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Fuel surcharges: Is there a better way?

Researching and writing about fuel prices and their impact on transportation costs since fuel prices initially started to spike back in the late 90s I’ve come to realize – despite what some fuel experts will tell you – the...


Researching and writing about fuel prices and their impact on transportation costs since fuel prices initially started to spike back in the late 90s I’ve come to realize – despite what some fuel experts will tell you – the only truly predictable thing about fuel pricing is its volatility and unpredictability. And the resulting impact on transportation buyers and providers who don’t take measures to protect themselves can be substantial.

Fuel surcharges have become a staple of the transportation industry but I’m hearing lot of grumbling from both shippers and carriers about them.

Carriers complain about the added administrative burden that comes with surcharges and about shippers who refuse to accept the higher surcharge levels when prices hit a peak. Shippers show a fair bit of distrust of the surcharge formula mechanisms and how they are applied. For example, a Shipper Pulse Survey conducted by the Canadian Industrial Transportation Association in partnership with us back in 2012 found that only 69% of shippers agreed with the statement “Fuel surcharges are necessary as long as fuel costs continue to be highly volatile.” That should raise concerns among carriers who need surcharges to keep their fuel costs in check.

Of even greater concern should be the fact that only 46% of shippers believed that carriers were generally applying fuel surcharges correctly while 61% believed “fuel surcharges are a way for carriers to squeeze additional revenues from their customers and improve their profits.”

It makes me wonder, are fuel surcharge formulas understood as well as they should be? Is there a better way forward? To find out, I’m leading a panel discussion on the issue at the upcoming CITT Reposition National Conference in Toronto, Nov. 3-5 (the fuel surcharge session is on the 4th).

I’ve got a great bunch of industry experts on the panel: Ginnie Venslovaitis, CITT, director, transportation operations, Hudson’s Bay Company; Jeff Bryan, president and CEO, Jeff Bryan Transport Ltd., and chairman, Ontario Trucking Association; Mark Lerner, assistant vice president, domestic intermodal, CN; Richard Patenaude, director, client integration and development, Wheels Group; Roger McKnight, Senior petroleum analyst, En-Pro International

We are going to look at where diesel pricing is headed; explain how surcharges should work from both the carrier and shipper points of view; and debate what is the best way forward.

It’s going to be an engaging and informative session and I hope to see you there. And while you’re considering this session, take a moment to look at all the other sessions planned for Reposition 2013. I think this is the most information (and fun) packed conference CITT has ever put together. All the information is available at www.citt.ca


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