how is the fuel surcharge figured?
fuel surcharge
- Thread starter morningwood
- Start date
Monty
Expert Expediter
Depends ........ some carriers don't charge it, some do. Some carriers don't share it, some do.
It is figured from a base rate, (I think it is $2.90 cents, I may be wrong), then any point over that price is passed along to the shipper. And it is regionalized for varying prices. Fuel might be $4.00 a gallon in Ohio, and $3.89 down south ...
Some carriers are skeered to charge it, because it might drive away their cheap freight.
Some carriers do charge it, but pass along cents on the dollar to the operator or the one actually buying the stuff.
Then some carriers do indeed charge it, knowing their contractors can not eat those costs for long, and then actually pass 100% of it to the contractors. I was once leased to such a carrier
It is figured from a base rate, (I think it is $2.90 cents, I may be wrong), then any point over that price is passed along to the shipper. And it is regionalized for varying prices. Fuel might be $4.00 a gallon in Ohio, and $3.89 down south ...
Some carriers are skeered to charge it, because it might drive away their cheap freight.
Some carriers do charge it, but pass along cents on the dollar to the operator or the one actually buying the stuff.
Then some carriers do indeed charge it, knowing their contractors can not eat those costs for long, and then actually pass 100% of it to the contractors. I was once leased to such a carrier
Yes its a long read but here is the skinny.
I have a base rate set at the pump price of 3.00/gal I figured how much it costs to run my strait truck PER MILE at that fuel price. This includes fuel, maintainence, truck payment, even if paid for the unit will need to be replaced eventualy, insurance, taxes, tolls, shore powwer or electricity used when home if in a cold climate. All of your expenses are influenced by your fuel cost including your salary. Remember you still have other things to pay for like food, shelter, utilities that are effected by oil prices.
I use a twenty five cent spread for my regular customers these are customers that call me for work a mininmum number of times a week, or month. That gives them some breathing room and keeps pricing stable and easier for you to to invioce. Unless of course, you like adjusting your rate on a daily or even an hourly basis.
NOTE: A regular customer is NOT the load broker or shipper that calls you to fix thier shipping nightmare and will most likely never call again. Charge them a premium or at least realistic price.
For example These are NOT my actual prices. I charge more than this.
Lets say I price out fuel at $ 4.00 to $ 4.249 in the area I run and I set my price at $ 1.00 per mile all in.
My real expenses incerase on average average 5% per mile per $0.25 per gallon
So, when fuel hits $ 4.25 I now charge $ 1.05 per mile this price holds untill the price of fuel is 4.50 per gallon. and then it increases again by 5%. Simple....
Now if fuel goes down, a fuel rebate is in order. I figured an average decrease of 1.5% per $ 0.25 / gallon. the rebate is lower because when the cost of fuel goes down the rest of your expenses stay the same or even continue to rise.
NOTE Keep current on the actual costs for your expenses so you dont over price your truck and loose a customer. I check monthly to keep my prices competitive and fair and still make money and you dont want to loose your shirt ether.
For example.
You charge 1.50 per mile but all your expenses and salary add up to $ 1.35 per mile you may want to adjust your rate down or hold your rate at that price for a while.
OR...
You charge 1.50 per mile and because your other expenses increased while fuel stayed flat you need to charge 1.60 per mile to avoid paying out of your salary well the obvious answer is increase the rate.
Remember your regular customer has a "price threshold" pass it and they start shopping. On the same token when you break down at O dark thirty on I 90 in mid Febuarry in a cold blizzard the shipper, broker, or customer will not come to your rescue. They wont pay the 1,000.00 service call and tow, or the 900.00 repair bill.
Trust me, Allot of us have been there its not fun.
Now, if you work for a carrier and YOU PAY FOR FUEL they charge a fuel surcharge. Find out what thier fuel surcharge program is and tell them that money is yours andyou expect the full ammount.
IF YOUR CARRIER PAYS FOR FUEL YOU GET NOTHING.... Regardless of what he charges.
Hope this helps...
Feel free to PM me if you have any questions.
Bob Wolf.
I have a base rate set at the pump price of 3.00/gal I figured how much it costs to run my strait truck PER MILE at that fuel price. This includes fuel, maintainence, truck payment, even if paid for the unit will need to be replaced eventualy, insurance, taxes, tolls, shore powwer or electricity used when home if in a cold climate. All of your expenses are influenced by your fuel cost including your salary. Remember you still have other things to pay for like food, shelter, utilities that are effected by oil prices.
