Highway Toll ‘Surcharges’ in the Spot Market
HIGHWAY TOLLS significantly diminish the earnings of Owner Operators who navigate the freight routes across our nation. In this POST, I detail the fundamental arguments for categorizing tolls as an independent expenditure within the trucking sector.
It emphasizes the benefits of transparency, efficiency, and respect for truckers’ operational costs, advocating for a change that could streamline the industry and foster better business relationships.
The Backbone
In the logistics industry Owner Operator truckers are the backbone, ensuring that goods are delivered from point A to point B.
However, the journey is rarely straightforward, especially for independent Owner Operator truckers who face numerous out-of-pocket expenses. HIGHWAY TOLLS are one of the most significant and “profit killing” expenses.
In the dynamic world of logistics, it’s becoming increasingly important for freight brokers and shippers to align with the evolving standards observed in many other service industries.
The Need for Change
The Transportation Industry must adopt practices that ensure fair compensation for additional services or items that may not be explicitly covered in the initial contract. For example, detention time and lumper fees are considered as standard practice in the industry.
Often referred to as a ‘surcharge’ or ‘contract addendum’, they are essential elements that contribute to the overall success of the service provided. Surcharges are provided to Owner Operators by reimbursement or direct payment by brokers and shippers.
It’s essential to consider the costs incurred by paying HIGHWAY TOLLS during transportation. Brokers and Shippers need to understand the serious impact Highway Tolls have on the profit of OWNER OPERATORS.
HIGHWAY TOLLS Reimbursement
I firmly believe Highway Tolls should be accounted for as a distinct line item, separate from the base rate that is agreed upon for hauling the freight. It is long past time and crucial to adopt practices that ensure equitable compensation for additional services or unforeseen costs such as Tolls, which may not be outlined in the initial contract.
Reimbursement, or outright broker payment for detention time and lumper fees, are standard practices in the industry. The exact costs of these fees are rarely known until the pick-up or delivery of the freight is completed.
Like reimbursement or direct payment for detention or lumper fees, it is essential to project the anticipated costs for TOLLS that are to be encountered along the route to be traveled.
In fairness to Owner Operators, they should be compensated for these expenses that are not currently provided for in the industry. These elements, that need to be applied as a ‘surcharge’ or a ‘contract addendum,’ are integral to the overall success of the service provided and warrant proper financial recognition.”
I prefer adding the projected cost of HIGHWAY TOLLS as a line item AFTER the line haul rate has been negotiated. However, some companies may prefer to Reimburse the Owner Operator by revising the Rate Confirmation after delivery, adding in the compensation for the HIGHWAY TOLLS.
Reimbursements of TOLLS instead of adding it to the Rate Confirmation as a “Line Item” could lead to a mountain of paperwork, delayed payments, and the potential for fraudulent claims.
By shifting to a system where HIGHWAY TOLLS are included as an additional line item, we streamline the process, reduce administrative burdens, and foster a transparent relationship between truckers, brokers, and shippers.
Encouraging Transparency
When HIGHWAY TOLLS are said to be included in the negotiated rate, it’s often unclear how much of that rate is intended to cover these costs. This lack of transparency can lead to disputes and dissatisfaction and never gives the Owner Operator the “True Cost” of moving the freight beforehand.
Creating a distinct entry for HIGHWAY TOLLS on invoices would promote transparency, safeguarding the trucker’s earnings from being compromised. It is imperative that brokers and shippers adhere to a standard of fairness in compensating for services rendered.
Given the severe volatility of diesel prices that Owner Operators already contend with, it is unjust to further reduce their profits by not separately accounting for HIGHWAY TOLLS.
Valuing the Trucker’s Time and Resources
Independent Owner Operators run their own business, and like any business, unexpected costs can be detrimental to their financial health. Tolls are a predictable expense that can and should be accounted for upfront.
Paying for HIGHWAY TOLLS over and above the hauling rate acknowledges the trucker’s operational costs and ensures they are not left losing money out of pocket for simply doing their job.
Streamlining Route Planning
Knowing that HIGHWAY TOLLS will be covered allows truckers to plan the most efficient routes without worrying about the financial impact of toll roads. This can lead to faster delivery times and lower fuel consumption, benefiting both the environment and the bottom line.
Line-Item Compensation vs Claiming Tolls on Taxes
The very first excuse we can expect to hear from the Brokers and Shippers is, “The Owner Operator can deduct the cost of tolls from their taxes”. This thought process would be in line with asking the Owner Operator to bear the cost of Lumpers and claim the expenditure on their taxes!
Direct reimbursement from brokers or shippers needs to take place as it will offer several advantages over claiming these expenses on their tax returns:
Conclusion
The inclusion of tolls as a separate line item is not just a matter of financial logistics; it’s a statement of respect for the independent Owner Operator truckers who keep our goods moving.
It’s a step towards a more efficient, transparent, and fair industry. As we look to the future of freight, let’s pave the way for practices that benefit all stakeholders in the supply chain.
QDS Summary
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