Fuel Surcharge Table

Fuel surcharges have been a mainstay in the trucking since at least the late 1970's. That was when oil and fuel first had it's first modern era dramatic cost spike. Since then customers have grown to expect and accept fuel surcharges. Occasionally you will still find a rare customer or two that insists fuel surcharges are included in the base rate. However those customers are becoming few and far between. When negotiating with a potential or existing customer who has never agreed to a fuel surcharge you should first point out to them what they stand to gain from a fuel surcharge.

1. A fair known rate allowing the customer to prepare accurate and consistent financial projections and a dependable ROI (return on investment).

2. When the national average of fuel costs go down it will decrease their gross shipping costs.

3. Additionally the customer gains the added value in keeping you operating in the black and providing them with a guaranteed truck to get their product to market. That will reduce their dependency on brokers or spending time on the phone trying to find a truck themselves.

All of these points can be very powerful positions to negotiate from. Do your best to politely take advantage of each of them. Don't be surprised if they already have their own company standard fuel surcharge rates. That has become more and more common. If that is the case, review their fuel surcharge rates. If they cover your fuel costs as the average national cost of fuel increases then accept. If it doesn't, then determine if you can still be profitable with their fuel surcharge rates. If so I would recommenced you accept their fuel surcharge rates and enjoy your new business relationship!

Determining the fuel surcharge rate is easier than the negotiations themselves. The industry standard for many years has been that truck owners accept the fuel cost in the base rate up to $1.00 per gallon and the trucks average miles per gallon is 5 mpg. Thus each time fuel cost rise $.05 per gallon it costs the truck owner an additional $.01 per mile in fuel. Therefore for every $.05 the national average of fuel increases over $1.00 per gallon your fuel surcharge is an additional $.01 per mile. Shocking to many new truck owners, there is a way to increase profits as fuel costs rise. Yes, make more money the higher fuel goes up! To learn more about trucking see my category Business of Trucking or post a comment.

 

Posted by Joel on Jun 21, 2015