How Do You Figure Fuel Surcharge?

Well it is simple to figure out if you know what your average mpg is.

this is per mile cost to add into the rate.

so … let’s say it is an average 6.8mpg.

fuel is at $3.45 a gallon.

I used $1.30 for the base price for fuel so

3.45 - 1.30 = 2.15

2.15 / 6.8 = 32¢ is added into the rate.

if you use the industry standard, then you would use 6mpg and $1,25 base price.

but that’s all dependent on how you manage your fuel in your budget.

oh and if a carrier is giving $1.50 as their base, they are cashing in on 25¢ on you.

 

I must be an idiot, this "base" #, never heard of it, why is that being deducted at all?


Ehhh. Nm, its a dumb holdover "because weve always done it this way" and a way to prevent shippers from paying the real cost of fuel

 

Well, you’re not an idiot.

First it has been called “base cost” from when it was created, it is the typical cost of fuel and set at $1.25. I use the term so as habit.

you deduct it because it gives you the actual difference for the surcharge.

shippers pay it one way or another, either with a fixed shipping cost and the fuel surcharge or with the increase in rates.

 

Fuel surcharges were adopted by the ICC after the oil embargo. It was the only way for carriers to increase their "rate" for the higher cost of fuel without ICC approval.
Leveled off in the early 90's to 1.00-1.15 and that was/still is the base used by most.

 

Yeah, i did a bit of digging on how to calculate it and the history, partially id never heard of it because as a single o/o leased on to someone, im not negotiating the contracts. Only last year did i even start digging up my own loads, but thats brokered and fsc is just calculated out using nat fsc numbers.

That said, it does raise an interesting point that i should probably explore with my boss. I ALWAYS lose money on fuel used vs what he gives me in fsc. This has always kinda rubbed me wrong since our fleet average is such that im not the best mpg, but im above average. I wonder if theyre using this kinda method to figure out fsc. And since 20-30% of fsc is considered "included" in the load pay portion that THEY get a % of, that would explain why ive never broken even, much less made money on fsc.

 

To add to the confusion, states like KY charge a fuel surcharge on IFTA. What’s that for? KY isn’t buying fuel, you are, but you pay them a surcharge for it. It’s just another way to charge more tax.

 

If you're leased on to a carrier flat rate loads should be broken into linehaul and fsc. Unless you like giving the carrier a % of the fsc that is in the rate. If you're on your own it doesn't matter.

 

It is broken down that way on statements, fsc 100%, and % of load, but thats WHY im curious if this base rate is included in linehaul and therefore siphons off a % of the fsc because "its built in as part of the load" which would be true but slightly shady.