Wayne's World  NTA - Homepage | Talk to Wayne | Join NTA

Written by Wayne Schooling

View 2003 Articles | View 2004 Articles | View 2005 Articles

May 2003 How to Implement a Fuel Surcharge

Aritcle

You know the old saying about “ everyone complains about the weather but nobody does anything about it”. Well everyone complains about the high fuel prices but it astounds me that nobody does anything about it. So, if you have ever wondered how you could set up a fuel surcharge but not incorporated a fuel surcharge into your operation, here’s how do it. Base your fuel surcharge on the U.S. National Average Diesel Fuel Index. The Fuel Index is published by the Energy Information Administration of the U.S. Department of Energy and every Monday it is updated. Or you can get the information by calling 202-586-6966. There is a web site but it is a long one : http://www.eia.doe.gov/oil_gas/petroleum/info_glance/distillate.html 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. 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%). A good method would be to build your index on 10 cent increments. With the national average more than $1.55 or more, you should build an index that sets the $1.55 in the middle, allowing for increases/decreases.

U S Retail On-Highway Diesel Fuel Prices

On-Highway Diesel Fuel U S Average

Week of 04/14……….155.4

Week of 04/07……….160.2

Week of 03/31……….166.2

Week of 03/24……….175.2

West Coast On-Highway Diesel Fuel Average

Week of 04/14……….166.2

Week of 04/07……….172.4

Week of 03/31……….178.5

Week of 03/24……….187.9

As you can see there is still a big difference in West Coast fuel, so be sure to use the applicable rates. They are broke down into the following areas: East Coast, New England, Central Atlantic, Lower Atlantic, Midwest, Gulf Coast, Rocky Mountain and West Coast.

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

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

Here is a sample chart to set up:

When the U.S. National Average Diesel Fuel Index is:

Next notify your customers with either by letter of faxed memo. You can use the following as a sample.

Dear XYZ Customer,

As you are no doubt aware, fuel prices remain at historic levels. ABC 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 xxxxx, 2003, 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 line haul 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 Jones
ABC Trucking Company

The NTA is a nationwide association established to provide services, benefits and information to Private Fleets, Trucking Companies and Independent Contractors - join now! Stop by our offices at 6825 E Rosecrans Ave, in Paramount (just off the 710 Freeway), or call (562) 630-7637. You can reach me through e-mail at wayne@ntassoc.com. Until next month, " Drive Safe - Drive Smart!"

View 2003 Articles | Search 2003 Articles --- View 2004 Articles | Search 2004 Articles

Wayne Schooling 
www.NTAssoc.com - Homepage | Contact Wayne at NTA | Join NTA