Fuel prices top owner-operator challenges
Stay tuned to Overdrive this month for examinations of the top five, also featured in our August magazine. (Also, over on the Channel 19 blog, Overdrive Senior Editor Todd Dills is sharing further reporting from his expansive interviews for the package.)
Following find an examination of and some partial solutions to your named No. 1 problem, fuel prices, from owner-operators, fleet representatives and others.
1. Fuel prices
Diesel prices first topped $4 a gallon in 2008, concurrent with that year’s dramatic freight downturn. Some owner-operators were simply “costed” right out of business. Many of those had been leased to carriers without fuel surcharge programs or whose rates weren’t adjusted often enough to compensate for the dramatic increases.
While fuel surcharge programs are more entrenched in today’s industry, owner-operators still rank fuel pricing as their number one problem. Here are steps to help manage your fuel costs:
Ensure that you’re getting a fair fuel surcharge.
Avoid brokers and carriers whose rates don’t adequately compensate for fuel. If you’re independent and lack a fair surcharge, explain the situation to your shippers and negotiate a program. Fuel surcharges should increase or decrease proportionally with diesel prices, either on a cents-per-mile basis or as a percentage of the rate the customer pays the carrier for the load.
Six-truck small fleet owner and part-operator Tom Blake survived the 2008 crisis by sitting down with a few select shippers near the end of 2008 and renegotiating his contracts to include more frequently updated fuel surcharges.
Blake hauls container freight around the Kansas City, Mo., region. He offered customers different forms of the surcharge for local and longer regional hauls, as there’s a significant fuel-mileage difference.
“All I was doing was trying to keep my customers happy,” Blake says, recalling the tough 2007-08 period. “When I started looking at the books, I was just like, ‘Oh man, I’m killing myself.’ If you’re not paying attention to what things are costing you, you’re going to leave a lot of money on the table.”