Fuel surcharge necessary in volatile market

It’s been more than a decade since diesel prices have been this high.

According to the most recent weekly update from the Energy Information Administration on March 7, the average price per gallon of diesel was $4.85. That’s a 74.5-cent increase from the previous week and $1.71 higher than the previous year on the same date.

As volatile as the fuel market has been, and with no assurances that prices will return to more typical levels anytime soon, the OOIDA Foundation says now is the time to implement a fuel surcharge.

Fuel surcharge help from OOIDA Foundation

If you’ve never implemented a fuel surcharge, the Foundation has recently updated its website with information on what you need to do, including templates and fuel card information.

Recent research by the Foundation revealed that more than half of owner-operators were unable to negotiate a fuel surcharge with their customers. Specifically, only 34% of those under their own authority were able to include a fuel surcharge, according to the Foundation’s Freight Rate Survey.

Those who do are charging 39 cents per mile on average.

“With the price of diesel fuel spiraling upward to record highs, if you have not incorporated a fuel surcharge into your operation, you must do it now,” the OOIDA Foundation website said.

The fuel surcharge calculator on the Foundation website is a tool to help you better understand the freight rate required to move your truck.

To calculate your rate, enter the latest fuel price baseline, average miles per gallon, and current average diesel price.

Your fuel price baseline is what you use to help figure your cost of operations. Typically, that amount is set by you to decide what your cost of operations to base your rate per mile off of. When fuel prices at the pump increase above your fuel price baseline, a surcharge is implemented.

Knowing your cost of operation as well as what you are allowed to recoup in fuel charges is key to your success, the Foundation website says.

No government sign-off

It’s also important to note that no paperwork or approval is needed to implement a fuel surcharge.

“Small business owner-operators and motor carriers do not need to get government approval or file an application with the Department of Transportation to implement a fuel surcharge,” the Foundation website said. “The fuel surcharge must be flexible in order to meet the volatility of the fuel market.”

Whether you have regular customers, are entering a rate agreement with a new customer, or are leased to a carrier, it’s all covered on the Foundation website.

The message is clear from the OOIDA Foundation to small business owner-operators – just do it, the Foundation website reads.

With fuel prices where they are today, you simply can’t afford not to. LL