Surcharge? Yes Sir!

When fuel was about 50 cents a liter-back in 2003-and if your trucks were getting about 6.5 mph, it represented a cost per mile of about 30 cents.

With a liter of diesel now higher than a buck in many places, fuel costs you about 61 cents per mile. Good thing you’ve been getting 30 cents per mile in surcharges, right? Didn’t think so.

Fuel surcharges are murky territory. We’re happy when shippers oblige and pay; we grouse when they refuse.

Before we go any farther, it’s worth noting that fuel surcharges-like rates-are not set by any person or government body.

While the Freight Carriers Association (FCA) “sets” recommended fuel surcharges, they are just that: recommendations.

At the end of the day, what your market will bear determines how much of a surcharge you can collect.

That said, the FCA recommends calculating a surcharge by taking the percentage increase of the Canadian average bulk price of fuel, without GST, and then factoring in the percentage of fuel in relation to total operating cost.

Common practice for American carriers is to use a baseline price and add a certain percentage to the freight bill for every 10-cent-per-gallon increase in the published national average diesel price.

Some recommend a simpler, cleaner solution for smaller fleets and owneroperators. Start with a base fuel price of $1.15 per U.S. gallon. Add a penny per mile for every nickel increase in the price of fuel.

If fuel was priced at $1.17 per gal, add a penny per mile to the freight bill because the price went above $1.15, but had not exceeded $1.20.

If the price had gone to $1.30 per gal- an increase of 15 cents over $1.15-we’d add three times five cents, or three pennies a mile as a surcharge.

The same holds true for fuel at $3.36-$3.40.

How many five-cent gains has fuel taken over $1.15? Forty five, so your surcharge at current prices should be 45 cents per mile.

Exactly what you’ve been getting, right?