Energy Surcharges

When receiving a quote today for some plating I noticed a $10 "energy surcharge" . I know that I also get a $3 per line "energy surcharge" from one of my aluminum distributors. With the price of fuel so low at what point do I ask about this extra charge? I don't want to nickel and dime my vendors but these surcharges always bother me. If it is in fact a surcharge shouldn't be either temporary or removed by adding to the cost of material? I had a friend who runs a multi million dollar trucking company on the east coast big enough that he has a share in a privet jet. When the fuel prices spiked years back he told me he just entered a number of new contracts before the increase. He went back to all his customers and explained the situation and since everyone was well aware of the fuel increase they all agreed to increases in their rates. A few months later he told me he was making more money under the new contracts even with the fuel rate hike. Ever since then I have hated "surcharges" because somewhere along the line they are just a permeant fee.

I suspect with the US shunning coal and embracing wind mills it relates to electrical energy. I think we will see a lot higher power bills coming.

I might buy that from the plater buy not the metal distributor.

Pete Deal said:

the US shunning coal

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Its not so much shunning coal. Have you seen the price of natural gas?

As to the OP, dont want to nickel and dime supplier? What are they doing to you with the charges? Not OK for you but OK for them? What about UPS and fuel surcharge? Rates go up (often a lot) every year but have not seen diesel/gas this "cheap" in a long time.

We used to buy mill runs of bar stock, back before the quote included the line "a surcharge may apply at time of shipment." The sales rep assured me that those things were typically a couple cents a pound and not to worry about it. I said I wouldn't worry about it at that rate, just write that limit into the contract. Which of course they wouldn't do. The point is, what if it were a dollar a pound "at time of shipment?" If it is allowed to be whatever the vendor decides at the last minute, then a surcharge obviously negates the value of any quote. You start thinking, (1) what have years of customer loyalty earned me, and (2) why bother even getting a quote from them.

I have language in our PO form stating that any taxes, fees, or surcharges other than those enumerated in their quote (which is incorporated by direct reference into the PO) will render the PO null and void. I haven't had anybody try to slip one in, but I suppose it comes down to leverage: do they need your business or not, and are they the only game in town?

WDW said:

With the price of fuel so low at what point do I ask about this extra charge?

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Lol.......next time you're at an auction, ask the auctioneer why the buyers premiums keep going up, etc.
The charge is there because they put it there and customers pay it.
When you call to place an order with your metals guys, do you ASK them if you can somehow get 5% off ? Better yet, say 'what can you do for me on this
price' ? Or 'can you get me a little bit better deal on this'? You might be amazed at the answer.

The whole "surcharge" thing is getting out of hand. It's literally the equivalent of a "tax" in the private sector. Problem is, the surcharges get easily added in but then are very difficult to remove. So surcharges started getting a lot of popularity when fuel prices started going up; I'm sure in many cases after oil/gas prices were higher than they currently are. So a company that initiated a surcharge when gas was $3/gallon should be giving you a discount today but how many would do that? Now it's even spawned behavior from companies like Wal-mart that they'll have people watch specific commodity prices (steel, aluminum, etc.) and they'll call up suppliers of products that contain a lot of aluminum when aluminum goes down and say "Hey, give us a price break!". Well, do they call up those same people when prices go up and say, "Hey, give yourselves a raise!".

The Dude

The Dude said:

The whole "surcharge" thing is getting out of hand. It's literally the equivalent of a "tax" in the private sector.

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No, it's a fine.
You're being fined for doing business with greedy people.

Just like the state police are out on the highways "for your protection".
Yea right......they're out there committing authorized highway robbery in the name of saftey.
Your state needs your money, but they really aren't too concerned about
your saftey.

