The Price Of Fuel...

This is a concern to all not just those in the RV transportation industry. The commercial transportation industry appears to be taking the brunt of the impact but it's hitting everyone. Not just in the fuel you buy, but in your everyday purchases as well. The items we use in our everyday life are being affected because some form of commercial transportation delivered them. When fuel goes up the price is eventually passed down to the consumer. Same with the RV transportation business.

The RV Transport companies charge their customers a base rate PLUS a fuel surcharge. The fuel surcharge is in addition to the normal rate charged to move a load from origin to destination. If you've been to FedEx, UPS or any of the other courier companies lately you've experienced a fuel surcharge.

All reputable RV transport companies pass 100% of the fuel surcharge to the transporter. As of this writing, I am not aware of any company that isn't passing this to the transporter. Believe me, if I knew of any company that was keeping a percentage of the fuel surcharge for themselves, I'd list them.

Now before I get letters, every company has their own way of calculating the fuel surcharge. If a company is paying a little less fuel surcharge than another it's probably because of their fuel surcharge agreement with their customer, not them being dishonest with the transporter.

It's not to the transportation companies benefit to skim any of the fuel surcharge. Let's face it, without the transporter the transport company is out of business. The entire industry is shut down.

What does this mean for the transporter? Basically that there is still a lot of money to be made. It's true that the price of fuel is keeping a lot of potential transporters away. Many may not be aware of the fuel surcharge.

One major transport company has published their fuel surcharge numbers that show the cost to the driver for fuel after fuel surcharge is only $1.89 per gallon. Another major company is paying an extra $.05 per mile bonus for new units being delivered.

The RVIA (Recreation Vehicle Industry Association) has predicted that RV shipments in 2008 are expected to be the fifth highest in 30 years, and well above the most recent ten-year average.

Using current fuel prices, I entered a 900 mile trip as a model in my computer. For transporter pay I entered a low $1.21 per mile. Gross pay for this trip would be $1,089.00. To make it more interesting I entered that I had to drive 800 miles empty to get to my load (trailer). At 17 mpg empty my fuel cost showed to be $190.59. With trailer and traveling 900 miles my fuel consumption dropped to 12 mpg with a fuel cost of $303.75. At the end of my trip my net after fuel totaled $593.47. Not bad for 2.5 days work and 800 miles empty.

What does all of this mean? If fewer transporters are entering the industry because of the fuel prices and 2008 shipments are expected to be the 5th highest in 30 years...It means to me that there are more trailers available to deliver which means more money in the pocket. There is a silver lining.

Let's Ruffle Some Feathers

I've been biting my tongue for some time knowing that I would only be causing myself trouble by posting my thoughts concerning the state of the trucking industry. This isn't something that I just decided to write about on a whim, it's been building for a while. It seems to have growth spurts every time I see a driver being interviewed by the media concerning the state of the trucking industry or when I read the rants of a driver that has written an article or a letter to the editor with their feelings.

I'm all for free speech and the sharing of ideas. This might be the most American thing we can do. However with this freedom comes responsibility. The responsibility to learn the facts before making statements that further jeopardize your brothers and sisters who are also in the industry. The responsibility to reflect on your own business practices before condemning others of theirs. Remember '05 and the rate FEMA was paying you? The detention time? Couldn't one easily say that was more than your fair share?

Unfortunately the drives I refer to represent themselves as owner operators to the press and in their writings. As such one would think that they would have a little business savvy. Case in point, if the load doesn't pay enough you don't take it. You find another. It's time to quit being a steering wheel holder blaming everyone else for your problems and start being business people.

Every report, article, or letter I come across or is brought to my attention always has a reference about freight brokers taking more than their fair share. What? What exactly is their fair share? If a shipper were to offer you $5.00 per mile on a load when the market rate was at $2.00 would you give $3.00 per mile back? A freight broker only makes what the market will allow. Freight Brokers don't control the market, trucks do. Again, if the rate isn't enough don't load it. A broker can not force you to take a load.

All of our clients hear me say the same thing, a freight broker is the most miss-used service in the trucking industry. A broker used correctly, should only be for backhauls. That is a load that returns your equipment to an area where you have an account in order to service your customer and allow you to obtain a higher rate. If you're using a broker for all of your loads then it's not the broker it's you! Why do you not have your own accounts?

Over the last several years we have had more owner/operators contract our services in order to learn how to find their own accounts. Each and every one of them were using a broker for more than 70% of their loads. Our brokerage has shown an unimaginable rise in companies seeking a load out of their home base area. This can only mean that they don't have or don't have enough outbound accounts. The one common denominator is that they are all smaller companies (1-5 trucks).

This past Christmas I warned our brokerage as well as our brokerage consulting clients that December 26 - January 3 would be slow. The reason for this warning is that Christmas is the holiday that finds the majority of the trucks home. Once they begin moving on the 26th it takes 5-7 days to have them scattered enough across the country in order to start re-loading them. This past after Christmas week, the week I warned would be slow, was the busiest week of the year for several of our offices. When reviewing the reports it showed that the majority of the loads were being picked up by local carriers as a head haul.

I understand that from time to time things happen. When things happen it should be the exception, not the rule. I am fully aware of the frustrations being felt in the industry and I fully believe that $4.00+ per gallon fuel is a sin. My opinion is that the rate per mile for a truck should be near or equal to a gallon of fuel. It used to be, a lot of things used to be. A strike is not the answer because they just won't work. How many have since deregulation?

Reality is this, the industry is going through a correction phase right now. The strong will survive others unfortunately won't. But for everyone to have a chance we have to accept responsibility for our own instead of blaming everyone else. For those that are and even those that are enabling others with the pointing of the blame finger, you should stop. Correction begins at home.

Yes. I'll be the first one in line to say that bad brokers and even bad broker organizations exist, my answer is to not use them. The bad ones normally disappear in the course of time. Find a broker you can work with and cultivate the relationship. You shouldn't have 10 filing cabinets full of broker packages.

I truly hope that the next time a driver is in front of a camera, writes an article or letter to be published in a newspaper or magazine that he or she remembers that shippers are hearing and reading your words. The same shippers that will or won't pay more to ship their freight. They are a business just as we are. If they sense that our industry is in such disarray that they don't have to raise the rates, they won't. Why should they? They're in business to make money just as we are. They just do it different.