We are all aware of the high cost of fuel. All we need to do is watch the news or pull up to a fuel pump to be aware of this.
Fuel is only one of the many problems facing all of us today.
Are you aware that there is, in the works, a federal mandate of a fuel surcharge for all trucks moving freight to help with the high cost of fuel? (Sorry for the original mis-information. I understood this law to be in effect now.)
Owner operators of trucks should be aware of this. The general consumer probably won’t be. How does this affect the average consumer? By mandating this fuel surcharge, it is designed to help the truck owner (carrier) with the high cost of fuel so that they can continue to move freight. This cost doesn’t just go away. It absorbs itself into shipping costs. When a shipper pays this, they, in turn, tack those fees into the cost the consumer pays. However, even though this charge is being added to the shippers bill, the carrier is not seeing the fuel surcharge as often as they should or, if they are seeing it attached to the fee for hauling the consumers goods, it is generally far less than it should be. (At this time, what is mostly occurring is it's being added to some freight bills and the original freight charges are being lowered to accomodate these charges.) Why does this happen? Because of the “middle man”. The freight broker!
Here’s how his system works. The freight broker takes a class that shows him the rules and regulations of freight brokering, how to get into the freight business, and how to protect himself from any liabilities arising from brokering the load from a shipping company to a carrier. He then fills out forms (or has a third-party do it), insures, bonds, and gets his business license to start. Obviously, he has to have an office, phone line, fax machine, and internet to be able to secure the loads. This can all be done out of his home, if there are no laws or ordinances restricting him from doing so.
He obtains a customer (a shipper). Then the customer and broker come to an agreement on a load to haul and for how much. In turn, the broker finds a truck (carrier) to haul the load for an agreed amount of money. This is assuming that the load has only been brokered once. It can be brokered more than once, each broker taking off money for themselves, and giving it to the new broker or carrier. This is where things begin to go bad.
The truck owner/carrier needs the freight. They have very high costs of operating which continue to accrue, whether or not his truck is moving. Truck and trailer payments, insurance on both of those, and phone bills. (Not including their household/family bills.) Then there are the fees when you do obtain a load, fax fees, fuel, road tax, fuel tax, truck maintenance (tires, oil changes, breakdowns, etc.) So, the carrier agrees to haul the freight, unknowing that, if this had been his own customer, he could have hauled the load for up three times the amount he hauled it for.
One example, recently, as a small trucking company, we decided to obtain more customers of our own. We had talked to brokers this very morning and were offered a load from Springville, UT to Peoria, IL for $1070.00. This included the fuel surcharge. Our company could not afford to haul this load through the broker (It would not have covered all of the expenses.) and turned it down.
As the representative of our company went to various potential customers, he wound up at the very shipper that was shipping the load to Peoria, IL. When he told the potential customer that our company could not afford to haul the load for the price he was quoted by the broker, the shipper asked the amount. Our representative told him the amount. The shipper was stunned and in disbelief. As it turned out, another carrier was on the premises, loading the exact load. The shipper asked that truck owner what he was being paid through the broker and found out that it was, indeed, $1070. The price the shipper was paying to the broker? $2800.00.
Obviously, this means that the broker made a profit of approximately $1730.00 on this particular load. Their expenses would have been something like… a percentage of phones, internet, insurance, office, fax, paper, ink, wages for the employee (broker), etc. The carrier expense would have been… fuel, road and fuel tax, a percentage of his truck and trailer payment, a percentage of his insurance, a percentage of his phone, fax fees, equipment, and licensing, and his labor (Does anybody expect him to do the work of loading and unloading, and driving for free?)
Does it sound fair or even feasible that the carrier made that much less to haul the load and do all of the work involved in transporting the load while the broker made almost double the income for sitting in an office finding the freight?
Again, you may wonder how this affects you, the consumer, since the fuel surcharge would have been added to the load already and passed onto you. Had there not been a broker who took so much of the freight fees, that same load could have been shipped at a lesser rate, directly from shipper to truck owner, and saved the consumer money.
Another example of brokers: A broker, as stated before, can do his work from an office or home… really, wherever he can get phone, fax, and internet service.
One of our last brokered loads was from a broker from Salt Lake City, UT who was in Las Vegas, NV playing slot machines as he was brokering a load to our company!
A truck owner could almost never do that! The only way a truck owner could vacation at the same time they haul a load is if their load is going to their vacation destination. While on vacation, their truck is not moving so freight does not move and they do not make any money but continue to pay expenses.
Do the brokers perform a service? Yes. They get shippers and freight haulers together. But do you, the consumer, feel that their service warrants them taking up to 2/3 of the freight fees?
Let's say that the broker only took 15% of the $2800 load. That would have been $420. Plenty of money for their services. That would have left the trucking company with $2380. As it stood, the carrier only received $1070. That would have made a difference of $1310. If the carrier and the shipper had split that money in half, the shipper spending less and the carrier making more, the savings could have been passed onto the consumer because he wouldn't have had to pay more for the goods.
In our current economy, how much does it cost you to drive to the grocery store to buy your groceries? Just imagine how much it would cost you to drive 1000 miles or maybe more to get those same groceries. That’s what trucks are doing for you.
If trucks stop moving, America stops. Are you willing to drive to Idaho to get your 10 lb. bag of potatoes? How about to California or Florida to get your oranges, strawberries, or other produce?
What this blog is designed to do is to alert the consumer as to what is taking place in the trucking industry that is costing you and me money and forcing small trucking companies out of business while making brokers more and more money.
There should be a federal mandate as to how much brokers can make off a load. There should be laws requiring them to show the truck owners actually how much they are making off the loads they broker to them. There should be laws that require brokers to give 100% of the fuel surcharge to the truck owner because he is the one buying the fuel. There should be laws that require the fuel surcharge to be the same for every shipping company and not different charges for different shippers.
If these things concern you, as it does it does us, please contact Lane at madtruckersfightback@gmail.com or fax us at (801) 465-6111.
One voice, ours, doesn’t bother anyone who should be listening. Many voices may help make a change!
By the way, certain radio personalities are saying that they have tried to contact us by phone but we have not taken the calls or have hung up on them or would not let them record us. UNTRUE!