I don't believe the word surcharge has any legal or binding meaning to it,it's just a catch word for, "Hey mister give use some more of your money because we think you should." If the price of material or transportation goes up, you have to work that out between you and the customer, don't try to do the smoke and mirror thing with an ineffective word like surcharge. If you miss quote something due to rising costs, you should have done your homework and had a margin built into the price to cover such things. Don't try and weasel out with catch phrases. The last sentence goes out to all who try it.

If it's on the quote, to me its part of the price of their product. Get quotes and purchase things accordingly. If it is added to a quoted price on the invoice, I deduct it and pay the quoted price. Surcharge, disposal fee, whatever they want to call it, I consider it as part of their cost. If they want to know why they don't get your business, their price is not competitive.

Get dinged with it from everybody.
Dumpster company, uniform/towel supplier, welding gas distributor, propane supplier, trucking
companies, etc. Pretty much everybody, I just nail them down on how much and shop around.
I only care about the bottom line on the invoice, it's what I write the check for.
David

Vendors negotiate prices up and its up to customers to negotiate them back down.

OR

You can wait for them to drop the surcharge, but I would not hold my breathe...

How can you quote a job, when they hand you a surcharge? You need to know what it's for and then it should included in the vendors quote. In fact you the customer should not even see it. Surcharges are Bull Shit!!!

It's just a trick to mess with your mind. The vendor knows what the total is, but he's unsure of what he's doing.

I don't care about your "SURCHARGE?" just include it in your quote. That's all I want!! Your just taking something simple and adding confusion.

If he can't do that then walk out and go to another vendor.

Regards,

Stan-

I noticed that the UPS has been adding fuel surcharges for a while along with the obligatory residential surcharge and the delivery area surcharge . . . since when do you need a fuel charge when diesel is about $2/gallon?

Look at it this way. If you have a job for a customer, and the material you need for that job has increased enough that you need to ask your customer for more money, do you reduce the price on that job again later when the material comes back down?

Dave K said:

Look at it this way. If you have a job for a customer, and the material you need for that job has increased enough that you need to ask your customer for more money, do you reduce the price on that job again later when the material comes back down?

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Good question but I would say that depends. I very often hold my price when material goes up slightly, so it is a two way street with me. Also to me a surcharge should be a temporary charge.

I did talk to a outside sales guy about this yesterday he said he was wondering the same thing and was going to bring it up at the sales meeting this week.

SURCHARGE!!!

It's just a way to hide what they're doing. Think of it as a "Black Mask" to steal more from you.

STAMP YOUR FEET and make them take off the Black Mask and tell you what their doing!!!

Ever see the SURCHARGES the phone company is doing. They'll never stop.

We have every right to know what we're paying for so we know we are buying! DAMN IT!

This is a real Piss Me Off!

Regards,

Stan- "I need a beer..."

I had a half truckload of material come in a while back, and I normally don't see most of the bills first hand, but the trucking company started e-mailing the invoices in, so I saw it. The "Fuel Surcharge" was enough to have paid for ALL of the fuel for the entire truck from point A to our place. Not just our half of the load, nor just the amount the fuel cost more than "normal". But with Fuel being $4 or there-abouts since Katrina (10 yrs), at what point doo we decide what is "normal"?
...... I got a new trucker.

IMO "surcharges" are only for long term agreements that can have some amount of sliding value during the duration to adjust for unforeseeable changes, and that could Shirley go both ways.

My heat treater does employ a surcharge for natural gas prices on occasion. And so far - when they have, it has only been short term - while they have been "in negotiations" with their supplier for a new contract.

Ever since 2004, when raw material prices doubled (steel in 6 months, brass in 6 weeks) (and watching several manufacturers go out of business doo to not having ability to adjust for those changes) and with the buzz about electric prices possibly skyrocketing - on long term quotes I have made sure to include the fact that the prices are subject to possible surcharges of about any sorts.

Not that we have had to employ those as of yet, but a guy needs to CYA to some degree. However - the other side of puting that on a quote is that it looks like you are possibly going to try to screw the customer too. Too many folks have abused the term and it's use.


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