I use a twenty five cent spread for my regular customers these are customers that call me for work a mininmum number of times a week, or month. That gives them some breathing room and keeps pricing stable and easier for you to to invioce. Unless of course, you like adjusting your rate on a daily or even an hourly basis.
NOTE: A regular customer is NOT the load broker or shipper that calls you to fix thier shipping nightmare and will most likely never call again. Charge them a premium or at least realistic price.
For example These are NOT my actual prices. I charge more than this.
Lets say I price out fuel at $ 4.00 to $ 4.249 in the area I run and I set my price at $ 1.00 per mile all in.
My real expenses incerase on average average 5% per mile per $0.25 per gallon
So, when fuel hits $ 4.25 I now charge $ 1.05 per mile this price holds untill the price of fuel is 4.50 per gallon. and then it increases again by 5%. Simple....
Now if fuel goes down, a fuel rebate is in order. I figured an average decrease of 1.5% per $ 0.25 / gallon. the rebate is lower because when the cost of fuel goes down the rest of your expenses stay the same or even continue to rise.
NOTE Keep current on the actual costs for your expenses so you dont over price your truck and loose a customer. I check monthly to keep my prices competitive and fair and still make money and you dont want to loose your shirt ether.
For example.
You charge 1.50 per mile but all your expenses and salary add up to $ 1.35 per mile you may want to adjust your rate down or hold your rate at that price for a while.
OR...
You charge 1.50 per mile and because your other expenses increased while fuel stayed flat you need to charge 1.60 per mile to avoid paying out of your salary well the obvious answer is increase the rate.
Remember your regular customer has a "price threshold" pass it and they start shopping. On the same token when you break down at O dark thirty on I 90 in mid Febuarry in a cold blizzard the shipper, broker, or customer will not come to your rescue. They wont pay the 1,000.00 service call and tow, or the 900.00 repair bill.
Trust me, Allot of us have been there its not fun.
Now, if you work for a carrier and YOU PAY FOR FUEL they charge a fuel surcharge. Find out what thier fuel surcharge program is and tell them that money is yours andyou expect the full ammount.
IF YOUR CARRIER PAYS FOR FUEL YOU GET NOTHING.... Regardless of what he charges.
Hope this helps...
Feel free to PM me if you have any questions.
Bob Wolf.
Here's the hopefully simple version of the arithmetic. Most companies that have a FSC base it on $1.25 per gallon. That is the amount they expect fuel to cost based on what used to be a semi-reasonable fuel price. They charge a FSC calculated from the national average price of diesel to net $1.25. Each company has their own formula but a common formula uses 6mpg for T/T's, 9mpg for straights and 15mpg for vans.
Let's say the national average price of diesel is $4.25 just to create an example. They want it to net $1.25 so they take $4.25 - $1.25 to get $3.00 that has to be adjusted by FSC. Now they take $3.00 / 6 and get 50 cents per mile for T/T FSC. They take $3.00 / 9 and get 33.33 cpm for straights and they take $3.00 / 15 and get 20 cpm for vans.
Hope that helps.
Let's say the national average price of diesel is $4.25 just to create an example. They want it to net $1.25 so they take $4.25 - $1.25 to get $3.00 that has to be adjusted by FSC. Now they take $3.00 / 6 and get 50 cents per mile for T/T FSC. They take $3.00 / 9 and get 33.33 cpm for straights and they take $3.00 / 15 and get 20 cpm for vans.
Hope that helps.
And gasoline powered vans are making even more money then diesel powered vans...i can't understand why they whining ..they are getting bonus bucks now.....
IF I were a carrier with a lot of vans i would create a gas FSC structure...
IF I were a carrier with a lot of vans i would create a gas FSC structure...
Load 1 does basically the same thing....not quite but close.....customers that use mostly TT's are used to the higher rate...why confuse them with the lower one and draw attention to the issue....
Actually, it seems to be the opposite to me. If the fsc is based on 15mpg for vans and the older sprinters (like yours) are getting 23+ mpg, they are gaining an unfair advantage. I would support a 15mpg/gas policy if you'll support a 23mpg/diesel policy?
Im pretty sure that carriers and customers have better things to do than worry over the minor variations of exact vehicle type within a vehicle class though. I think that most days your pretty happy with that fact too....but today, you chose to throw a stick at the gas van crowd?
