OOIDA responds to anti-fuel surcharge groups

| 4/27/2005

In early April, a group of companies sent a letter to the Senate Committee on Commerce, Science and Transportation leveling some serious charges against the mandatory fuel surcharge legislation that was approved by the House in March.

Todd Spencer, executive vice president of OOIDA, said not only are those charges misleading, they are flat out wrong.

In the letter, the group wrote that the surcharge is not necessary because shippers and carriers already negotiate fuel surcharges when they contract for shipping.

“That system of freely negotiated prices exists today and works well,” the letter stated.

Spencer had a different view.

“It certainly works very well for those people that are opposing this legislation,” Spencer said. “But that’s certainly not most truck drivers.”

Spencer said the trouble is that those companies that implement fuel surcharges don’t pass the money along to the drivers, who are the ones paying for the fuel in the first place.

“It is simply inconceivable that any entity would assess a fuel surcharge and then not pass that money through to the person that actually pays for the fuel,” he said. “When they do that, a fraud has been committed against the shipper and the person who pays for the fuel. This is clearly a matter of integrity, or the lack thereof. This is certainly an unethical practice, and it clearly should be an illegal one as well.”

The letter also claims that the regulation will lead to increased costs for the federal government, both in terms of increased shipping costs and as a result of an increased number of lawsuits triggered by an enforcement mechanism in the legislation.

Once again, Spencer said this is simply not true. The federal government, he said, plays no role whatsoever in the enforcement of the rule and if anything, the rule would lead to a clearer understanding of who is paying what to whom when it comes to fuel surcharges.

“The current system, where everything is gray or ambiguous, is the one that’s more likely to produce litigation,” Spencer said.

“What we’re proposing here takes away all ambiguity. It’s simple, it’s easy, and it’s straightforward. Any violations that would occur would be known and deliberate violations. The only way that a possible violation could occur would be if a deliberate effort to avoid compliance was made. In that instance, obviously there should be a mechanism to enforce. But the mechanism laid out here is one that clearly leaves it up to private parties to negotiate and to work out their differences and in no way, shape or form does it involve an active involvement on the government’s part.”

The letter also charges that a mandatory fuel surcharge would be the first step on the road toward re-regulating the trucking industry. Spencer dismisses this claim as well, reiterating that there is no involvement in enforcement or price structuring on the part of the federal government.

“That’s simply nonsense,” he said. “Fuel surcharges were the industry norm when the industry was regulated. They continue to be the industry norm. There isn’t any connection. There’s no government involvement whatsoever. The plain and simple truth is that the fuel surcharge mechanisms in place today benefit a handful of parties at the direct expense of small business truckers.”

Spencer said the only thing that a mandatory fuel surcharge would do is to level the playing field between small businesses and big businesses in the transportation industry. He said the opponents of the measure simply don’t want that to happen.

“It makes zero sense to periodically purge the ranks of trucking of the smaller drivers that keep the industry competitive when they are desperately needed,” he said. “The vast majority of trucking is small businesses. The country can’t afford to do without them.”

Spencer said it’s interesting that some of these groups are opposing the legislation at all. Less than truckload carriers, for example, aren’t even affected by the bill.

“The only reason they would care is because the fuel surcharges they currently collect are a significant profit center that goes beyond offsetting fuel costs,” he said.

Spencer said that big brokers – another opponent of the bill – have an even greater desire to keep their business dealings well concealed.

“On many brokered loads moving today fuel surcharges are assessed and collected from shippers,” he said. “But those revenues and as much as 40 percent of the gross are often skimmed by the broker with neither the shipper knowing they were had.”

– By Terry Scruton, senior writer