Will Washington regulate fuel surcharges?

by Canadian Shipper

WASHINGTON, DC — A provision of this year’s federal highway funding bill currently being considered by the U.S. Senate would essentially re-regulate the trucking industry when it comes to fuel surcharges.

The provision requires carriers and third-party logistics companies to log the number of miles and the price of fuel for each freight movement based on government tables, according to a report in the San Antonio Express News. Specifically, the surcharge must be figured for the price of fuel, minus a base level of $ 1.10 per gallon times the number of miles,.

The federal government won’t have to spend money enforcing this. It will allow lawyers and courts to do that by allowing disputes between truck drivers and carriers/brokers to be settled by lawsuits, even years after the freight is hauled, the San Antonio Express News reports.

Independent drivers like the proposal because they want to know whether they’re getting paid the same amount for fuel they must pay out of their pockets as what the shipper is paying to the broker or third-party logistics providers.

But the Transportation Intermediaries Association (TIA), a third-party logistics trade group, is not happy with the proposal. TIA President Robert Voltmann said lawyers easily will be able to launch class-action lawsuits on behalf of drivers if mistakes are alleged in miles or fuel prices.

No one will win such disputes, except the lawyers, Voltmann is quoted in the San Antonio Express News, adding the paperwork necessary to defend against lawsuits would be costly, he added.

The main concern, however, is government action that essentially re-regulates the industry.

“It re-regulates the industry,” said. “The provision would reinsert the federal government into pricing and contracting.” Voltmann is quoted in the San Antonio Express News. He provides this example: A $ 1,000 contract to haul a load 1,000 miles. The government method would set aside $ 220 automatically, leaving $ 780 for the carrier and driver. That takes away the flexibility between carriers who have invested in trucks that can get 9 miles per gallon versus the government standard of 5 miles per gallon.

The TIA says carrier associations should be allowed to develop a fuel cost matrix without the government.

“Such a matrix would show that if fuel costs $ 2.20 a gallon and your truck gets 6 miles to the gallon and the load is 1,000 miles, that you need 37 cents per mile just to pay for fuel,” Voltmann is quoted in the San Antonio Express News. “A similar matrix could be developed for operating costs. This information would be useful when carriers are working with shippers and brokers.

“Another option would be for the carrier, shipper and intermediary association to develop a model fuel surcharge addendum to (standardized) contracts. Such an addendum would have blanks that can be negotiated and filled in. Let’s work within the confines of the marketplace without adding new regulations, new costs and new lawsuits.” The matter will become even more urgent as fuel costs continue to rise along with volume of freight.

The TIA is concentrating its opposition to the proposal on the U.S. Senate, since the House already has approved its version of the federal highway funding bill.

The San Antonio Express News says many House members did not know they were voting on the fuel surcharge provision because it was slipped into the bill between committee hearings and the floor vote.

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