I think it's the gas/diesel price variance being referred to so let's look at that. Using the same $4.25 diesel to save one calculation, let's say gasoline would be $3.90. To make the math easier we'll say the gas van actually gets 15mpg so he's getting $3 (15mpg * .20cpm = $3). Subtracting, $3.90 - $3.00 his actual cost under load is 90 cents a gallon for gasoline. Now, we'll guesstimate the diesel van is getting 20mpg so he's getting $4 (20mpg * .20cpm = $4). Subtracting, $4.25 - $4.00 his actual cost under load is 25 cents a gallon for diesel. Yep, those (us) gasoline vanners are getting a heck of an advantage alright. 
That was a fluke...not one model since 06 gets that mileage...LOL...maybe for about a 5 yr window 02/07 there could have been a sprinter FSC for some carrier to invent...who knows....but tht advantage has dried up....And I was directly pointing out cargo vans only in my reference...not cubes or cargo maxs..both driven responsibly, I don't think there is much difference between the 2 today....sprinters have lost much of their appeal with the advent of the 6 cylinder engine, the bigger body and the added cost of DEF....and the 35-40K price tag
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I think it's the gas/diesel price variance being referred to so let's look at that. Using the same $4.25 diesel to save one calculation, let's say gasoline would be $3.90. To make the math easier we'll say the gas van actually gets 15mpg so he's getting $3 (15mpg * .20cpm = $3). Subtracting, $3.90 - $3.00 his actual cost under load is 90 cents a gallon for gasoline. Now, we'll guesstimate the diesel van is getting 20mpg so he's getting $4 (20mpg * .20cpm = $4). Subtracting, $4.25 - $4.00 his actual cost under load is 25 cents a gallon for diesel. Yep, those (us) gasoline vanners are getting a heck of an advantage alright.
All depending on driving habits of course....
Sure, 1.25 a gallon, Diesel hasent been that in almost ten years. Unless they ration fuel it will never be that low and when rationing takes place you still have to charge enough to justify the run.
I tried the standard method and found that adding the FSC with a base rate for salary, truck and business expenses was at best short of matching the mininum of what I actualy needed to make. Especialy being based in New york State.
My method is simple, accurate and includes all the other expenses that go up because of fuel basicaly comes out better than the fsc on 1.25. My customers like the fact I use a real fuel price not one dated almost fifteen years ago.
This is easily used for gasoline too you just need to have the base van rate.
Bottom line is figure a method that works for you so you make money at the end of the run and is easy for you to use
If you run for annother carrier and pay for your own fuel tell them you want all the fuel S.C.
I tried the standard method and found that adding the FSC with a base rate for salary, truck and business expenses was at best short of matching the mininum of what I actualy needed to make. Especialy being based in New york State.
My method is simple, accurate and includes all the other expenses that go up because of fuel basicaly comes out better than the fsc on 1.25. My customers like the fact I use a real fuel price not one dated almost fifteen years ago.
This is easily used for gasoline too you just need to have the base van rate.
Bottom line is figure a method that works for you so you make money at the end of the run and is easy for you to use
If you run for annother carrier and pay for your own fuel tell them you want all the fuel S.C.
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Zorry,
You just simplified what I was trying to say abbout the 1.25 its long outdated. Thats why Im saying to set pricing at what it actualy costs to run. We can torture numbers all day long but if we arent making money why bother satrting the truck or van in the first place?
Bob Wolf
You just simplified what I was trying to say abbout the 1.25 its long outdated. Thats why Im saying to set pricing at what it actualy costs to run. We can torture numbers all day long but if we arent making money why bother satrting the truck or van in the first place?
Bob Wolf
zorry
Veteran Expediter
The comment on the rate was tongue-in-cheek.
I'm happy with the rates we're getting.
There is downward pressure. Some brought on by competition. Some internal to improve profits.
It's all part of the game.
Unless you're in a niche market,as I was as a truck hauler,trucking is about pennies,not dollars.
Expediting was a niche market years ago. Now it's just another style of trucking.
I'm happy with the rates we're getting.
There is downward pressure. Some brought on by competition. Some internal to improve profits.
It's all part of the game.
Unless you're in a niche market,as I was as a truck hauler,trucking is about pennies,not dollars.
Expediting was a niche market years ago. Now it's just another style of trucking.
Oh, that's simple! You just have to get everybody in the trucking industry to agree that it needs an update...and by how much