The Fuel Surcharge is NOT the enemy…

Fuel. That wonderful stuff that allows us to run engines. It is incredible to think of what a world without any sort of fuel would look like; we as humans rely so heavily on fuel for our everyday life. Industries rely heavily on fuel and the relevant cost of fuel; we feel this every day in trucking. Being relatively new to the trucking side of the transportation industry, I have little knowledge of the origin of fuel surcharges, but I can understand the logic that led companies to put them in place.

Over the course of the last year, like most people, I have noted the price per litre at my local 7-11 when I fill up my little Civic to get to work. I have seen gasoline prices as high as $1.30 per litre and as low as $0.79 per litre. I recognize diesel prices differ from that of gasoline; however, I feel that the point remains: fuel prices fluctuate. A fuel surcharge in essence allows the carrier to be compensated when fuel prices increase, and then in turn allows the carrier to pass savings on to the customer when prices decline. Like so many systems, this is a great idea… in theory…

The problem with fuel surcharge really is not the surcharge or the concept of the fuel surcharge in itself, but rather the lack of accountability so inherent with fuel surcharges. Most carriers maintain their own fuel surcharges and update them as they see fit. Many do not post their fuel surcharge, but rather show it to you on your quote or your bill. Some even leave it out and let you add your pre negotiated surcharge to the rates yourself. How do you know if your fuel surcharge is competitive? One carrier’s rates may be higher than another carrier’s rates, but what if their fuel is out by 10%? The lack of accountability with fuel surcharges makes pricing in the transportation industry just that much more frustrating and yet intriguing.

Ultimately, shippers, receivers, and carriers can work together to ensure that there is both integrity and accountability in how the fuel surcharge is used so that the benefits are evident to both sides. Common ways to create accountability with fuel surcharges include using a suggested fuel surcharge posted by a third party such as the FCA, or NTS fuel surcharges. The only struggle with these surcharges is that they are trying to mitigate for all of the fluctuation in fuel prices across the whole country. This may be sufficient for national carriers, but the challenge comes for smaller, regional carriers that are heavily influenced by smaller provincial shifts in pricing. Encouraging local transport associations, such as the AMTA in Alberta, to post a recommended fuel surcharge may be a viable solution. What are your thoughts?