Fuel Surcharges Explained

Fuel Surcharges Explained

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Fuel Surcharges Explained

Fuel surcharges explained: A national fuel surcharge is a fee that trucking companies charge to cover fluctuating fuel costs. It is calculated as a percentage of the base rate and is usually added to a shipper’s freight bill to cover the cost of operations. Fuel surcharge for LTL and truckload carriers alike is something that is updated each week…usually on Tuesdays.

Most motor carriers have a “linehaul” charge plus a fuel surcharge (FSC). They have a bunch of other surcharges or accessorial charges for extra services too, but by and large FSC is only calculated on the linehaul charge. FSC is generally either a % of linehaul (think like a sales tax) or is calculated as a rate per mile. LTL FSC is almost always %; but truckload goes either way.

Each carrier builds some fuel price assumption into their pricing model which produces the linehaul rate. Then, so they don’t have to keep updating the whole model, they build a fuel surcharge table that (in essence) says “When fuel prices are between x and y, add z to the linehaul charge to cover the extra fuel cost”. These fuel surcharge tables usually start at whatever fuel price the carrier has in its base model.

Where the carriers get the fuel cost is another variable. Most of them use an internet tool from the US Government that posts the average fuel prices for gas and diesel for the US as a whole and for different regions. Each carrier specifies which of those index numbers they will use on their fuel surcharge table.

When you deal direct with a carrier it’s important to understand how their rate and fuel surcharge work together, as well as when they update their fuel surcharge. Are they quoting you a rate before FSC or including FSC? How long is the rate good for? etc.

When you work with Customodal, rates quoted (whether LTL or truckload) always include FSC already. Our LTL rates are good for 7 days and our truckload rates are good for 24-48 hours. Need something more about fuel surcharges explained? We’re happy to help!