Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Subscribe to this list via RSS Blog posts tagged in Freight Carriers Association of Canada

In the most recent Transportation Buying Trends Survey undertaken by Canadian Transportation & Logistics magazine, there is an interesting set of questions that pertain to fuel surcharges. Over 68% of shippers support the view that “fuel surcharges are necessary as long as fuel costs continue to be highly volatile.”  Slightly less than half of the survey respondents believe “carriers apply fuel surcharges correctly.”  Over 61% agreed with the statement that “fuel surcharges are a way for carriers to squeeze additional revenues from their customers to improve their profits.”  Over 55% of shippers support the view that “carriers should adjust their freight charges to market rates that include fuel surcharges and as a result simplify their billings.”

Perhaps the most interesting finding is that 25.8% of shippers have created their own fuel surcharge index.  Since I interact with both shippers and carriers in my daily work, I would like to weigh in on this topic.  This set of responses begs a few questions.  Should shippers be taking their precious time to create fuel surcharge indices and formulas?  How should shippers approach the topic of fuel surcharges?  What should shippers do to optimize their freight costs?  Here are my thoughts.

For shippers that use both private fleet and for-hire carriers, it is essential to be fully informed on all aspects of fuel costs and fuel surcharges.  Even for carriers that use exclusively third party carriers, there is a requirement to have some familiarity with the leading indices and the current surcharges being applied.  For Canadian and cross-border shippers, a subscription to the Freight Carriers Association of Canada’s weekly fuel calculation bulletin will provide you with one of the industry standards for LTL and truckload shipments.  For shippers that use intermodal service or are considering it in their freight programs, they should obtain a copy of the railway/IMC fuel surcharge formulas.  These differ (e.g. are lower) from the over the road surcharge numbers.

The next thing a shipper should do is to gain an understanding of the components of a freight rate.  One needs to understand that a carrier’s freight rate or tariff is based on several components.  There is the cost of pick-up and delivery, the line haul component, the cost for any special handling (e.g. residence, construction site deliveries, etc.) and of course, the fuel component.  For LTL and small parcel shipments, there are a number of other variables that come into play such as shipment weight, density, cube, packaging etc. 

Shippers need to understand that each carrier has its own mix of freight, its own fleet size and specifications (e.g. straight trucks, tandems, tridems etc.), its own head haul and back haul requirements in terms of both yield and volume and its own primary and secondary markets.  In other words, fuel costs and surcharges are a large piece of the puzzle but they represent one element of a carrier’s total cost structure.  At the end of the day, the carrier looks at each shipper’s freight and relates it to their costing model, business requirements, profit objectives and of course, market rates to determine their rate structure.

Hits: 27778
Continue reading 1 Comment

Most Recent Posts


Tag Cloud

buying trucking companies ShipMax shipping Sales Inbound Transportation Finance and Transportation driver shortages MPG Global experience Transplace Infrastructure Transportation Buying Trends Survey Driving for Profit network optimization Associates CSA robotics Load Boards Freight Rates 2012 Transportation Business Strategies. Jugaad Business Strategy University of Tennessee Training automation $75000 bond selling trucking companies MBA Bobby Harris Blockchain Sales Training Business skills Yield Improvement UP derailments US Economy risk management Otto Hudsons Bay Company Trucking Twitter Horizontal Supply Chain Collaboration Facebook dimensional pricing Transcom Fleet Leasing President Obama Politics business start-up freight RFP Management truck driver small business Colilers International Crisis management 2013 Economic Forecast trade Reshoring TMS US Auto Sales Success failure entrepreneur freight payment Career Advice transportation newspaper ELD Freight Recession 2015 Economic Forecast Freight contracts NMFC drones broker security Canada U.S. trade Broker freight transportation freight rate increases BNSF Distribution Trump LTL hiring process Business Transformation Strategy Training New Hires NAFTA Canadian Transportation & Logistics Conway dynamic pricing LinkedIn Spanx broker bonds marketing Leadership shipper-carrier contracts JB Hunt shipper-carrier roundtable shipping wine Map-21 Canadian freight market Load broker Shipper trucking company acquisitions Keystone Pipeline Stephen Harper Trade Vision Celadon freight transportation conference transportation news pipelines freight cost savings fuel surcharge IANA Dedicated Trucking natural disasters Packaging Retail transportation economic forecasts for 2012 USA Truck Climate Change Retail technology routing guide last mile delivery Masters in Logistics TMP Worldwide Carriers economy NCC Freight Capacity solutions provider Transportation service customer engagement capacity shortage CP Rail Toronto Entrepreneur 2014 freight volumes e-commerce freight costs financial management 3PL 360ideaspace Search engine optimization supply chain management mentoring freight audit KCS Loblaw David Tuttle Derek Singleton Warehousing freight payment freight audit freight bid Doug Nix ProMiles freight broker Wal-Mart Transloading Regina employee termination Global Transportation Hub Failure Omni Channel FMS Canadian economy cheap oil Canada Ferromex EBOR energy efficiency home delivery Freight Carriers Association of Canada Railway Association of Canada Schneider Logistics Deferred Packaging Muhammad Ali FMCSA Grocery tanker cars Education TransForce bulk shipping intermodal FuelQuest US Housing Market Sales Management FCA Blogging Life Lessons freight transportation in 2011 capacity shortages CITA Shipper Pulse Survey 3PLTL Freight Matching Job satisfaction Outsourcing Sales Social Media in Transportation future of freight industry coaching Rate per Mile Werner Fire Phone Social Media US Manufacturing CSX autonomous vehicles APL Rotman School of Business Donald Trump Software Advice Rail Canadian truckers Consulting home delibery Freight Management freight forwarders freight agreements professional drivers CSA scores Harper Davos speech the future of transportation Whole Foods Transportation Right Shoring Canada's global strategy US Election CRM driver New York Times Crude Oil by Rail carrier conference Scott Monty Tracy Matura LCV's Surety bond Cleveland Cavaliers Emergent Strategy Adrian Gonzalez Accessorial Charges 2014 economic forecast Canada-U.S. trade agreement YRC CN RFP peak season Dedicated Contract Carriage rail safety 2014 freight forecast driverless Success Comey Transport Capital Partners (TCP) BlueGrace Logistics NS Amazon Freight Shuttle System Dan Goodwill Truckload consumer centric FCPC Doug Davis truck drivers Swift Freight Microsoft shipper-carrier collaboration Driver Shortage transportation audit CN Rail online shopping

Blog Archives