Congress considers mandatory fuel surcharge

High diesel fuel costs have hit small motor carriers hard. Congress may help them out by requiring that those costs be passed on to shippers.

By -- Logistics Management, 7/1/2000

Legislation filed last month in Congress would impose a mandatory fuel surcharge on shippers that use truckload carriers. U.S. Rep. Nick Rahall (D-W.Va.) sponsored the Motor Carrier Fuel Cost Equity Act of 2000 (H.R. 4441), which would also require that any surcharges collected be passed on to the trucker that actually provided the transportation service.

The bill is designed to help independent truckers offset the high costs of diesel fuel. In mid-June, diesel prices averaged about $1.42 a gallon nationwide, according to the federal Energy Information Administration. Although the Organization of Petroleum Exporting Countries (OPEC) agreed last month to increase production by 708,000 barrels a day, that's not expected to bring prices down by much.

Many large motor carriers have added fuel surcharges to their freight bills, but small carriers have had less success. Owner-operators in particular have lobbied Congress to provide them with some relief from soaring diesel costs. "Our concern is to help the little guys," says Jim Zoia, a spokesman for Rep. Rahall. "The big guys can negotiate their own fuel surcharges."

The Owner-Operator Independent Drivers Association (OOIDA) has been calling upon federal lawmakers to relieve the plight of independent truckers, many of whom cannot extract surcharges from the motor carriers that employ them. "It will add stability in terms of small business truckers' meeting the needs of shippers," says Todd Spencer, OOIDA's executive vice president. "It will address the inability of small operators to offset their costs in emergency situations."

Spencer says shippers should be concerned that some surcharges imposed by motor carriers are not passed on to the independent truckers who actually perform the work. If a shipper is asked to pay higher amounts, he says, that shipper is justified in seeking assurance that the money will actually go for fuel.

Opposition mounts

Shippers groups, however, oppose the legislation for several reasons. The National Industrial Transportation League (NITL) argued during a House hearing on the bill that it ran contrary to the spirit of motor carrier deregulation. "We've been working for years to deregulate trucking," says Kathy Luhn, NITL's vice president of public affairs. "This bill is regulatory in nature."

Luhn also suggests that the measure is problematic because it doesn't address the underlying reason for the current surge in fuel prices. Furthermore, it singles out a small segment of the trucking industry for special protection.

NITL also is concerned that the legislation's wording could result in shippers' getting dragged into lawsuits over the payment of fuel surcharges. The bill does not set up any federal oversight but does give the aggrieved party the right to sue in a civil court, Luhn says.

In late June, the House Ground Transportation Subcommittee was considering changes that would increase the bill's chances of passage, Zoia says. But he declined to specify what changes might be necessary to ensure broader support.

The bill faces an uncertain future. For one thing, Congress takes a recess in August and then will return for only a brief period in the fall during this election year. No champion for the legislation, moreover, has emerged in the Senate. In any event, the key factor affecting the bill's future is fuel prices. If diesel costs continue to climb, then lawmakers seeking votes in an election year may be more inclined to help out a constituency like owner-operators.