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4/22/2005
SPECIAL REPORT: Fuel surcharge boils down to big business vs. small business

After three days of declines, diesel prices began to rise again on April 22. And while independent truckers struggle to survive the latest increase, bigger trucking companies - many of them opponents of mandatory fuel surcharge legislation - report they are doing quite well.

For example, a recent article from The Associated Press reported that companies like Yellow Roadway are thriving in the face of an estimated $10 billion increase in diesel fuel costs because they are implementing fuel surcharges of their own.

Yellow Roadway, which is based in Overland Park, KS, has more than doubled its earnings in the first quarter of 2005 compared with the same time period in 2004. The company earned $49.89 million in the first quarter, up from $18.6 million in 2004. What's more, The Associated Press reported, the company more than quadrupled its earnings for the entire year in 2004, checking in at $184.2 million.

Todd Spencer, executive vice president of OOIDA, said that these companies that are making money aren't giving those who aren't making money a chance to survive.

"Clearly this issue isn't about regulation or re-regulation or litigation," he said. "It's clearly an issue of big business vs. small business and those that have the means making certain that the door is closed behind them."

Spencer said that - given the plethora of problems facing the trucking industry as a whole - these companies should really know better.

"What makes it especially frustrating is that this position is being taken despite the fact that it is common knowledge that more trucks and drivers are needed," he said. "And the current rate system we have isn't sufficient to allow drivers to be adequately compensated to the extent that they can be retained for long periods of time."

Several companies - including J.B. Hunt Transport Services Inc., Knight Transportation and USA Truck Inc., recently issued press releases posting record revenues and earnings for the first quarter of 2005.

J.B. Hunt posted a 36 percent increase in income for the first quarter, up from $58 million in 2004 to $79 million in 2005.

In separate news releases, each of those companies credited their rise in earnings to a rise in their fuel surcharges. In fact, Knight said it increased its fuel surcharge billings by 173 percent.

FedEx, Celadon and Werner Enterprises also posted increased profits credited to higher fuel surcharges.

In addition, an article in The Cincinnati Enquirer recently quoted Bob Costello, chief economist for the American Trucking Association - one of the main opponents of mandatory fuel surcharge legislation - as saying that thousands of small trucking operations could be forced to close as a result of rising fuel costs.

"The ones that will really get hit by this are those operators with one to two to three trucks," he said.

By Terry Scruton
terry_scruton@landlinemag.com

Find out what a mandatory fuel surcharge would mean to you

Mandatory fuel surcharge legislation is a thorny issue. For more information on the subject, click the links below.

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