fuel surcharge percentage of the line haul or by the mile?

The purpose of fuel surcharge is to compensate you for the difference between today's fuel price and $1.25. Trust me, you don't want them to ratchet that number up.

 

For our BCO's I calculate it both ways and usually give them the higher paying of the two, which typically comes out to be the cpm way versus percentage.

 

They like the % basis because the lower the rate the lower the FSC.

 

My carrier uses a flat % based on national diesel prices adjusted quarterly. Right now it's 33% of the gross.

 

There is no good way to create a FSC based on percentage. It exists that way because that was the old school (steel hauler) way of doing things. Fuel cost does not vary with the line haul rate. In other words, your fuel cost is the same whether the base rate is 1.00, 2.00 or 3.00 per mile. I agree that the mileage FSC is harder for customers to understand. However, it is worthwhile to explain it to them. The calculation you used in the OP is simple and easy to understand.

 

The key to figuring out a % based FSC would be looking at your average rate per mile with the customer.