New legislation aims to help O/O recoup fuel costs
 

Jeff Berman, Group News Editor -- Logistics Management, 4/25/2008
WASHINGTON—A new piece of bipartisan legislation pledges to lend a much-needed hand to owner-operator truckers by passing 100 percent of the fuel surcharges charged to shippers back to truckers, rather than freight brokers.


The bill, entitled “The Trust in Reliable Understanding of Consumer Costs (TRUCC) Act, was introduced by Senators Olympia J. Snowe (R-Maine) and Sherrod Brown (D-Ohio). The senators said in a statement that this bill “would free small business operators and carriers from the stranglehold of unscrupulous brokers and middle-men who charge shippers for fuel costs but refuse to pass those costs on to operators that actually pay for the fuel.


This bill comes less than a week after Snowe introduced the “Diesel Parity Tax Act,” which would lower the federal diesel tax from 24.3 cents per gallon to 18.3 cents, matching retail diesel.


Snowe added that because there is currently no uniform fuel surcharge standard, small truckers are often at the mercy of freight brokers, logistics intermediaries, and larger trucking companies.


This situation, in turn, had led to owner-operators recently stage a “shutdown” on April 1 in protest of high diesel prices.


Prior to the actual shutdown, OOIDA Spokesperson Norita Taylor told LM that the OOIDA would like Congress to enact legislation mandating 100 percent pass through of fuel surcharges and transparency in those transactions, noting that when prices on store shelves go up, it is not because of truckers, but because they are seeing theses rises trickle down to them because of brokers of middle-men.


“We think the good, honest brokers, will likely be supportive of this bill, because they recognize that their customers are not just shippers, but also truckers,” Taylor said in an interview earlier today. “Right now, freight is slow. But it won’t always be that way. Plus, shippers will appreciate this bill because it provides the assurances that the higher amounts they are asked to pay out because of fuel prices are indeed being used for just that.


Other recent fuel-related developments include:



the American Trucking Associations calling on the White House to release oil from the Strategic Petroleum Reserve to curtail the run-up, which is hurting the economy and the trucking industry in particular; and

Presidential candidate John McCain calling for the suspension of the motor vehicle fuel tax between Memorial Day and Labor Day.


"Shippers are accustomed to paying fuel surcharges when fuel costs spike," Senator Brown said in a statement. "But there is no guarantee these surcharges go to the people who pay at the pump. With diesel prices at an all-time high, this bill would help…truckers who find hauling goods too costly or impossible."

Unless this bill has some real repercussions or accountability for non-accountability I don't see it as having much effect. That is part of the problem for the last bill they tried to pass. I think transparency and a pass through is a good idea if there is some accountability attached. Otherwise, it is just another feel good piece of legislation.

Is anyone interested in discussing the language in the bill?


It has been introduced as an amendment to title 49 sec.14102:

49 USC 14102 - Sec. 14102. Leased motor vehicles
Does this mean that it applies only to OWNER/OPERATORS that are leased to a Carrier?

‘‘(2) at the time payment is made under para
graph (1), a written list that specifically identifies
any freight charge, brokerage fee or commission,
fuel surcharge or adjustment, and any other charges
invoiced or otherwise presented to the person de
scribed in paragraph (1).’’
This goes way beyond fuel surcharges. Looks like transparency to me?

(b) BILLING AND COLLECTION PRACTICES.—Section
13708(b) of title 49, United States Code, is amended to
read as follows:

•HR 5934 IH
‘‘(b) FALSE OR MISLEADING INFORMATION.—No
person may cause a motor carrier, broker, or freight for
warder to present false or misleading information on a
document or in an oral representation about the actual
rate, charge, or allowance to any party to the transaction
or transportation.’’.
If you discover that a person has misrepresented the rate "at the time payment is made", has he committed a crime, and would it be a misdemeanor or felony? Or would it need to be settled in Civil Court?

All in all, it's a small step forward. However, it is clear that our lawmakers don't understand how the trucking business works these days. They will need input from our side as this bill moves through committee and is debated on the floor.

It drives me nuts when I hear that the fuel surcharge doesn't always go to the person who is PAYING for the DANGED FUEL.

I'm going to stop posting now so as to avoid a really long rant. People are just crooks.

If this is how you feel, then why not voice this opinion at the OOIDA forums as well.
I'm getting kicked all over the place for the same opinion.
How bout a little support?

Just when the bottom feeders are starting to drop like flies, OOIDA wants to help them stay in business.
WHY????

OK, hoohaa. I posted on the OOIDA board.

It drives me nuts when I hear that there are supposed businessmen that will accept a load knowing there isn't enough $$ in it to make a profit.

