Some please explain Fuel Surcharge

The base price stays at $1.27 then you calculate using the current weekly average . Using the chart below the FSC when fuel is $2.00 a gallon is $0.1327 per mile . This formula figures fuel consumption at 5.5 mpg . If your carrier uses this formula and your truck gets 6.5 mpg it is to your benefit .

 

Ok thank you!

 

I'm a newbie company driver, and I'm not finding out much about fuel surcharges. If someone can break it down Kindergarten style, I'd much appreciate it.

 

Since your a company driver, you'll never see the fuel surcharge.

A fuel surcharge is an additional fee that is charged on top of the freight rate.

 

There's a National Diesel Price Index that comes out every Monday. Carriers will contract with shippers for a base rate per mile depending on point of pick up and delivery and then add on a surcharge based on the weekly average price of fuel.

Since freight has been in the toilet for most of the year, the best way that I can describe fuel surcharge is "theoretical," because many shippers (and most brokers) have decided that they just aren't going to pay it.

 

I understand the carrier negotiates a baseline rate per mile or however that particular load is going to be charged.

However...

Who puts out the National Diesel Price Index (can you find it on the internet), and how is it applied?

Is it a percentage of the total cost of fuel utilized by that particular truck for that particular route? For example, let's say a truck gets 5 mpg and the trip is 100 miles. 100 divided by 5 is 20. 20 gallons would be used on that trip, and let's say diesel is running $2.00/gallon. Would the carrier then tack on a 100% fuel surcharge of $40.00? Or is there an industry standard of 50%, or...?

Or let's say the National Diesel Price Index is $2.00/gallon. The fuel in your area is $3.00/gallon. Using the same number as the above example, would the carrier then tack on an additional $1.00 per mile as the Fuel Surcharge?

Thanks in advance...

W2W

 

Yes! Just search National Diesel Price Index at google & you'll get the results.

 

Hypotheticaly/typicaly/theoreticaly speaking......Back in the early/mid 90's when fuel was about $1.20/gallon (and never much fluctuated) and 6 mpg was the norm, it cost about .20 per mile in just fuel. The FSC is an effort to somewhat break even on fuel above the .20 per mile cost. a year ago when fuel was pushing $5.00, my fuel cost per mile was .80 cents. Therefore, fair enough to say .60 CPM extra per mile on top of the rate.

Right now with fuel at about $2.40/ gallon, fuel cost per mile is at .40, assuming 6 mpg. Thus in theory the FSC today would/could/should be about .20 cents

That is just one take on this. Everyone has their own formula - esspecialy those who arent buying the fuel like brokers LOL.

There's alot of people in the transportation industry who must believe todays fuel prices are cheap. However, they are double what they were 15 years ago. Some of the rates these brokers are pushing would be crap even if fuel was FREE!

 

I'm going to try to assist on explaining the fuel surcharge... My numbers may not match yours or anyone else's. I'm going to attempt to use my truck's fuel mileage & the current diesel price at the truck stop down the road....


In the freight contracts that companies & brokers sign with shippers, we already mentioned that there is a clause in there to cover fuel surcharges. Most of those clause has a dollar amount. Something saying like when fuel hits $1.10 per gallon, then we will activate a fuel surcharge on all loads. Every company is different but most base their fuel surcharge on average fleet mpg... But now we have a fuel price benchmark.

We take the current price of fuel & subtract it from the benchmark price. Then you take that sum & divide it by the average fuel mileage & you get your fuel surcharge.... Just like the example below.... Now that number is different for each company. The large companies use a average fuel mileage counting all their 18,000 trucks... I only have 1 truck so those would be my true numbers!




Benchmark price$1.10

Pump Price $2.459

Difference$1.359

Avg. MPG 6

FSC per mile $0.2265

 

I found a page that shows prices throughout the United States, by region, for all types of diesel, and also for ULSD.

Right now, in our area (East Cost, Central Atlantic) diesel is averaging $2.663.

Using Winchester Magnum's factors, I guess I would take $2.66 minus $1.20 = $1.46

$1.46 divided by 6 mpg = $0.24

Tack on an additional 24 cents per mile to the previously negotiated rate, and you have the fuel surcharge - if I understand this correctly.

EDIT: I could have just waited for REDD to post, then I would have had my answer!!! Thanks REDD!