Date: Fri, 18 Feb 2000
From: "T.J. Carney" <firstname.lastname@example.org>
Subject: Re: AMS-Forum More on Fuel Surcharge...
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Michele George wrote:
>Please advise the justification for a 2% increase in the fuel surcharge?
>The AMSA is supposedly utilizing the Dept. of Energy's weekly report to
>monitor fuel costs. Last week the national average was $1.47 per
>>gallon.(some areas higher, some lower). Here is an example:
10,000 pound shipment going 800 miles
>Truck getting 6.5 gallons per mile
>147.69 gallons & 20% empty mileage
>Fuel at $1.25 = $184.62
>Fuel at $1.47 = $217.11
>Increase in cost 17.60% or $32.49
>Gross linehaul on 400M $7,747.00
>Less 50% linehaul discount = $3873.50
>Actual increase in fuel $32.49 or 0.8388% of linehaul
>3% surcharge $116.21 5% surcharge $193.68. Any feedback?
I admire your tenacity on this subject! My position on the fuel surcharge is this:
The average cost of fuel has increased roughly 52% from the same time last year and the price of fuel really started to rise back in March. Fuel along with labor represents the major share of the variable expenses associated with moving. The fuel surcharge is a recovery, an adjustment in the market price for moving services that favors only the part of the industry that pays for fuel. The current pricing structure is too complex to determine what any one shipment should contribute to offset the fuel component of the increased cost of operating moving vans. Additionally, due to the irregular route nature of the shipment origins and destinations, this industry has an excessive amount of empty miles (read fuel used) to reposition equipment between shiments, to get weights, to get labor and packing material. The margins in this business can be razor thin without economic adversity, but without additional revenues to offset the cost of fuel there might be no relocation worth doing, especially 3PR contract business. But then again, I suppose we could recover through additional packing! 15-20 more dishpacks to pack per job can make the economy of a job work.
The bottom line is that, as far as I can tell, all the quality operators are adding fuel surcharges based on the linehaul rate, therefore the market price for the good service is up. OK, so we can do it collectively through an anti-trust exempt tariff bureau and make it stick, that's one thing admittedly in our favor. But it is otherwise a free-for-all marketplace and somewhere out there in this business is a moving company that will do your moves and waive the fuel surcharge. But count the boxes!
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