U.S. importers in the eastbound Pacific will pay inland truck and rail fuel surcharges to shipping lines beginning Aug. 15, but that doesn't mean harbor truck drivers will receive additional compensation in this era of rising fuel costs.
Harbor truckers are incensed. They contend that shipping lines will turn the high cost of diesel fuel being paid by motor carriers into a profit center for ocean carriers. "If the carriers are collecting a diesel surcharge from their customers but are not passing it on to the drivers, who are the ones putting the fuel into their tanks, it's just not fair," said Dan Gatchet, president of West Coast Trucking in Seattle.
The Transpacific Stabilization Agreement, a discussion group of 13 carriers in the eastbound Pacific, announced on July 14 that its member lines intend to institute an inland fuel surcharge of $40 per container for local and regional truck transport in California, Oregon and Washington, and for East Coast local moves. The TSA also announced that its members plan to assess an inland fuel surcharge of $137 per container for intermodal rail shipments.
The TSA's guidelines are voluntary. Its member lines are free to follow or disregard the guidelines in their confidential contract negotiations with shippers. However, the TSA issues an announcement only after achieving a consensus of its members.
Albert A. Pierce, the TSA's executive director, said the inland fuel surcharges will be public for all shippers to see because the formula is based on the Department of Energy's National Diesel Price Index. The formula will be published on the TSA Web site (www.tsacarriers.org), and the surcharge will float up or down with the fluctuating cost of diesel fuel.
However, the new diesel fuel surcharge to be paid by shippers will not necessarily be passed on to harbor truckers. Rather, carriers intend to keep the revenue to offset the fuel surcharges they are paying to truckers. This angers truckers because they say ocean carriers will collect more money in inland fuel surcharges from shippers than the lines are currently paying to harbor truckers.
Harbor truck drivers across North America contend that they are not being compensated sufficiently for the rising cost of diesel fuel, which the Department of Energy says has risen 23 percent this year. Increased fuel costs are one of the factors that precipitated a costly harbor trucking strike in Vancouver, British Columbia, over the past month.
Diesel fuel surcharges are usually negotiated between shipping lines and harbor trucking companies. The surcharges are stated as a percentage of the cost of trucking a container to an importer's warehouse. The importer never sees the trucking rate because the importer pays a single, inclusive rate that includes the ocean carriage and the trucking rate from the harbor to the importer's warehouse.
Therefore, importers do not know if the fuel surcharge they will pay the shipping lines beginning Aug. 15 will be the true cost of the fuel surcharges the carriers are paying to trucking companies.
To charge a fuel surcharge, a harbor trucking company normally writes a letter to the shipping line stating its surcharge to a specific location, and the shipping line either accepts that rate or attempts to negotiate a lower one. In Los Angeles-Long Beach, for example, local "store door" truck rates are about $175 to $200 per container. Trucking rates to distribution centers in Riverside and Ontario counties, about 50 miles away, range up to $300 per move.
Shipping lines currently are paying fuel surcharges of as little as 4 percent to as much as 11 percent. That is why truckers say shipping lines plan to turn the new inland fuel surcharge into a profit center. Using a 10 percent fuel surcharge in Southern California as an example, harbor trucking companies say they are now receiving fuel surcharges ranging from about $17.50 to $30 per move. If shipping lines charge importers $40 per container, they will simply pocket the difference, truckers say.