A recent survey reported that many factories and other businesses are getting into the Fuel Surcharge game. As we have reported previously, the current Fuel Surcharge which started within the trucking industry came into play back in 1999 as a “Temporary” Fuel Surcharge. Since then, all transportation sectors have jumped on the bandwagon and have been applying these fuel surcharges, not on a temporary basis but on a permanent basis with no end in sight.

Now it seems that other segments of our business world are finding it necessary to assess Fuel Surcharges to their customers. In the end,we are all consumers and as such, we have been and will continue to feel the punch these surcharges have caused.

Recently, the Philadelphia Federal Reserve Board received responses from 78 manufacturing firms in its district. Of these 78 responses, 29% of those respondents have been adding a fuel surcharge to their invoices to their customers obviously in an effort to “Relieve the Pain” from the fuel cost burdens placed on them. Over 60% of the respondents stated that they have raised their base rates to offset some or all of the additional costs associated with fuel. The report went on to say that “a significant share of the firms reported that suppliers have instituted transportation, commodity or energy surcharges.”

Over 87% of the respondents reported that their suppliers had already imposed transportation fees, while some 44% indicated that the supplier had been assessing an energy surcharge and some 52% of respondents were assessed special fees to cover a variety of products. All of this comes on the heels of the energy related feesassessed by the entire transportation industry on top of rising base rates and fees.

Many businesses are beginning to feel the pinch from the corner coffee shop where their customers bring lunch to work rather than use their vehicles at lunchtime. Some business like HNI, an office furniture manufacturer, has seen their second quarter profits drop by a whopping 50%. So what has HNI done to offset this loss? It has begun to raise its prices to its already financially strapped customers.Where does the cycle end?

Even the “big boys” are getting into the surcharge game. Companies like Dow Chemical have said they will implement a freight surcharge of $300 for every truckload shipment to its customers and a fee of$600 for every volume shipment by rail. Another chemical producer, Oxea, said it “will remove these added fees when fuel prices return to normal levels.” Two questions come to mind, 1) what planet are they from and 2) we would love to know their definition of normal. Don’t hold your breath Oxea, fuel prices will NEVER return to a level that could be considered normal.

While some manufacturers have taken the bull by the horn, there is many more that due to contractual obligations and various competitive pressures just are unable to pass these costs onto their customers at the present time. We believe, however, that in the future we will see a huge increase in these surcharges and added fees to offset these higher fuel costs. Where it all ends nobody knows.

Tony Nuzio