyday. My usual response to that is "well you better call the guy that moved it for a cut rate last week and get him to move it again this week." About 50% of the time i will get the move for my rate the rest they find somebody willing to work for nothing to move it eventually. As far as you complaining about a broker keeping the FSC he is just adding that to the 50% of the freight rate that was left on the table and laughing all the way to the bank. He now knows he can get his loads moved and he can put 75% profit in his pocket all he has to do is wait for a "BACKHAULER".
This industry can be a whole lot more profitable if everyone would get on the same page when it comes to rates.
As far as your 38 yrs. in this industry then i guess we both have one thing in common we just have a difference of opinion on rates. I am not trying to cut anyone up here but i am very vocal when it comes to this BACKHAUL bs. Hope this explains my viewpoint on this subject.

The only thing we agree on is that we disagree, lol
Keep on trucking T800