Shipper group tells members to prepare to negotiate fuel surcharges

OTTAWA (April 10, 2002) — The head of Canada’s largest organization of shippers has told members to be prepared for motor carriers to come forth with surcharges in order to mitigate the rising price of diesel fuel in both Canada and the United States.

“We understand that the carrier cannot control fuel prices, however, neither can shippers,” said Lisa MacGillivray, president of the Canadian Industrial Transportation Association/Association Canadienne de Transport Industriel (CITA-ACTI). “This is why the members of CITA-ACTI expect the carriers to approach them as partners in resolving these issues.”

The Ottawa-based association, which represents about 300 companies, has developed a formula shippers can use to calculate fuel surcharges. The CITA-ACTI does not make the formula public.

“Most of our members have their own in-house method of calulating surcharges,” said CITA-ACTI spokesperson Sophie Tourangeau. “Still, many do not, yet I think understand the need to address the issue of rising prices. We want them to be prepared when the carrier comes forward [seeking a surcharge].”

In the trucking industry, fuel can represent anywhere from 8% to 20% of costs of a carrier, depending on the size of the fleet, the efficiency of the carrier, the trade lanes, and the type of service the shipper requires. For this reason, MacGillivray reasoned, the impact of volatile fuel prices will vary greatly from one carrier to the next.

“Shippers are reluctant to consider a demand for a surcharge when the percentage being quoted appears to have little in common with that carrier’s operation,” she said. “And shippers are understandably leery of one-size-fits all blanket statements about what percentage they should be paying.”

Diesel fuel prices jumped this week to levels not seen since last October. An announcement by Iraq that it will stop oil exports to protest Israel’s actions against Palestinians is expected to send them even higher.