fuel surcharge calculator
What do you need to know:There are currently no rules, laws or regulations that require a fuel surcharge.
- Small carriers with direct freight contracts should consider a fuel surcharge.
- Good carriers typically pass 100% of the fuel surcharge on to their authorized owner-operators (OOs). This allows the leased sport utility vehicle to offset the higher fuel price.
- make sure of yourselfYour rental agreement includes 100% transfer.
A fuel surchargeis a separate additional fee charged on top of the current contract rate when fuel costs exceed a defined level.
Key terms to understand:
- Average miles per gallon (mpg): The average fuel economy for a large loaded truck today is around 6 mpg.
- Fuel Price Basis – This is the fuel cost amount you used to calculate your running costs.
- Average price of diesel oil: theUS Energy Information Administration (EIA)publishes the average diesel price every Monday.
Today, truckers generally increase their fuel surcharge by one cent for every 6 cents the diesel price increases above the stated base price.
- For example, if an airline calculates its operating costs using a fuel price of $2.50, it would calculate a fuel surcharge if diesel prices rise above that number.
- If the price of fuel were to increase to $2.56 per gallon, the airline would impose a fuel surcharge of $0.01 per mile.
- If fuel went up to $2.62, they would charge $0.02 per mile, and so on.
The account is like this...
- Take the current fuel price, which was $5.25 per gallon on 3/14/22,
- minus the fuel price basis ($2.50) of the airline's operating cost figures,
- a difference of $2.75 per gallon.
The second account is...
- Divide the difference by the average mpg, or $2.75 ÷ 6.0 mpg = $0.46 per mile.
o, one could simply add a surcharge of 0.01 cents per mile (cpm) for every 0.06 cent increase in the fuel pump price, as noted above.
The central theses:
- A fuel surcharge is not intended to cover all fuel costs.
- There's no ignoring your operating expenses, which means you need to know how much to charge to make a profit.
- Keep in mind that a fuel surcharge is designed to help offset a rise in diesel prices.
- Most freelance OOs operate on the spot market, which means they purchase cargo through brokers rather than contracting with a direct carrier.
- Brokers typically do not pay a fuel surcharge, so you should consider your fuel surcharge in your total fare negotiations.
OOIDA Fuel Surcharge Calculatorhelps you know what to add per mile to your total fare to offset rising fuel prices.
How it works:If an owner/operator sets his baseline fuel price at $2.50 after reviewing his operating expenses, but the average diesel price rises to $5.25, would you participate...
- $2.50 in the fuel price reference field,
- 6 in the field average miles per gallon and
- $5.25 for the current average price of diesel fuel (seeUNS EIA website.)
The total mileage surcharge is $0.46 per minute.
Finally, add $0.46 per mile to the base rate to cover your additional fuel costs.
go deeperfor more information about your operating costs orwatch our videos.
Small business owners and operators: FACILITE
How to implement a fuel surcharge
With diesel fuel prices skyrocketing to record highs, if you haven't built a fuel surcharge into your operation, you should now. Small business owners and auto hauliers do not need to obtain a state license or complete a DOT application to implement a fuel surcharge. Here's how to do it.
If you have regular customers
Notify your customers (this includes brokers, 3PLs, carriers, digital service providers) via email or how you normally communicate. You can use this as a template:
Greeting (ABC sender)
As you no doubt know, fuel prices have risen to some of their all-time highs in the last few days or weeks. (John Q. Trucking Company) acted in good faith to oppose the price cut for as long as possible. Due to the critical situation, we can no longer afford the increased costs.
As a result, we have to introduce a temporary fuel surcharge on all shipments from (insert date here). The fuel surcharge remains separate from our base rates and appears as a separate entry on our freight bill. The fuel surcharge amount is calculated per kilometer and reflects the additional cost of fuel consumed on a given trip.
Our prices are based on the US Energy Information Administration (EIA) Index. We will analyze this data and our actual costs on a weekly basis. The value used for the cost per gallon is also region specific and is determined by the average cost per gallon of fuel, date and origin of the load.
We deeply appreciate your understanding and working with us to help us share the dilemma of these rising fuel costs. It is cooperation that will keep our nation strong in this time of crisis. We hope that by sharing this burden together, we can maintain the goods and services that drive the American economy.
respectful,
John Q. truck driver
John Q Forwarding
If you have a tariff agreement with a new customer (carrier, broker, 3Pl, etc.)
Use the basic template above. You must include a flexible fuel surcharge in your contract pricing. You must state (in writing) that the price you offer is based on the fuel price in effect at the time of signing the contract. Advise (in writing) that each increase in fuel price is subject to an increase of __ cent(s) for each 4 (5) cent increase in fuel price, as determined by the U.S. Index Administration of Energy Information (EIA). The value used for the cost per gallon is region specific and is determined by the average cost per gallon of fuel at the current date and source of the load.
(end with)
We deeply appreciate your understanding and working with us to help us share the dilemma of these rising fuel costs. It is cooperation that will keep our nation strong in this time of crisis. We hope that by sharing this burden together, we can maintain the goods and services that drive the American economy.
respectful,
John Q. truck driver
John Q Forwarding
If you are renting or considering renting to a transporter
If you are leasing from a carrier or considering leasing from a carrier, you should find out what the built-in fuel surcharge is and what the fuel surcharge is for the leased carrier. Almost all major airlines have a fuel surcharge formula, but not all airlines pass this surcharge on to the owner/operator. Find out what your lease agreement says about the fuel surcharge and how it is allocated.
tank cards
If you can qualify for a fuel discount card, get one. Provides additional protection against sudden increases in fuel prices. If you have a good fuel economy card and contract, you will receive a fuel surcharge based on the US Energy Information Administration (EIA) index. You can protect yourself from sudden price swings and potentially earn more revenue after factoring in your other operating expenses. If you are an OOIDA member, you can contact OOIDA and ask to speak to someone about the OOIDA fuel card.
