Truck News

Feature

Viewpoint: In search of the missing surcharges

On the West Coast, owner/operators outraged by ballooning fuel costs are agitating to bring B.C.'s economy to a halt unless the government cuts prices at the pump. According to the Teamsters union rep...




On the West Coast, owner/operators outraged by ballooning fuel costs are agitating to bring B.C.’s economy to a halt unless the government cuts prices at the pump. According to the Teamsters union representing them, they’re teetering on the verge of bankruptcy.

On the East Coast, they’re more sedate but just as concerned. Members of the Truckers Association of Nova Scotia are pushing their executives for a fuel escalation charge to be addended to the government work contracts they negotiated earlier this year. They’re terrified that a fuel spike this summer would drive them into bankruptcy.

What’s going on here? I thought the implementation of fuel surcharges by motor carriers over the past few years had basically made fuel pricing a non-issue. I thought we had learned from past mistakes that were responsible in large part for wiping out a quarter of the nation’s small carriers and more than a tenth of the owner/operators over the past five years.

I know with absolute certainty that shippers are paying fuel surcharges. Our own research clearly confirms that.

Our Transportation Buying Trends Survey included responses from more than 600 shippers of all sizes across a variety of industries in Canada.

And 99 per cent of them reported paying fuel surcharges. In fact I’ve heard of cases where fuel costs are representing almost 25 per cent of truckload costs for some shippers.

So there can be only three answers to what’s causing all the pain.

1.Carriers are collecting fuel surcharges but they are not passing them on to owner/operators. I have a hard time believing this represents the majority of the problem. Why would carriers screw with the industry’s most precious resource: the qualified professional driver? Even if they were, I would imagine the distinct driver shortage would make it easy enough for owner/operators feeling abused to jump to a competing carrier.

2.Carriers are collecting and passing on fuel surcharges but they’re not enough because some owner/operator equipment is spec’d more for image than for fuel efficiency. I think there’s something to that. But although some owner/operator spec’ing practices require a good look in the mirror (just like car drivers have to consider if the big SUV is the best type of vehicle to deal with high fuel prices), I don’t think that’s the main cause of the pain.

3.Carriers have been either too slow or too reluctant to approach shippers about the latest price spikes. My gut feeling is – I have no empirical evidence yet – that’s where the majority of the problem may lie.

Whichever scenario is the best fit, we had better get things figured out and fast.

Although there’s no consensus on the direction of fuel pricing (many respected economists were predicting a drop in pricing this year) there are distinct fears we haven’t reached the peak of fuel pricing yet. OPIS, one of the better known oil price information services and think tanks in North America, for example, recently warned that diesel prices as high as US$3.00 per US gallon could be relatively common at the pump 15 months from now.

– Lou Smyrlis can be reached at lou@TransportationMedia.ca or (416) 510-5142.


Print this page


Have your say:

Your email address will not be published. Required fields are marked *

*