Collecting fuel surcharges no longer an option: CTA
Posted: August 1, 2014
OTTAWA — Although shippers are improving in passing down fuel surcharges to carriers, rising diesel costs this winter mean that truckers will have a lot more to recoup, says the Canadian Trucking Alliance.
Diesel fuel is the second largest component of operating cost for a trucking company and recent escalations have motor carriers wondering how long before fuel becomes their largest cost component, says CEO of CTA, David Bradley.
“It is imperative that trucking companies recoup these cost increases, or they won’t be around for very long,” says Bradley. “Fuel surcharges are as much a fact of life in trucking now as they are in the airline industry, for example,” he said. “The industry has worked hard to get to this stage and unless a company is being compensated for higher fuel costs through increases in general rates, it cannot afford not to be paid a fuel surcharge.”
Pumped: Truckers face a beating if they don’t collect surcharges
The average commercial price of diesel fuel in Canada (based on the rack price) set a new record earlier this week when it jumped over 73 cents before federal and provincial taxes. In the last month alone, national diesel fuel prices are up by 16 percent. In the last three months, the trucking industry has had to cope with an increase of a whopping 4o percent, says Bradley.
‘No company can, or should be expected to, absorb those sorts of increases,” he adds. “Carriers who think they can are deluding themselves and shippers who think their carriers can had better think again if they want to sustain the service levels from the industry to which they have become accustomed.”
In a separate release, Bradley also warned that consumers will soon be facing significantly higher food prices thanks in part to the cost of fuel, which is being passed along to retailers and grocery stores.
“I don’t want to sound like the Grinch who stole Christmas, but when you consider that every thing on store shelves has to be transported there, you have to wonder how long before consumers get really hit in the pocketbook,” said Bradley. “Consumers already feeling the squeeze at the pumps and in their heating bills may be forced to cut back on other purchases, which would be bad enough for the economy. But, if the price of retail goods and groceries also increase significantly because of increased shipping costs, this could have a further dampening impact.”
Bradley called on the government to reduce the federal and provincial taxes on diesel fuel, like some US jurisdictions have done, even if only on a temporary basis. They can also make it less restrictive for truckers to use wide-base single tires, which are more fuel economical than duals, and they can look at a controlled expansion of extended length trucks, says Bradley.
In Ontario, the OTA is developing a proposal to government to mandate the activation of speed limiters on trucks to better control speed and fuel efficiency, Bradley adds.
According to the Freight Carriers Association of Canada, which conducts costing studies and develops and publishes rate structures for the trucking industry, current fuel surcharges in the LTL sector should be in the range of 12.5 percent. FCA recommends about 30 percent or higher in the truckload sector, depending on whether the shipment is domestic or transborder, and the weight.
Additional information is available from FCA’s website.