SMART BUSINESS

[Truckaxe]

SMART BUSINESS
http://www.landlinemag.com/Archives/2006/Jun2006/bottom_line/fuelsurcharge.htm

Better business

With fuel prices out of control, use a fuel surcharge to regain control of your bottom line

As fuel prices skyrocket – with no end in sight – smart business decisions have become more critical than ever to survive in the trucking industry. This is just as true for owner-operators with one truck as it is for mega motor carriers.

Donald Broughton, a transportation analyst with A.G. Edwards, has tracked the number of failures in the trucking industry in relationship to fuel prices since 1986. The data he has turned up proves that point.

Case in point: Diesel averaged less than $1 per gallon in the first quarter of 1999. During that same quarter, 310 trucking companies with five or more trucks closed their doors. By the third quarter of 2000, fuel was averaging just more than $1.50 per gallon. More than 1,300 trucking companies with five or more trucks went out of business.

Regardless of the amount of the increases, fuel prices were obviously taking their toll on trucking companies.

“It used to have a much higher correlation because there were a number of companies who did not demand a fuel surcharge,” he said. “Those companies are now gone.”

Despite the fact that Broughton’s data does not include owner-operators who have only one truck, the fact still remains that in order to be competitive in business today, truckers cannot eat the additional costs that high fuel prices are placing on their operations.

[Rev.Vassago]

Case in point: Diesel averaged less than $1 per gallon in the first quarter of 1999. During that same quarter, 310 trucking companies with five or more trucks closed their doors. By the third quarter of 2000, fuel was averaging just more than $1.50 per gallon. More than 1,300 trucking companies with five or more trucks went out of business.

So a truck that was averaging 6 mpg and running 120,000 miles per year in 1999 had a fuel cost of $20,000. That same truck in 2000 had a fuel cost of $30,000 per year. That means they were operating on a profit margin of $10,000 per year, or $0.083 per mile. And when they lost that whopping $0.083 per mile, they went out of business.

the fact still remains that in order to be competitive in business today, truckers cannot eat the additional costs that high fuel prices are placing on their operations.

Perhaps if they weren't undercutting each other, and running razor thin margins, they would be able to "eat" the additional costs. While a FSC is a good thing, it isn't the "save all" that Landline, or OOIDA (by default) is making it out to be.

What would happen if fuel went back down to that $1.50 per gallon tomorrow? I'm sure that every shipper out there would refuse to pay a penny in FSC, thereby taking away the only thing keeping many trucking companies afloat.

I disagree with your title for this thread. This doesn't seem like "smart business" at all.

[Preacher]

The fact remains that we are susidizing corporate profits on the backs of the truckers. Whether we charge a separate FSC or build it into the rate is irrelavant. We must see an overall increase in revenues to offset fuel price increases or go broke. It's that simple. With fuel at $3.25 in the northwest, and averaging $2.93 nationwide, we can no longer afford to run our trucks at $1.50 per mile. The consumer is going to have to face the fact that the cost of goods and services is going to increase substatially in order to bring those goods to the store shelf and for services to arrive at their door.

But face it, we truckers are all a bunch of cheap whores who are willing to get screwed for little or nothing. We are not standing-up to the brokers and/or shippers in order to earn a fair and decent amount for our services. After all, we also have financial commitments to lenders and families to support. We have equipment to maintain and kids that need food on the table.

Since the beginning of this year I have seen freight rates decline while fuel prices have skyrocketed. How much longer can the single truck owner/operator continue to survive? How much longer can we continue to subsidize the profits of corporate America? What is the future of non-asset based trucking companies who rely on the small owner/operator? What we're going to see is a record numbers of bankruptcies and drivers leaving this industry in droves.

Compounding these issues are large conglomerate trucking companies who recruit drivers by making false promises and lies, and then treat them as servant/slaves, paying them wages that no one could support a family or household on. These companies will eventually reap what they have sown.

Finally, when people can't get toilet paper on the shelves to wipe their azzes with because there aren't enough trucks out there to deliver it, or enough drivers to drive the trucks due to driver attrition, then, just maybe, the truckers will begin to see wages improve and rates increase to meet the demand. Until then, keep hauling that cheap freight. Who cares as long as you are getting by....just barely.

[Rev.Vassago]

But face it, we truckers are all a bunch of cheap whores who are willing to get screwed for little or nothing.

HEY! Dont lump me in with that group! :vmad:

[Preacher]

Sorry Rev., of course I didn't mean you or anyone else here at TSUSA. :rofl:

[Rev.Vassago]

Sorry Rev., of course I didn't mean you or anyone else here at TSUSA. :rofl:

Everyone else can fend for themselves. :chase:

[Mark-the-Spark]

But face it, we truckers are all a bunch of cheap whores who are willing to get screwed for little or nothing.

HEY! Dont lump me in with that group! :vmad:

Okay, so you're an expensive one rather than a cheap one :harhar:

=========================================

Well dressed man approaches pretty woman on the street...

"Would you go to bed with me for a million dollars?"

The woman ponders the question for a few seconds, and then says "Yes."

"Well, would you go to bed with me for ten dollars?"

"Of course not! What do you think I am?"

"We've already established what you are," the man smiles, "now we're just haggling on the price." ;)

[SUNSHINE]

But face it, we truckers are all a bunch of cheap whores who are willing to get screwed for little or nothing.

HEY! Dont lump me in with that group! :vmad:

Shame on you , Preacher. :bop: :bop: Dont lump me into that catagory either.

If the cost of doing business increases, fuel maintence,etc of course we need to raise rates or we're not going to be in business.If it means getting a FSC that the brokers cant touch go for it. Im tired of shippers and brokers crying poverty, when there living better than we are.I dont know about hte rest of you, but Im tired of just getting by.
If were professionals we should be getting paid big bucks for what we do. This what I cant understand. People will pay whatever to dr's lawers, etc and pay whatever their asked cuz there professionals in that field of work. We drivers ask a rate for our professional services and were told "thats too much". We have the same expenses as any other professional business person. Go figure.

[Randg1]

It is my opinion that Preacher is right in the broad sence. Those of us who do not haul cheap should not take offense as his statement does not apply to us.
I have only been independant for 3 mo. but I made myself a promise that I would not haul cheap, even to get home. I have bounced home from Houston & from Austin because I refused to pull for $1.40/mile. I have not found it to difficult to find $2.00 loads & I run Texas only.
I turned load finding over to Archa last week & she ran me from Ft Worth to Plainview to Friona to Laredo to Garland in less than 4 days of work, no sitting looking for loads, my linehaul avg. over $1.85/mile. That is ALL miles not just loaded miles.
As time goes on & the business impaired get weeded out things will improve. It already has for me because I can now concentrate on doing what I do best, being on time & delivering the load in good condition which builds customer confidence in RandG Trucking. ;)