Fuel Surcharges

In today's trucking, fuel surcharges are necessary for trucking companies, owner operators and truck drivers to survive.  With the constant increases in the price of fuel, carriers and owner operators must implement compensatory fuel surcharges.  In Canada, fuel surcharges are calculated as a percent increase over the base diesel fuel price of 39.0 cents per litre.  Most Canadian carriers use the Freight Carriers Association of Canada, "Canadian Domestic Fuel Calculation",  as the index to calculate the percent over base fuel surcharges.

In the US the Department of Energy - Diesel Fuel Price Index is used as a basis for fuel surcharges. Fuel surcharges for most LTL operations rises by 0.5 percent for every five cent increase in average on-highway diesel prices published by the Department of Energy.  Truckload fuel surcharges are about twice of LTL fuel surcharges, their fuel surcharges would rise by 1 percent for every five cent increase in fuel prices.

The problem with the industry is that there are carriers that do not charge fuel surcharges or do not charge enough for fuel surcharge.  These carriers which are either hoping to gain a competitive advantage or are ignorant of their own cost structure, will eventually go broke.  Meanwhile carriers who are responsible and know their costs are hurt by this short term strategy.  Without fuel surcharges the industry would not survive.

Fuel surcharges should not be negotiable and change automatically with the price of fuel.  All shippers are aware that diesel fuel prices are increasing as everyone has to fuel their personal vehicles and it is a daily topic in the news.   There should be an industry standard for fuel surcharges and all companies should abide by the standard.