NEWS RELEASES
For Immediate Release -
FUEL PRICES SOARING AGAIN - MOTOR CARRIERS NEED INCREASED FUEL SURCHARGES
Fort Erie, ON - January 27, 2000 - Already enduring a fuel crisis, motor carriers are faced with another steep fuel price increase of 5 cents a litre or more. Fuel prices are up again because of high crude oil prices caused by OPEC's production cuts and cold weather. The Freight Carriers Association of Canada (FCA) who monitors fuel prices on an ongoing basis reports that since July some carriers have increases as high as 50% on their base fuel price. Indications from many sources are that prices will continue to rise.
In the US, the situation is similar. Walter B. McCormick, Jr. President of the American Trucking Association has asked President Clinton to release oil from the Strategic Petroleum Reserve to offset the current shortage.
Fuel costs represent a significant portion of motor carrier's operating costs and carriers had already absorbed a large portion of the fuel increases experienced earlier this year, causing a decline in operating results. 'It is impossible for the industry to absorb these increases, they must be passed on.'
The fuel surcharge calculation, using industry average fuel cost increases and fuel to revenue relationships, results in carriers needing a surcharge of 3.6% on LTL and 8.5% on TL to offset their fuel cost increases. Many carriers have paid larger increases or have higher percentage of fuel costs than industry averages (especially long haul carriers), requiring higher surcharge percentages.
The Tariff Advisory Committee of the FCA is recommending motor carriers increase their fuel surcharge to offset the additional increase in fuel costs. They also recommend carriers keep their surcharges in effect for 30 days after the fuel prices return to their pre-crisis level to recover increases already absorbed. FCA will continue to monitor fuel prices, keeping the industry informed of changes.
The FCA represents over 90 general freight carriers in matters related to economics, costing, pricing and finances, as well as industry statistics. The FCA, whose members operate in all Provinces of Canada, has been serving the trucking industry for more than half a century. The Tariff Advisory Committee (TAC) is composed of motor carrier executives elected by the membership to monitor the industry's financial condition and make recommendations.