Choosing a Trucking Company (Part 1)

Choosing a Trucking Company (Part 1)

It would be irresponsible to write a book to help lease operators become more successful and not analyze fuel costs, both past and present. Over 30% of “Making Your Miles Count: Choosing a Trucking Company” is dedicated to Fuel costs.

As I have presented it, if operators understand fuel taxes they will be able to understand more clearly how to manage their net fuel costs. Fuel taxes are a relatively stable part of total fuel costs. They are a little like oil on top of water. From above the surface it may appear that the taxes are going up and down but it’s actually the base price of fuel that fluctuate not the fuel taxes. (see figure five)

In managing bottom line fuel costs the operator must focus on the base price never the fuel taxes (with only very few exceptions). Understanding and following base fuel price differences saves the operator net fuel costs, often times thousands (or even tens of thousands) of dollars per year.

There is no such thing as the “fuel tax game” unless we refer to a make-believe fantasy like scavenger hunt… that helps absolutely nothing! Fuel taxes are almost a fixed cost since virtually nothing can be done by the operator to lower the cost in a jurisdiction other than not driving in that jurisdiction at all. Operators should only be focused on base price, not pump price.

There is one part in my book that so emphasized the fixed nature of fuel tax I recommended that it would be reasonable for Carrier Contracts to actually pay for all fuel taxes. This suggestion was not one to necessarily increase operator income as much as it was to stabilize it. There are some jurisdictions that tend to be significantly more expensive to operate in (for example BC costs 7.9 cents per mile more than Alberta does… exposing only fuel cost differences… at 6mpg). There is also the point that once a route/trip is chosen there is absolutely NOTHING an operator can do to reduce their fuel taxes. Therefore, if the operator has no influence over its cost, they should reasonably not have to absorb the jurisdictional differences they produce.

The point was not to suggest all Carriers now should pay all fuel taxes… the point was that different trip and routes produce different costs that are too often not adequately compensated. Now that you know it costs 7.9 cents per mile more in JUST fuel taxes to operate your truck in BC verses Alberta… which trips will you avoid? Which trips may you be more enthusiastic about? How do Carrier contracts deal with these types of variations? Or maybe do they at all?

Even if all Carriers would pay the fuel tax entirely, operators must still retain a method of evaluating the base fuel price for each fuel purchase. Operators must learn where in their route/trip base prices tend to be higher and where base prices tend to be lower.

Issues like this are sometimes considered complex and too many operators ignore them. However, survival or failure is rooted in them. If it’s not fair to blame an operator for something they can’t control, it’s also not fair to blame a Carrier for something they are not responsible for.

Choosing an appropriate Carrier should be more of a science than it is trial and error. This book could save some drivers years or even a decade of financial catch-up. Educating Operators in making the right choices is what Over the Road Magazine and this book tries to accomplish.

Robert Scheper

Robert D Scheper has a Masters Degree in Business Administration and is the author of two books, “Making Your Miles Count: Taxes, Taxes, Taxes” and "Making Your Miles Count: Choosing a Trucking Company".

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