Companies keep on trucking thanks to surcharge
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‘It would be crippling to not have those safeguards in place’ Author of the article:
A convoy drove past Health Sciences North in Sudbury on April 18, 2020. Photo by BEN LEESON /POSTMEDIA NETWORK
A critical cog in Canada’s economy is insulated from higher fuel prices, but that still does not protect the average consumer from paying more down the line.
Like all other parts of the economy, the trucking industry is facing dramatically higher fuel costs this year. But truckers can pass along the increase in the form of a fuel “surcharge” to customers who use their shipping services.
Essentially, they charge their customers more, as the price of fuel goes up. “Just in the last week, fuel has gone up three or four cents a litre since last Friday,” said James Steed, who runs Steed Standard Transport in Stratford. The 108-year-old trucking company is considered a smaller operator with just 40 trucks.
Steed’s family-run business relies on the industry surcharge to stay afloat. Since Jan.
1, retail diesel has gone up 45%, according to the U.S. Department of Energy.
“A carrier just can’t absorb those costs with the fluctuating. It would put us out of business if we didn’t have a fuel surcharge.” Steed explained. “That’s the key part of dealing with the ups and downs of fuel pricing.”
Fuel is considered the second biggest cost for trucking companies — after labour. “It is such a huge cost, it would be crippling to not have those safeguards in place,” said Marco Beghetto of the Canadian Trucking Alliance, which represents 5,000 firms nationally.
Beghetto says the surcharge system keeps member companies functioning. The increase in shipping cost is ultimately passed down the food chain, possibly ending with the consumer. “The customer will typically pay the price, the fluctuations will be reflected in the contract,” he said. “That’s the situation right now as costs are increasing throughout the entire supply chain”
Dan McTeague of Canadians For Affordable Energy predicts a dire circumstance if current trends continue.
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