It’s every man for himself on fuel surcharge formula

IT IS not often that FTW fails to come up with the goods, but a reader has just confounded us with an unanswerable question. “Could we not publish a running monthly figure which would allow transport users to work out what fuel surcharge they were going to face?” he asked FTW. But, although the fuel cost has always been a vital part of a vehicle’s operational cost, and fuel surcharges are spiralling continually upward, such a monthly index figure is just not calculable. While the Road Freight Association (RFA) issues a regularly updated vehicle costing schedule, and FTW has been led to believe that the Steel and Engineering Industry Federation of SA (Seifsa) issues a construction industry costing schedule (which includes a road transport cost element), neither of these fills the role required. This type of schedule, according to Kevin Martin, MD of Freightliner and vice-chairman of the Durban harbour carriers' association (DHCA) section of the SA Association of Freight Forwarders (Saaff), can only offer a vague guideline. The type and age of the vehicle used; how well it is maintained; its fuel economy level; the routes it runs; the mass of cargo it carries; and even how heavy- or lightfooted the driver is, all contribute to its average running cost, he told FTW. And each road carrier will have his own individual cost records that will dictate his fuel surcharge calculation. Paul Rayner, MD of DTB Cartage and former chairman of DHCA, agreed. “Everyone does their own thing,” he told FTW. Each transport company must use its own formula to work out its fuel surcharge, Rayner added, based on the percentage that fuel makes up of its total costs, and multiplying that by the percentage increase in the diesel price since the original rate was set. And diesel is now a pretty hefty part of the overall running cost. As at May 1 this year, the cost of diesel had increased by approximately 61% over the same date last year. Rayner estimates that the fuel element for a short- to mediumdistance road transporter would be between 30% and 35% of the overall running cost. “But considerably higher for a long-haul operator,” he said. For the industry as a whole, Rayner reckoned that the average figure sits somewhere in the 35%- 45% range. This means that a short- to medium-distance transporter needs a fuel surcharge of between 20% and 25% to cover costs – and, it would more probably be at least a 30% surcharge required by a long-distance operator. So, to our desperate reader, we can only apologise. An average fuel surcharge index figure is impossible to work out.