OTTAWA, Ont — Diesel fuel is the second largest component of operating cost for a trucking company and recent escalations have motor carriers wondering how long before fuel becomes their largest cost component.
“It is imperative that trucking companies recoup these cost increases, or they won’t be around for very long,” says the CEO of the Canadian Trucking Alliance (CTA), David Bradley.
“Fuel surcharges are as much a fact of life in trucking now as they are in the airline industry, for example,” he said. “The industry has worked hard to get to this stage and unless a company is being compensated for higher fuel costs through increases in general rates, it cannot afford not to be paid a fuel surcharge.”
In addition, Bradley says “with demand for diesel up on a worldwide basis, with new profit strategies in the oil producing sector and with cooler temperatures heralding the increased demand for home heating oil, which comes from the same barrel as diesel, truckers’ fuel costs will continue to come under upward pressure.”
According to CTA, the average commercial price of diesel fuel in Canada (based on the rack price) set a new record earlier this week when it jumped over 73 cents before federal and provincial taxes. In the last month alone, national diesel fuel prices are up by 16%. In the last three months, the trucking industry has had to cope with an increase of a whopping 40%.
‘No company can, or should be expected to, absorb those sorts of increases,” says Bradley. “Carriers who think they can are deluding themselves and shippers who think their carriers can had better think again if they want to sustain the service levels from the industry to which they have become accustomed.”
According to the Freight Carriers Association of Canada, which conducts costing studies and develops and publishes rate structures for the trucking industry, current fuel surcharges in the LTL sector should be in the range of 12 %. FCA recommends about 30% or higher in the truckload sector, depending on whether the shipment is domestic or transborder, and the weight.
Most provincial trucking associations publish fuel surcharge information on their web sites, or provide training sessions for carriers.
Additional information is available from FCA at www.fca-natc.org.
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