Grain group wants truck fuel surcharge provision dropped from bill
One of the country’s largest grain shipper groups has asked Congress to strike a provision from the House version of the highway reauthorization bill that would require commercial truckers to impose a fuel surcharge on shippers.
The mandatory truck fuel surcharge, which was introduced by Rep. Roy Blunt, R-Mo., was added as Section 13714 of the highway reauthorization bill (H.R. 3) before it was approved by the House March 10. The Senate may include a similar provision in its version of the bill when it resumes floor consideration this week.
“Congress should not be in the business of dictating specific commercial terms of transportation, particularly when the marketplace has demonstrated high levels of competition to discipline behavior, as is characteristic of truck transportation,” said Kendell W. Keith, president of the Washington-based National Grain and Feed Association (NGFA), in a statement Tuesday.
Under the House bill’s provision, any contract or agreement for transporting truckloads would be required to include a provision that the payer of shipping charges also pay a fuel surcharge that is “no less than the amount of the increased cost of fuel.” The surcharge would apply when the current diesel fuel price exceeds a “benchmark” price by 5 cents per gallon. The benchmark price would initially be set by national law at $1.10 per gallon.
The surcharge amount would be determined by subtracting the benchmark price from the current diesel fuel price, and then multiplying that by the number of gallons used during the transport movement.
The bill would define the current diesel fuel price as the most recent weekly average for retail “on-highway” diesel fuel published by the Energy Information Administration for districts or subdistricts where the shipment is tendered.
The NGFA represents about 900 member companies from all sectors of the commercial grain, feed, integrator, processing and export business, which operate about 5,000 facilities and handle more than 70 percent of all U.S. grain and oilseeds. According to the association, about 50 percent of the volume of commercial grain, feed and feed ingredients is shipped by truck, while 32 percent is transported by rail and 18 percent by barge.
The NGFA is concerned that the mandatory truck fuel surcharge, if passed, would “create a troubling precedent,” because it could eventually be sought by Congress for rail and barge movements. The group warned that it could result in “significant windfalls” compared to the base rates contained in current fuel charges imposed by railroads because it would legislatively sanction a benchmark diesel price of $1.10 per gallon and approve the assessment of fuel surcharges as a percentage of the freight rate.
“For many rail carriers, rail rates are not highly correlated with the cost of fuel for individual movements, such that surcharge percentages applied to rates create an inequitable distribution of surcharges among shipper customers,” Keith said.