Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: https://read.dmtmag.com/i/85442
OWNER-OPERATORS' TOP CHALLENGES customers different forms of the surcharge for local and longer regional hauls, as there's a significant fuel-mileage difference. "All I was doing was trying to keep my customers happy," Blake says, recalling the tough 2007-08 period. "When I start- ed looking at the books, I was just like, 'Oh man, I'm killing myself.' If you're not paying attention to what things are cost- ing you, you're going to leave a lot of money on the table." Consider alternative fuel equipment. Smart owner-operators should be mindful of developments with natural gas engines. The tech- nology is proven to be efficient in many urban and regional haul applications and is becoming increasingly viable for over-the-road. All truck makers have or are making available natural gas-powered versions of their trucks, and the fueling infrastructure is rapidly expanding, says Mike Bethea, director of Schneider National's independent contractor fleet. "We have some units ourselves that we've put on," he says. "They're running all over, and have performed well with lower emissions." Natural gas' diesel-gallon equivalent has been run- ning about a third less costly, making new fleet investments in the equipment to take advantage of it attractive. Know your costs and boost efficiency. Cost analysis is crucial to establishing or evaluat- ing the efficacy of any fuel-surcharge or rate- adjustment program. Know what it takes per mile of revenue to meet your fixed costs, and track your fuel mileage, tire-life cycle and maintenance expenditures over time to determine variable cost per mile. "Make sure revenue lines up with all costs, make a good business plan" and update it frequently, Bethea says. How are you affected by fuel prices? I get a good fuel surcharge, so it's no problem. 35% I get no fuel surcharge, so it's a big problem. 11% I have trouble understanding my fuel surcharge, so I'm not sure how much I'm affected. 16% My method of payment adequately covers fuel cost. 16% I get an inadequate fuel surcharge, so it's a problem. 22% OverdriveOnline.com poll, 63 respondents Join the debate, sparked by our surcharge polling, on how to manage fuel costs with rates at OverdriveOnline.com and on our Facebook page (Facebook.com/OverdriveTrucking). Rate adjustment or surcharge? If you're independent, you have a choice in how you structure your rates to account for fluctuations in fuel prices, possibly diverg- ing from the fuel surcharge. Many question the relevancy of that model, arguing for more dynamic rate structuring that in real time accounts for the cost of fuel. Using tools like Overdrive publisher Randall-Reilly Business Media's FuelSurchargeIndex.org to get daily lane averages for fuel prices, dynamic rate structuring is much easier today. And for a leased owner-operator not in the position to be nego- tiating such contracts, it makes no difference whether a $500 load pays the flat $500 or $350 plus a $150 surcharge. "Don't get hung up on the surcharge," says owner-operator Jeff Clark. "Maximize your net income." If you're leased, fuel surcharges can be a profit center and encourage fuel efficiency. If you're beating your carrier's average fuel mileage – the base mpg that is used to calculate the fuel sur- charge in contracts – then the more miles you run, the more you profit on fuel. Spec the most appropriate truck for your operation, too, he adds, to get the best fuel mileage. With the 2010 diesel engine technology making its way into the market, some owner-operators "who've managed to get used equipment and operate under those old emissions standards" will increasingly find themselves behind the ball on efficiency, Bethea says. "Six mpg is no longer the standard. Folks are getting 8 mpg with the right kind of load with the new specs. Keep up with the technology and make the right decisions to adapt to change." Find a good partner. Discount fuel programs are available to those running under their own authority via card pro- grams like Wright Express' OTR Pro Card (OTRProCard. $71 million First-quarter 2012 total invoiced amount of fuel surcharges passed along to Landstar owner- operators, says Vice President Joe Beacom. Scan the QR to view a recent 70-minute webinar with Overdrive columnist Kevin Rutherford on "Fuel management: Optimization, taxes and surcharges." 34 | Overdrive | August 2012