I know there are some out here that spout off about fuel surcharge and have NO idea how it works, or how it's figured. So, I thought I'd give a lesson in it. This is BASIC, guys, so don't hang me if it doesn't meet EXACTLY what you or your company does.
First of all, you have to establish a baseline. This is the price all surcharges start at. For example. Many large carriers use $ 1.15 per gallon of fuel, as the base. This figure is obtained from the weekly figures released by the DOE. I put a link to that up, earlier, as a Sticky.
Now, you have to set papameters of how often you raise the surcharge. The big boys use 6 cents as the figure, governing the rate increase. In other words, if fuel is at $1.15, Nat'l average, there is no surcharge. Now, when fuel EXCEEDS $1.21 per gallon, or it rises 6 cents, a 1 cent fuel surcharge kicks in. Now, it doesn't take a brain surgeon to figure out if it goes up 1 cent for every 6 cents price increase, all I have to do is maintain a 6 mpg average to break even. Pretty simple, huh? I guess it's not, to some. If you drive like fuel is free, that 1 cent increase, every 6, isn't gonna help, that much. But, conversely, if you slow down, making your fuel mileage go up to let's say 7 mpg, all of a sudden, you're MAKING money off the fuel surcharge, not just holding your own. I'll give an example, later on.
Now, some companies charge their customers a surcharge based on the fleet rate their trucks are getting. I know of one company that uses 5.7 mpg as the average, and $1.20 per gallon as the baseline. So, every time the prise jumps 5.7 cents, they get another 1 cent rise in FSC. Some guys in that company make out well, with this, others do not, if they can't get decent fuel mileage. I know, until lately, I've been losing my butt because of fuel mileage. BUT, I do believe the engine has finally broken in. My mileage is up over 6 mpg, since I left California, and I've been to NJ, MA, CT and back to PA. My readout says I'm getting 6.6 mpg, right now. FINALLY, decent mileage.
Since I have to go make like a driver and pay a lumper and get my bills, I'll stop here, but resume it in a couple hours. There is more to this story. And some of it involves brokers. and unscrupulous practices. Be back soon, for Part 2.