Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Justin Yagerman - Wachovia Securities.
Justin Yagerman - Wachovia Securities
Wes, at the very end you said you’re right now experiencing revenue per hundredweight down 1 to 2 basis points?
J. Wes Frye
1 to 2 percentage points.
Justin Yagerman - Wachovia Securities
What’s going on with the fuel surcharge and where these caps are. Earl or David, I think you said in your prepared remarks that you don’t expect this to abate in the near-term, and if this is a 100 to 200 basis point hit on the OR, I just like to get a bit more clarity on where these caps are. How much of a percentage of your business these caps are on, and to what extent you think you can alleviate them, and in what timeframe should we continue to expect that drag on the profitability if fuel stays where it is or goes up?
J. Wes Frye
Most of the caps are related to our contractual accounts which do account for about 42% of our overall business. Within that, we estimate maybe 20% to 30% has a cap.
Justin Yagerman - Wachovia Securities
On average, where does fuel cap out on those on that 20% to 30% of the 42%?
J. Wes Frye
It varies and the difficulty is, there are several basis points between what would be the normal fuel cap and what the contractual, what you don’t know, and the uncertain that makes it difficult to measure. If there is a fuel cap that we negotiated, then how much, in many cases, we increased the rates. In other words, we look at the profitability of the overall account combining both rates and fuel surcharges.
Justin Yagerman - Wachovia Securities
Can you do that in real time though? Is there a provision in the contract for that?
J. Wes Frye
I’m just talking about as we renegotiate the rates on accounts, so in the more recent months.
Justin Yagerman - Wachovia Securities
So, you’re going to have to wait for contracts to actually roll over in order to get to the healing process on these caps if fuel is staying where it is.
David S. Congdon
No, we are not waiting till expirations of contracts. We are looking at every account that has any cap on it and instructing our sales force to address the issue of the cap with customers now.
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