Tell me again why do we need legislation to protect stupid people? :roll:

Suppose this law passes and the brokers just play with the numbers lowering the rate and adding a FSC. Half of these boneheads would be wetting themselves that they are getting a FSC when in reality the load pays the same as before. It is all smoke and mirrors.

When you discuss fsc and rates it is a matter of semantics. Which is better, a load that pays $2/mile or one that pays $1.50 plus a $0.50 fsc? You see, it is the same money just readjusted to make the owner feel that they are making more money. If you need $2/mile then don't take a load for less than that rate. Don't worry about the fsc. It is the same dollars. A fsc is a way for carriers to get a higher rate without asking the shipper for more money on the line haul. The carrier and broker should have the intestinal fortitude to ask for a fair rate and then they would not need to worry about the fsc. I checked over the bill and don't see any real value with the way it is worded. It is only a feel good piece of legislation which wastes paper, time and money. There is no teeth in the legislation. Without accountability is is merely an exercise in futility. I agree that 100% of the fsc collected should pass through to whomever buys the fuel. This will not do any more for the owner than charging a decent rate. Notice that I said "CHARGE!" In other words, the owner needs to take charge of his business rather than going into this with his hat in his hand begging for a fsc. Demand a decent rate and you will get it! If you own the truck you are the one in charge of the rate. It isn't the broker or shipper who determines rates, but the carrier. You can either charge a fair rate or take what is offered and probably go broke. It seems like a simple choice to me.

Thank you, I just read it.
You do have a way with words. :lol:

I am glad you liked it, hoohaa.

Here we go again.

I think we are missing the main benefit of a transparent, 100% pass through FSC. That is, when a broker charges the shipper and extra $50 due solely to an increase in fuel price, said broker will be forced to pass it on or explain to the shipper where that money went. I support mandatory transparency with a stiff penalty for violators.

And Rank, I support truck owners being smart enough when the broker tells him there is no FSC to say thanks but no thanks and keep looking. If enough did that, then the brokers would have to cough it up, as they wouldn't have any trucks. It is simple supply and demand. As long as there are those that will take substandard rates, the brokers will keep offering them.

We don't need the government meddling in every failing business trying to prop them up.

Just because it doesn't include a FSC, a rate is substandard?

The fuel surcharge is irrelevant if the rate is high enough. I would not turn down a load simply because there wasn't a fsc as long as the rate was there.

As an O/O leased into a company:

One year ago I looked at the rate, and decided if it was good enough without the fsc. It didn't matter what area the load was going into for delivery, or IF there would be a load out of that area.

Six months ago, I started looking at where was the load going, and how much deadhead was I going to have to do, if I accepted the load at the offered rate.

Five months ago I started adding the Linehaul and the FSC, running the practical miles, and looking at where was the next load coming from. Five month's ago I started turning down loads on a regular basis, simply because of where they went.

Last month I started telling the dispatchers, on the qualcomm not the cell phone, that if the rate, fsc and the load accessorials did not make a load profitable, why should I take it. I have sent practical mileage figures on every load for the last month, with the breakdown of how much I expected to spend on fuel, how much it would cost in tolls, and how much it would cost to deadhead to the closest terminal.

Since I started doing all of these things, my rates to the truck have been marginally better.....but only marginally.

I see guy's on here yapping about "supposed businessmen" and their rate acceptance practices. What qualifications do those whom berate others have, as it pertains to the discussion, or rates to the truck in general?

Do I agree with this legislation? No---absolutely not. The Congressman whom wrote it knows less about "To the Truck" mileage rates and the fuel surcharge, than he does about the color of his car, or the cost of a bottle of milk.

Do Brokers need to be honest on their "pass through" methods when it comes to paying a fair rate to the truck. Yes...but congress is not going to make that happen. That horse already left the barn years ago, and is not going back in. The percentage of fair and honest Brokers out there is smaller now than it has ever been. There are those whom used to pay a fair rate to the truck, whom no longer do so. CHRobinson and Landstar are examples of two brokerages that I know of, whom have lost their luster, due to unfair pricing practices.

Do truck owners need to practice better math skills, as it pertains to their trucking operations? Yes..absolutely...but once a truck owner has slid behind the 8-ball, when it comes to low rates, it becomes an uphill battle to get out from behind that 8-ball.

We aren't all working through brokers. Some of us must deal directly with the Carrier with whom we are leased, and have little imput when it comes to load rates and fuel surcharges. The only thing we have control of, is how much do we deadhead..or sit at home.

Part Time;

I guess I don't see how a transparent FSC is propping up a failing trucking company. Nor do I see how a 100% pass thru is propping up a failing trucking company. If anything, it will benefit the shipper more than the truck because once the shipper sees that the truck is not getting it, he will stop paying some of it.

