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Trucking 101: Understanding fuel surcharges

Updated Jun 24, 2022

Updated June 4, 2022, to reflect current fuel prices and surcharge practices. 

There are no rules covering fuel surcharges. As with freight rates, anything goes.

The systems of calculating and implementing fuel surcharges are worked out between any two parties -- a shipper and a carrier/independent, a shipper and a broker, a 3PL/broker and a carrier, or a carrier and a leased owner-operator. Standard practices for surcharges do exist, however, and have since Hurricane Katrina been increasingly common in freight contracts.

Fuel represents the No. 1 or No. 2 expense for any carrier. Once the price exceeds $4 per gallon, it’s long been likely that fuel will be the top expense, followed by driver pay.

Fuel price volatility makes it difficult to negotiate long-term contracts, but long-term contacts are important. A surcharge allows those contracts to accommodate short-term price fluctuations.

[Related: A fuel crisis is here: Will only the strong survive?]

For example, Shipper A has a regularly scheduled load that leaves Cleveland every Wednesday to deliver in Dallas. The shipper would like to know that every Wednesday the load will be picked up by the same carrier. Shipper A would also like to know how much it’s going to cost. So the shipper and the carrier agree on a year-long contract with a base rate of $2 per mile plus a fuel surcharge. Now they need to work out a fuel-surcharge calculation.

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