While it is of the utmost importance and a matter of National Security to keep the trucking industry working and profitable it's not something that most Americans care about until it affect them. They don't understand that the military doesn't own enough trucks and trailers to keep it moving, that truckers move everything that moves in not only this country but countries throughout the world if the news articles are anything to go by.
Trucking has been woefully ignored unless it was some spectacular accident involving commercial vehicles that aroused interest of the national media or the ire of PATT, MADD and the other numerous anti everything trucking groups that don't have any understanding or concept of trucking and what's involved. Or heaven forbid 20/20 or 60 minutes take an interest in us again, I doubt we can survive that again. I still cringe when I hear Barbara Walter's voice.
The importance of the trucking industry is something that hasn't been widely advertised or made known to the public in the past. We've done a thankless and dangerous job without the public having a clue as to where that steak or shampoo came from or how cars get to the dealers. I once had a couple tell me that the stores had a plant in the warehousing section of the store and everything was made right there.
While that was an extreme example of the nativity of the public, sadly it's not far from the truth. Most people don't know, nor do they want to know where anything they buy comes from as long as what they want is on the shelves when they want it at the price that they will pay.
Most trucking companies do have contracts with their clients. The contracts normally cover almost anything that can arise in trucking. However with the dramatic increases in fuel this year I doubt that any one had the foresight to have any contractual entries that would cover the historical rise in oil prices that we have seen this year alone and since 9-11 and Hurricane Katrina.
The trucking industry uses a formula to calculate what the fuel surcharge should be that week which has been up until now a tried and true way to charge a fair rate. However on June 11, 2008 a barrel of oil jumped $11.00 per barrel in less than 24 hours which is the largest increase in any 24 hour period in U.S history, however I think that will be broken in the not so distant future, i hope I'm wrong.
There is no way that the once accurate fuel surcharge formula can take in to consideration price increases like that or even the smaller ones that we see on a daily basis. So we can no longer live by computing the fuel surcharge on a weekly basis, in fact it has to be done almost on an hourly basis to come anywhere close to covering the unpredictable market swings.
Some companies have thrown out contracts with long time clients because to honor them would quickly lead to bankruptcy. Some trucking companies are telling their clients and brokers that their acceptance, pickup and delivery of a load is ONLY valid as long as there are NO increases in the cost of fuel from the time they sign the contract to the time they actually pickup and deliver the load because of dramatic increases like we saw on June 11, 2008.
The days of letting a small increase in fuel or buying pallets are past and will never be back and it's taking some serious adjusting on all sides.
In the past trucking companies big and small would take the hit on somethings like a 1 or 2 cent price increase in fuel, or a 5 cent increase in a toll in order to maintain good relations with their clients because when all the hoopla is out of the way and all is said and done customer service is what trucking is about period. By doing this the company built a stronger relationship with the client which is of the utmost importance in trucking as it is in any business. Trucking is a very cutthroat business in good times, but right now it's a chaotic mess at best.
Supply and demand controls ALL businesses, however no other business works under the time constraints that the trucking industry does including the JIT companies of Fed Ex and the other package delivery companies. With the invent of JIT to save on warehousing, insurance, taxes and other cost, companies forfeited the security of having several weeks or months of dry products. Perishables like fruits and vegetable have always had JIT constraints but they are tighter now than ever before because of attempts at eliminating product lost.
While some of the increase in cost are passed on to the consumer, Clients like WalMart for example, drive the price of products down as low as they possibly can by several different methods. Almost any increases are absorbed by the manufacturer. Because of WalMart's buying power along with the manufacturers fear of loosing WalMart as a client the manufacturer figures a 5 cent profit per item multiplied by millions is better than 20 cents by thousands which in some cases but not all is true.
Then WalMart has their in-house trucking companies load and then the same companies brokerages hands out loads to other brokers after they have taken their cut, then next *********** takes their cut and so on to the point that there isn't a decent rate left. Sad but true.
The brokers have counted on the fact that some company or owner operator is going to need that load to get home or to a better area and will take it to avoid zero dollars in dead heading. This was true before fuel hit the prices that they have.
The sad thing is that some people in this industry don't know what the actual cost per mile is to operate their equipment and those are the ones that it's hitting the hardest. They say it cost this much for fuel this much for insurance and that's where they stop when there are many more things that come in to play when you are calculating actual operating cost. Those individuals have painted themselves into a corner and now they have had an awaking that no-one would enjoy which is loosing their trucks and in some cases homes. A good business person knows every penny it takes to run the equipment and won't operate for less. They keep a close watch on everything and cut expenses where they can without sacrificing safety. Their clients appreciate the service that the trucking company or owner operator has provided and works with them.
There isn't any real safety net for anyone when fuel prices and other related products are as chaotic as they are now. The strong survive and weak fall.
Tags: Fuel PricesSurcharg Es Contacts Trucking
