Fuel Surcharge

One thing not mentioned are companies that use fuel hedging. I don't think that anyone in the industry predicted today's prices when they locked them in a while back and that's the flipside of hedging. If they're locked in a contract with a spot price on the day the ink dried on the contract, oh well.

 

Companies who hedge fuel butterfly their contracts. Not very many companies do that any more because of the fsc. You never have more than 7 days of fuel volatility as the DOE report comes out every week.

FSC hasn't really even been around that long. It really came about because shippers didn't want to change their rates all the time and carriers kept getting the short end of the stick when fuel spiked. In theory fsc begins on a base, usually 1.06 and increases 1 cent for every 6 cents change in price. In the early 00's most fcs stopped at 1.99 because no one ever thought fuel would hit 2.00. I think it was around late 02 or 03 when fuel spiked to like 2.40. All of our customers paniced. No one wanted to adjust the fsc. It was a pretty hairy couple of weeks. The bottom line is, you want your fuel to net out to zero, not 1.00 like someone stated above.

There are a few companies that pay higher fsc rates. When discussing it they usually site that their department's freight budget is separate from fsc, so they play hide the hat game.

Also- different companies use different avg's from the report. If you are hauling ga, fl it may use SE avg. It may se the national avg (I Have only had 1 company use that), etc

Alot of companies are skimming their ops not only on the fsc but also on the fuel discount. My customers fsc could vary as much as .40 from highest to lowest. If your getting a flat fsc for every customer, that's probably a sign. Fuel is a little tougher because that usually runs as the greater of a cost plus/retail minus. I could be .50 lower than posted in toledo and .02 less in Buffalo. And it changes every day.