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Good Judgement Needed
April 30, 2008
Shipper and Brokers need to be alert to the real challenges facing the motor carriers around the issue of fuel and health care insurance both of which are placing many carriers in the red; and political leaders should not be interfering in the free enterprise system by proposing legislation that would mandate that brokers pass on the actual fuel surcharge paid by shippers to the Brokers.
Shipper and Brokers also need to be cognizant of the time lag between when the carrier is paying for the fuel and when they are being paid for the shipment; and the frequency of their DOE EIA updates. With carriers unable to offset sizeable health care cost increases, the never ending waves of daily fuel spikes have brought carriers to the point where they just don't have the cash to bridge the cost and time differentials.
Many good carriers have begun telling their customers, that do not have equitable fuel programs, they can't continue to carry their freight. Don't let this happen to your company. Call and Talk to your carriers about their financial well being. If they are running in the red, you need to be concerned for the well being and strongly consider making some concessions to keep them operational. There is nothing to be gained from running good carriers into the ground and out of business - especially when we consider what it takes to find and develop and good service provider. Carriers will remember those that helped them through these financially challenging times...and those that didn't.
At the same time contact your congressional representative and explain why the government should not be interfering with the private enterprise system. Before you do, you may want to ask your broker what they are doing with the fuel surcharge you are paying them?
Posted by John A. Gentle on April 30, 2008 | Comments (2)
In response to: Good Judgement Needed
Kenny Hooker commented:
In regards to the legislation requiring brokers to pass on the fuel surcharges to the carriers: I am a small broker and all my loads are flat rated to carriers. They may accept them or decline them. There many reasons a carrier may decide to take a load other than just considering the revenue. Possibly they need to get a driver home or the truck to a specific geographical location so they can service their own customer. In most instances we total the revenue fuel + line haul and offer a flat amount. In every case I pay more than my line haul rate. So they are getting 100+% of my rate and I am profiting a % of the surcharge or they are getting 100% of the surcharge and most of the linehaul rate. My profits have gone down with high fuel cost just like everyone elses w/ exception to the oil companies because the carriers are demanding higher flat rates.
In response to: Good Judgement Needed
Wolf Creek Logistics commented:
Get real. Fuel surcharges go up a penny every six cents the national average raises in most instances and it is to the point the carriers are wanting far more than that. If I get 2 cents more per mile on a 500 mile lane that equates to $10. The carriers are wanting anywhere from $25-$100 additional. So if you think brokers are profiting off the fuel surcharges you are badly mistaken.