News
How to implement a fuel surcharge
If you have not incorporated a fuel surcharge into your operation, here's how to do it.

Base your fuel surcharge on the U.S. National Average Diesel Fuel Index. The index is published by the Energy Information Administration of the U.S. Department of Energy and every Monday it is updated. You can get the information by calling 202-586-6966 or you can go to this web site:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/ weekly_petroleum_status_report/current/txt/table18f.txt

You’ll find a table if you go to the web site. Along with the prices of fuel in different U.S. areas, it will give the U.S. retail averages of on-highway diesel in cents per gallon. The averages include taxes.

Table 18.
U.S. Retail On-Highway Diesel Fuel Prices On-Highway Diesel Fuel U.S. Average
Week ending 04/09
139.7
Week ending 04/16
143.7
Week ending 04/30
144.3
Week ending 05/07
147.0

You can set up an index of your own based on these averages. Most companies start the fuel surcharge chart at $1.10 (and 1 percent). A good method would be to build your index on 10 cent increments. With the national average more than $1.47 or more, you should build an index that sets the $1.47 in the middle, allowing for increases/decreases.

Something like this:

Because the national average is calculated each Monday afternoon, it would be a good idea to make your weekly adjustments on Tuesday or Wednesday.

NOTE: Small business owner-operators do not need government approval or to file application with DOT in order to implement a fuel surcharge.

Notify your customers with a faxed memo. You can use this one for a guideline.

Dear xxxx,

As you are no doubt aware, fuel prices remain at historic levels. John Q. Trucking Company has acted in good faith to resist seeking price relief as long as we possibly could. Due to the critical nature of the current situation, we can no longer continue to absorb the increased cost.

Therefore, effective xxx, 2001, we must implement a temporary fuel surcharge of xxx percent on all shipments. The fuel surcharge will remain independent from our base rates and will be shown as a separate entry on our freight bill. The fuel surcharge amount will be a percentage of the net linehaul charges.

Our pricing is based on the U.S. National Average Diesel Fuel Index. We will review this data and our actual costs on a weekly basis.

We deeply appreciate your understanding and partnership with us in helping to share the burden of these fuel cost increases.

Respectfully,

John Q. Trucker
John Q Trucking Company

When the U.S. National Average Diesel Fuel Index is:
At Least
But Less Than
My Fuel Surcharge will be
1.10
1.20
1.0% (of net linehaul charges)
1.20
1.30
2.0%
1.30
1.40
3.0%
1.40
1.50
4.0%
1.50
1.60
5.0%
1.60
1.70
6.0%
1.70
1.80
7.0%
1.80
1.90
8.0%
1.9
2.00
9.0%
July Digital Edition