OTTAWA, Ont. — David Bradley, CEO of the Canadian Trucking Alliance (CTA), warned shippers at the Pharmaceutical and Personal Care Logistics Association that they will have to continue paying sufficient surcharges in light of rising fuel costs.
“However you cut it, whatever fuel surcharge formula you use, carriers need to generate enough revenue to survive,” he explained. “The combination of the base rate, fuel surcharge, accessorial and other charges must add up to an amount that provides for an adequate return on investment. Two plus two must equal four at the end of the day.”
Bradley pointed out that 40-50% of carrier revenues currently result from fuel surcharges. While he admitted that’s “bizarre” he also said “putting that genie back in the bottle is extremely difficult.”
He went on to say: “Changing fuel surcharges in isolation of rates is not tenable for carriers. You want a new formula, fine. But you have to look at all the fuel used to pick-up and deliver your load. You want lower fuel surcharges, fine. But then rates have to go up. Whatever formula you come up with, carriers want you to stick to it.”
Finally, Bradley urged shippers to take a long-term view and to secure capacity now.
“Many markets are soft right now, there is excess capacity and changing balance. But the capacity situation will resolve itself and when it does things could tighten quickly.”
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