U.S. motor carriers debate diesel surcharge legislation

The trucking industry in the U.S. is split over legislation that would impose a mandatory surcharge when fuel prices increase.

The Truckload Carriers Association (TCA) and the Owner-Operators Independent Drivers Association (OOIDA) are throwing their support behind Senate legislation that would impose a mandatory surcharge when fuel prices increase. But everyone in the U.S. trucking industry is not backing similar pending bills introduced in both houses of Congress.

The Motor Carrier Fuel Cost Equity Act of 2002, a Senate-initiated bill, would impose a fuel surcharge when diesel exceed (U.S.) $1.15 gallon. The Senate bill stops short of mandating that motor carriers pay their drivers when diesel prices surge; drivers would only receive the surcharge payments when the company is able to collect from the shippers. However, a similar pending House bill would authorize motor carriers to pay drivers the surcharge, regardless of their collection record from shippers.

Senate Bill S. 1914, clearly the favorite of trucking firms, instructs a motor carrier, freight forwarder or broker to calculate the surcharge based on mileage or percentage of revenue to determine the amount necessary to compensate the fuel buyer (usually the driver) for the amount of the increase in the fuel, according to the bill.

The Congressional bill, which requires carriers to "pass through to the person responsible for paying for fuel any fuel surcharge" soon as prices exceed $1.15 per gallon provides no connection to a carrier’s ability or success in collecting the extra cost for fuel increases. Drivers would have to be paid the extra costs they incur if diesel prices jump past the benchmark.

While the TCA and OOIDA are urging their members to support the Senate bill, they are very cool towards the House bill. They say the passage of the House bill would be extremely detrimental and add that the trucking industry would strongly oppose it.

But other trucking organizations also don’t want to have anything to do with the milder Senate bill either.

"The problem with that kind of legislation is that the carrier is the bad guy in the middle," said Buster Anderson, vice president of the National Association of Small Trucking Companies. Both bills would cause an accounting nightmare for carriers when diesel prices climb past the benchmark threshold, Anderson added, since companies pay drivers sometimes for multiple deliveries on a weekly basis, and collections from shippers average 30-60 days. Anderson said that shippers would demand contract renegotiations to try to lower their shipping charges if the surcharges were imposed, leaving the carrier with less revenue.

"Fuel surcharges are great when they can be collected and passed on to drivers," Anderson said. "The way these bills are worded adds a level of complexity to the transaction process."