Thursday, July 10, 2008

Nothing is perfect, but this is the best we have

The price of fuel has brought many other topics to the forefront, not the least of which is the fuel surcharge.

Right now, Congress is considering the TRUCC Act – a bill that would require any fuel surcharge paid by a shipper to be passed on to the person paying for the fuel.

Some truckers have claimed that this act won’t work. The typical concern I hear is that the broker will ask the shipper to not list the surcharge separately, and instead just include it in the rate.

At one time, I was concerned about this. But is the broker going to do this?

First, what is the broker going to tell the shipper? Hey, I know I was billing you for a fuel surcharge, but I was really pocketing that money, so could you roll it into the rate now so I don’t have to pay it to the trucker? I just need you to help me violate this federal law, so I can keep ripping off you and the trucker.

Does that sound like something the shipper is going to go for?

Let’s try this on for size.

We’re assuming that the shipper and broker have the same interests. But they don’t.

Shippers prefer a surcharge. If the rate goes up, it stays up … even if fuel prices drop.

But if the shippers pay a base rate plus a surcharge, then if the price of fuel drops, their cost drops.

The shipper gains nothing, no advantage whatsoever, by going along with some broker’s scheme to line their own pockets.

People in this kind of situation tend to act in a way that benefits their own economic interests. The surcharge is the best situation for the shippers’ economic interest. And the broker can’t make the situation you describe work without the shipper’s cooperation.

The TRUCC Act isn’t perfect. But it’s a good bill, and it’s the best shot we’ve had in many years to fix this situation. If we don’t act on this, we can count on truckers being ripped off for years to come.

And that is something that no one wants.