I am not advocating setting rates or giving a truck more money. Only that the rate, however you want to cut it up, is known to all.

As an independent ,FSC is moot unless you're setting up a contract with a shipper.
I can see how it would help leased operators though.

Not necessarily. Say I move one load for a broker that is paying me $1400. With rate disclosure on the BOL, it may be seen that the shipper is paying $1,000 + $750 FSC.

It doesn't mean you're going to get more money.

As I have stated and hoohah reiterated, a FSC is great for a leased O/O, but for us independants it is a moot point.

As for your example above.... work on your negotiating skills, and the broker is allowed to make money...

I agree with "Beattle-brow's". The fsc breakout works great if you are leased to a company....like I am. When your running under your own authority, like "BD", "Not-Steve" and a couple others here, then the total per mile rate is far more important, than a breakdown of the FSC.
That is why knowing what it cost's to operate the truck is so important. Not just where fuel, plates, insurance and maintanence are concerned...but driver wages..meals..the whole nine yards.

Even as an O/O leased to a company...I figure everything "In", to establish my cost to operate..and turn down loads that don't pay cost plus.

That's right it doesn't. But that was never my point. This is not just about the carrier.

You stating something and getting someone to agree doesn't make it so. I believe my example shows that it is not moot.

That's amusing. I doubt many here have consistently higher rates than me. But again, that's not the point. Nowhere in my example did I say that I wanted more money for moving the hypothetical load. Nobody is looking at this from the shippers perspective.

sure they are, but why the big secret?

Jeez, can't ya still calculate the coveted total per mile rate by adding the line haul to the broken out FSC??????? This ain't difficult people.

Can anyone give me a good reason NOT to show the shippers rate, line haul, FSC & broker fee on the BOL?

The only one I can think of is that all the BOL forms need to be changed. Also, I suppose it's conceivable that if the shipper sees that carriers are willing to work for peanuts, he may lower the line haul amount that he is willing to pay. That being the case, are the broker and carrier in bed together? Wouldn't that be ironic, after all the bitching and moaning they do about one another.

:roll: :lol: :roll: :lol:

Translation.
I'm not a rich truck driver, I just play one on the internet. :roll:

Then what is the point of the legislation? If you are already hauling it for what you feel is fair, then it shouldn't matter whether they call part of it a FSC or not.

I believe several people here already did, and determined that it would cause rates to drop because the shipper would find out that money they paid as FSC wasn't actually going to the carrier.

I doubt you disclose how much profit you earn to your shippers. Why the big secret?

Because it will cause shippers to rethink what they are paying for shipping rates. It also is impractical, as the broker fee is usually negotiated after the shipper has already agreed to the rate, and the rate is sometimes negotiated by the consignee. It is also impractical to include these items on a blind load.

IMO, I think carriers would be better served by worrying more about what they are making, and less on what their supplier (the broker) is making. Run your own business to the best of your ability, and let the broker do the same. Propping up poor negotiators with this feel-good legislation is harmful to the industry as a whole.

The hard truth of the matter is that you have a lot of owner operators out here who are not businessmen. They may own the truck (for now) but haven't a clue of what it takes to run a profitable business. This is obvious due to so many taking cheap loads. A fuel charge can help with sharp fuel spikes, but it is still part of the rate. If you establish a minimum haul rate you will negate any need for the fsc. A fsc can be good, but it is still a matter of shuffling numbers and presenting them differently. If the load isn't profitable, then don't haul it. After all, no one is pointing a gun to your head to force you to take the load. Either the load is profitable or it isn't. Unless you run for a fixed mileage rate, each load is negotiated. While I still think it would be good to have some transparency, I am not sure that it will make much difference in the long term. Something such as this bill will have little or no effect unless there are penalties for not complying. Without teeth in the legislation there is no need to even spend the time putting it together. A fsc is a way for brokers and carriers to get more money without having to negotiate for better rates. Freight rates have been too low for many years. The fsc takes the monkey off of their back and puts it on the oil companies. After all, the oil companies are responsible for the higher fuel prices and increased fsc. It isn't the carrier or broker. By putting responsibility on a third party, it takes pressure off of them to negotiate higher rates.

So the carriers DO have a vested interest in non disclosure then.

IMO, I think carriers would be better served by worrying more about what they are making, and less on what their supplier (the broker) is making. Run your own business to the best of your ability, and let the broker do the same. Propping up poor negotiators with this feel-good legislation is harmful to the industry as a whole.[/quote]
Perhaps. Like I said, it really makes no matter to me, other than principle.