What exactly is fuel surcharge?

Back in the early 90s, fuel had remained steady for years at about $1.20/gal and 6 mpg was quite common. That meant obviously, .20 per mile for fuel. Today Im at .77 mile so I think .57 cents fsc is fair with $4.00 diesel. The government doesnt regulate fsc, and every company charges in their own way. Some go by percentage of the linehaul which is probably around 30% as I type this. Brokers typicaly do not break their rates down with a fsc, just "all inclusive".

If you get your own shippers, they themselves know the going fsc rate, so dont go in telling them you need .80/mile, plus the going linehaul rate.

 

I've been out for several years so I'm going to let the owner/operators that can address fuel surcharge with facts do so. I'm looking at getting back in so I've researched and worked up some numbers.

Unless you're setting your own rates for direct freight, I think you probably don't need to spend much time on FSC. Whether you are leased or running your authority, you will get what the company or broker pays.

What you need to do is calculate your cost of operation. Look at post 3 in this thread: "Cost Analysis"

http://www.thetruckersreport.com/tr...r/146942-how-to-become-an-owner-operator.html

This is something I worked up for running my own authority. This whole thread is worth reading. I shared a story that shows how easy it is to fail as an owner/operator. Since this analysis is by line item, you can remove items that would be covered by a company, you would lease to, and then compare expense to what they would pay.

 

you have so many errors in your plans I strongly urge you to do alot more reading. You have the rose color glases on by friend


for instance.
no way you will run 5000 per week. not unless you are running a team. you may have a 5000mi week but you'r not going to average that. How about days sitting in the truck stop looking for a load that's worth hauling? time off? down time for repairs etc?

companies don't ostly keep fuel surcharge. most every company pays fsc to the owner operator. very few will try n screw you out of it. in fact if you are independent and booking loads through brokers they are the ones that usually will try to pocket the fsc and anything else they can


I won't leave my recliner for $1/mi

how about the $200+ oil changes twice a month? or the $75 truck washes, or the $100+ a week to eat on the road and every other little thing we get charged twice as much for in a truck stop?

your not going to average 6.8mpg I don't care who told you what


trucking always looks good on paper. the reality is not so promising. most don't make it a year.

 

Finding your loads is the part that I'm the most worried about and I've done it before. The problem is, anybody can find loads, but can you find profitable loads? If you take loads for expenses or fuel because you are desperate, that will be the only loads you are offered. It won't take long before desperate will acquire a whole new definition.

You need lots of skills to be successful at loading your truck. Contacts, negotiating skills, a good delivery record, time with authority, picking the right freight lanes, deadheading out of cheap areas and getting enough to DH out all play a role in load selection.

IMHO, the reason so many fail at being an owner/operator is few drivers understand their true cost of operation, just how many tasks they have to excel in and how much capital is needed.

 

FSC is just an index used by the industry in an attempt to take out the variable cost of fuel and see a more "true" or normalized freight cost. The government doesn't set the index price, nor give anyone any money for it. See this US government site. Shippers and carriers set their own FSC. Most seem to index fuel (index is the fuel price where FSC = 0) somewhere around $1.10 - 1.20 as Winchester stated. Most of the large carriers will publish their current FSC on their website.

In my cpm model, I figure a gross cpm and include a current fuel cost in the math. In other words, I ignore the FSC because it's already baked into my model with an actual fuel cost. Others prefer to keep them separate. Usually because their brokers or the company they lease to settle it that way, making it easier to figure for their business.

 

if you haul cheap out of desperation you will never get god paying loads. these brokers share. they put you in the systems. they know who has screwed over a broker and they know if you haul cheap. and once you start hauling cheap they will never offer you a good rate

 

On the mileage per week, figure it low. I know you are talking team but I would not base my projections on 5000 miles with a team.

If you looked at my projection, I figured 2000 miles a week paid and 300 deadhead. Now I'm hoping for 3200 miles a week at $2.30 per mile but we can all dream.

Since I have no team experience, I don't know what is reasonable miles. I would use 4200 paid and 600 deadhead unless further research showed that high. If you can't come up with a worst case analysis that will work you're out of business.

Take a look at what rates and miles were doing in, I believe it was, late 2008 and early 2009. And best I can tell it was no bumber crop most of last year either.

 

there really isn't THAT many team loads on the broker market. they're there but you'r not going to run team every load unles syou lease to a company who does strictly team expidited

 

It would be completely legal and possible to run 6000 miles a week with a team. This will likely only happen running specific freight lanes with a specific trailer type, specific freight and during certain seasons. And trust me, it won't happen week in and week out. One more thing I just thought of, If you break down in a team operation, missed miles and revenue are two times what they are in a single operation.