So about gas surcharges

[Bonibelle]

Now that gas is much cheaper, will companies (including spa dealers) who charged a gas surcharge, drop the charge?  Just wondering how that will work out. I am thinking of the plumber that charged me every time he came out without all the needed equipment and charged me a gas fee...

[Shaamus]

We have charged fuel surcharges to our wholesale customers ever since diesel went over $1.85/gal.  We base it on a scale that is tied to the price of diesel the day of the delivery.  In our case, it goes down because it's tied to the price of the fuel.

But you bring up a good point.  Many service businesses (I am thinking about our bottled water delivery) have added an arbitrary flat fee for increased fuel cost.  As gas and diesel drops, I too wonder if these arbitrary fees will drop or fall off.

[Zep]

Bonibelle,

I am in the transportation business and we are beginning to get a few scattered inquiries
from customers saying "fuel is dropping how soon will you be lowering or dropping the
fuel surcharge"?

The vast majority have not said anything, but the rumbling is starting.

We have not done anything yet, but if fuel stays low or drops more we will have
to lower/drop the fuel surcharge.

We tell our clients that our fuel surcharge is still much less than FedEx and UPS
fuel surcharges and that we are watching closely to see if the fuel volatility is over
and we will be making a decision in the near future.

[Bonibelle]

I know I don't fill my tank anymore..just wait until I am empty and get about $10.00. It's probably not good for my van, but the prices are dropping so fast and I really have gotten used to less driving (and I like it).

[Steve]

It's funny that when gas prices goes up that companies have no problem making the decision to increase freight or fuel surcharges right fricken NOW but when prices drop, there's a pause to contemplate and "are watching closely to see if the fuel volatility is over"...  

[Zep]

"when gas prices goes up that companies have no problem making the decision to increase freight or fuel surcharges right fricken NOW"

Not true in our case.

We were months behind UPS & FedEx in implementing any gas surcharge.

You dont want to be too quick to add it or too quick to drop it.

It's not something you want to get in the habit of doing and undoing every other month.

[Steve]

You are right Zep... "some" don't but I wasn't referring to your company directly...

[Dr. Spa™ Ret.]

Our shipping contract for shipping spa covers has a fuel surcharge based on the price of diesel (in 25 cent increments), on the day a cover is shipped....While it typically doesn't change every day, every other day isn't unusual  

[Zep]

really the whole concept of a "fuel surcharge" seems rather bogus to me

of course we are not going to throw money away and we have one for now

but a fuel surcharge that goes on forever just seems kind of bogus

operating a business has all kinds of costs that over time go up

should we add a "rising office space rent" surcharge?

should we now with Obama add a "rising corporate tax" surcharge?

should we add a "rising electric bill" surcharge?

should we add a "rising medical insurance costs" surcharge?

i suppose it boils down to calling "a price hike" something that customers
think may be temporary and also something they can relate too as well?

[Chas]

We tell our clients that our fuel surcharge is still much less than FedEx and UPS
fuel surcharges and that we are watching closely to see if the fuel volatility is over
and we will be making a decision in the near future.

Correct me if I'm wrong, but don't we WANT the fuel to remain volatile?


I'm just askin'



 8-)

[Shaamus]

really the whole concept of a "fuel surcharge" seems rather bogus to me

of course we are not going to throw money away and we have one for now

but a fuel surcharge that goes on forever just seems kind of bogus

I'm not sure if the whole concept is bogus.  I think you can have arguments both ways but the reason we elected for a surcharge instead of just a change to our delivery charge is that we anticipated it going back down and didn't feel as if we needed the extra amount when or if fuel costs subsided.  It also allowed us a mechanism to raise and lower the delivery charge as needed that was transparent (we base ours on a scale tied to diesel prices checked daily).  Of course, this started when when diesel was $1.85/gal and I can't imagine it going that low again in light of the new 2007 EPA requirements that spawned the ultra-low sulphur fuel (the 2010 regs are going to be rougher).

It has worked out for my customers though.  We aren't basing the surcharge on $5 diesel anymore.  It may not be 1.85, but 3.25 is a whole lot better than 5.00/gal.  Especially when your delivery truck gets 10 miles to the gallon.