01-5241. Fuel-Related Rate Adjustment

AGENCY:

Military Traffic Management Command (MTMC), DoD.

ACTION:

Notice.

SUMMARY:

The Military Traffic Management Command, as the Program Director for the Department of Defense (DoD), announces an adjustment to the current Fuel-Related Rate requirements for qualified carriers. This action is a result of joint MTMC Industry Fuel Board which included industry representatives. The change will be implemented to assist transportation industry and carriers on diesel fuel cost increases. Further details covering the policy and requirements are contained in the SUPPLEMENTARY INFORMATION paragraph indicated below.

DATES:

The change will become effective on April 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Ruth Tetreault, Headquarters, Military Traffic Management Command, ATTN: MTDAC, Room 11S31, Hoffman Building II, 200 Stovall St., Alexandria, VA 22332-5000; Telephone [phone]; Telefax [phone].

SUPPLEMENTARY INFORMATION:

Background

MTMC developed and implemented an automatic fuel surcharge that goes into effect on April 1, 2001. Carriers will be entitled to an automatic increase when the national average price of diesel fuel rises above $1.30 a gallon as reported by the Department of Energy, Energy Information Administration. Diesel fuel prices are segregated into 10-cent increments, for which there is a 1% addition for each time the threshold is crossed. In the past, carriers incurring high diesel costs faced long delays in receiving surcharges. MTMC has mad surcharges automatic for carriers by linking them directly to the price of diesel fuel. The new automatic fuel surcharge is a result of a joint MTMC-Industry Fuel Board which included industry representatives. The policy ensures fair compensation for our industry partners when the price of fuel rises.

Effective April 1, 2001, MTMC Policy No. TR-12 (Fuel-Related Rate Adjustment Policy) replaces MTMC 1-7, C-1, Policy No. 55-4 (Fuel Related Carrier Rate Changes) as follows:

Transportation and Travel

Policy No. TR-12

Subject: Fuel-Related Rate Adjustment Policy

a. Policy: Written provision will be made in Military Traffic Management Command (MTMC) regulations and solicited tender agreements for fuel related rate adjustments. The following Fuel-Related Rate Adjustment policy provides the transportation industry, including individual carriers, economic adjustment and reasonable relief from increases in diesel fuel prices. Carriers are urged to consider changes in fuel prices when submitting or supplementing rates during rate filing and/or bid submission periods. See Sections I and J for specific program applications and exceptions.

b. Issue Date: The issue date is January 2, 2001.

c. Effective Date: The effective date is April 1, 2001.

d. Expiration Date: The expiration date is April 1, 2002 and is subject to reauthorization on an annual basis at the sole discretion of HQ MTMC. The MTMC Fuel Board will periodically meet to consider changes and modifications to this policy.

e. Application: The policy will apply to MTMC Personal Property and Domestic Freight Programs.

f. Policy and Guidance: 1. Application: Applicability of the Fuel-Related Adjustment is based on guidance contained in the solicitation or other procurement request for transportation services. Application of a Fuel-Related Rate Adjustment will be determined the first Monday of the month and based on the National Average diesel fuel price as determined by the Department of Energy, Energy Information Administration (EIA). If the first Monday is a holiday the fuel price will be determined based on the price on the next business day.

2. Determination of Adjustment: (a) Only the National Average diesel fuel price as published by the DOE, EIA on the first Monday of the month (or the first working day after a Monday if the Monday falls on a Federal Holiday) may be used as a basis for determining the applicability of a Fuel-Related Rate Adjustment. The fuel adjustment will automatically apply to shipments picked up on or after the 15th day of the month through the 14th day of the following month. The diesel fuel prices published by the EIA may be found via the following sources:

(1) EIA Web site: http://www.eia.doe.gov/​.

(2) EIA Weekly Petroleum Status Report.

(3) EIA Hotline: [phone].

(b) It is the responsibility of the carrier to monitor diesel fuel prices via one of the sources identified above. The National Average diesel fuel price determined by the DOE, EIA on the first Monday of the month will serve as the basis for determining the entitlement to a Fuel-Related Adjustment, until the first Monday of the following month when the National Average diesel fuel price is published. The National Average fuel price and the actual pickup date of the shipment will determine if there is an entitlement to an adjustment and the amount of the adjustment. An adjustment is not applicable to any portion of transportation in which a surcharge or any other additional payment for fuel is already in existence. For example, portions of transportation to which the Bunker Fuel Surcharge is applicable.

3. Amount of Adjustment: a. The table below will be used to determine the fuel related adjustment factor. No fuel adjustment will be granted when prices are within the neutral range (“0”). When the DOE, EIA fuel price exceeds the neutral range amount, the carrier will be entitled to the specific fuel rate adjustment percentage based on the applicable fuel cost per gallon as indicated in the table. The increase applies to line haul transportation charges only unless otherwise identified in the solicitation. The following rates adjustments are provided in the following table:

Table

Cost per gallon (in cents)	Rate adjustment (percent)
130.0 and below	0
130.1-140.0	1
140.1-150.0	2
150.1-160.0	3
160.1-170.0	4
170.1-180.0	5
180.1-190.0	6
190.1-200.0	7
200.1-210.0	8
210.1-220.0	9

b. For example, if the reported DOE, EIA National Average diesel fuel price is $1.52 the carrier would be entitled to a fuel-related surcharge of 3% for shipments picked up on or after the 15th of the month. For each 10 cents per gallon above 220.0 add 1%.

4. Readjustments: The surcharge is automatically recalculated monthly and adjusted upward or downward depending on the DOE EIA National Average price on the 1st Monday of the month. In no case will the adjustment lower the original price offered in the carriers' initial filing or response to a solicitation.

g. Billing Procedures: Carriers will clearly show fuel price adjustments on all paper and electronic commercial freight bills and Government Bills of Lading and invoices. The amount of any diesel fuel rate surcharge must be shown as a separate item on the carriers' invoice.

h. The policy supersedes Policy No. 55-4 Fuel Related Carrier Rate Changes.

i. Personal Property Program: Specific program applications and exceptions are listed below:

1. Applications: (CONUS segment, including Alaska and Hawaii).

(a) Line haul portion of domestic interstate and intrastate movements.

(b) Domestic line haul portion of international personal property movements.

(c) Transportation charges applicable on domestic and international storage-in-transit shipments when such shipments are delivered or removed from the domestic storage-in-transit warehouse.

2. Exceptions: None.

j. Domestic Freight Program: Specific program applications are listed below:

1. Applications: a. Applies only to the domestic line haul portion of the carrier rate.

2. Exceptions: None.

(end of change)

Regulatory Flexibility Act

The change is not considered rule making within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.

Paperwork Reduction Act

The Paperwork Reduction Act, 44 U.S.C. 3051 et seq., does not apply because no information collection requirement or recordkeeping responsibilities are imposed on offerors, contractors, or members of the public.

Francis A. Galluzzo,

Director, Distribution Analysis Center.