TRUCKING COMPANIES CAN’T AFFORD EXCEPTIONS TO THE FUEL SURCHARGE PROGRAMExpense Increases Summary TableFort Erie, Ontario, February 2003 – FCA’s current Canadian Domestic Fuel Surcharge Calculation is 6%-LTL and 14.2% TL (billed weight 10,000 lbs. or over). This fuel surcharge calculation is based upon 100% of the industry’s customer base paying the fuel surcharge.
To the extent that a trucking company has any exceptions to the full fuel surcharge percentages, the company is failing to offset fuel cost increases. The 23% increase in fuel prices over the last two months illustrates that fuel prices are too volatile to be treated in the same manner as other costs. Exceptions to the fuel surcharge calculation are costly. For this reason, FCA recommends that no carrier enter into a contract that prohibits a fuel surcharge.
What’s the impact on a trucking company’s bottom line if their customers are not paying the fuel surcharge? A truckload trucking company with a net profit of 3 cents per dollar will give away 100% of it’s profit if 25% of it’s customer base doesn’t pay a fuel surcharge or if 50% of it’s customer base pay only half the calculated TL fuel surcharge.
The fuel surcharge program is the only practical and fair method for carriers and shippers to handle volatile fuel prices. Fuel costs are the largest component of costs other than labour for a trucking company and they have risen dramatically from an average of:
The thin operating margins of the trucking industry do not allow these significant cost increases to be absorbed for any customer.
- LTL carriers: 6-8% to 11-14% of total costs
- TL carriers: 17-20% to 30-36% of total costs
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.
Return to FCA / NATC News Releases 2002