We explain that with razor-thin net margins, averaging less than 3 cents per dollar of revenue, there is little room, if any, to absorb fuel price increases, or any other cost increases for that matter. Without full recovery, that means a loss of 2 cents for each revenue dollar. Fuel surcharges that fluctuate with fuel prices are the most efficient means to recover fuel cost increases. Over the years, experience has shown us it is also the fairest when all customers pay their fair share. If carriers were to attempt to recover fuel costs through rate increases, thousands of rate agreements and contracts would have to be renegotiated every time fuel prices move up or down.
Surcharges are more practical.
Administering surcharges, nonetheless, adds to a carrier s administrative burden, which gets costlier when customers resist, necessitating repeated contact with carriers personnel. To exacerbate this problem, carriers are now faced with increased customer resistance to general rate increases announced last September, because they have to be implemented while a fuel surcharge is in effect. Many forward-thinking large shippers understand that motor carriers must pass fuel cost increases on to their customers if they are to provide ample transport capacity in the future. But many shippers also expect their carriers to postpone rate increases until the fuel crisis subsides. This is understandable, since their transportation costs have already increased substantially.