FAQs
How much should a fuel surcharge be? ›
Once you know the fuel mileage, then the fuel surcharge is simply $1.00 per gallon divided by your truck's miles per gallon. If your truck gets five mpg, then the fuel surcharge would be $1.00 / 5 mpg = $0.20 per gallon or 20 cents per gallon.
How to calculate fuel surcharge calculator? ›- Original fuel price - Updated fuel price = Difference in fuel cost.
- Difference in fuel cost / Miles per gallon = Cost per mile.
- Cost per mile x Distance travelled = Surcharge.
In simple terms, a fuel surcharge is determined by taking the average price, subtracting the base price and dividing the result by the base fuel mileage. Your preferred transportation company will be able to tell you exactly how its own surcharge is calculated.
How do you charge customers for fuel surcharge? ›Fuel Surcharge Formula Calculation
To use the formula to calculate your fuel surcharge, subtract your fuel threshold amount from the actual price per gallon and divide that amount by vehicle's miles per gallon. This gives you your per-mile surcharge amount.
The Fuel Surcharge Equals:
The base price of fuel in a shipping contract: $1.25/gallon. The increased cost of fuel: $4.85 - $1.25 = $3.60/gallon. Divided by the average miles per gallon of a truck = 6.5 mpg.
Surcharge is a tax on tax. It is levied on the tax payable, and not on the income generated. For example, if you have an income of Rs 100 on which the tax is Rs 30, the surcharge would be 10% of Rs 30 or Rs 3.
How can I reduce my fuel surcharge? ›- Optimize mode selection and consolidate shipments. ...
- Work with carriers to plan efficient routes. ...
- Work with a 3PL who prioritizes sustainability. ...
- Become a shipper of choice to limit fuel surcharges.
- FAF Rate Calculation = ( B - A ) / A * 100 * 22%
-
- A = base rate of diesel fuel included in calculated schedule of rates.
- B = end of month rate of diesel fuel (increase or decrease).
- 22% = Bulk Lines 2017 diesel cost basket component of total costs.
Surcharges are fees that are tacked onto the price of goods and services. Surcharges are either a fixed amount or a percentage of the purchase price. They come in many forms, including service fees, handling fees, disposal fees, and processing fees.
How does fuel surcharge work for owner operators? ›A fuel surcharge is a fee billed to shippers on top of the freight rate they receive. A fuel surcharge is in place to account for the diesel a trucking company or owner operator will use to haul the shipment of goods from point A to point B.
What is fuel surcharge for dummies? ›
A fuel surcharge is a flat rate that allows the cost of fuel to be incorporated into shipping rates in a fair manner and allows shippers to have a fixed fuel cost they can count. A fuel surcharge accounts for fluctuating fuel prices and the average cost of transporting goods.
What are examples of fuel surcharges? ›For example, if a carrier figures their cost of operation with a fuel price baseline of $2.50, then they would incorporate a fuel surcharge whenever diesel prices rise above this figure. If the price of fuel increased to $2.56 per gallon, then the carrier would institute a fuel surcharge of $0.01 per mile.
What is a 100% fuel surcharge in trucking? ›Thus, when the carrier mentions a 100 fuel surcharge, what they're talking about is that the entirety of the surcharge should be allocated to the driver. In other words, the driver or carrier gets the full amount of the surcharge that's collected.
What is the percentage of surcharge? ›(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees.
How to calculate 15 percent surcharge? ›First, convert the 15% to an actual number that can be used in a calculation. For percents,this is always done by simply dividing the percent (in this case 15%) by 100%. So, the conversational term "15%" becomes 15% / 100% = 0.15 in terms of a real mathematical number. 0.15 x $152.00=$22.80.
How do you calculate fuel cost per hour? ›- Formula To Estimate Maximum Engine Fuel Consumption. Gallon Per Hour (GPH) = (specific fuel consumption x HP)/Fuel Specific Weight. ...
- 300-hp Diesel Engine Example. GPH = (0.4 x 300)/ 7.2 = 105/7.2 = 16.6 GPH.
- 300-hp Gasoline Engine Example. GPH = (0.50 x 300)/ 6.1 = 150/6.1 = 24.5 GPH.
- Other Related Resources:
Fuel surcharges are generally waived when you pay with a fuel credit card to purchase petrol or diesel. In addition, you will not be charged an additional fee for using your credit card to pay for fuel. This can be a great benefit if you often use your credit card to pay for fuel, as it can save you money.
What is the minimum transaction amount required for fuel surcharge waiver? ›The transaction amount should be a minimum of Rs. 400 and a maximum of Rs. 4000 to get this fuel surcharge waiver.
Is fuel surcharge refundable? ›The fuel surcharge is only refunded if the fare conditions of your ticket allow it to be reimbursed.
How do you calculate a price adjustment? ›The price adjustment equation summarizes, at the level of an entire economy, all the decisions about prices that are made by managers throughout the economy. The price adjustment equation is as follows: inflation rate = autonomous inflation − inflation sensitivity × output gap.
How is fuel cost baseline calculated? ›
Fuel Cost Baseline: The Fuel Cost Baseline may be determined based on what the price per gallon of fuel would need to be in order for you to earn an acceptable profit at your current freight rate. The Department of Defense baseline is currently $2.50 per gallon. Average Miles Per Gallon: Your average miles per gallon.
How is fuel adjustment factor calculated? ›FAF Calculation
Sealink Travel calculates FAF by using the average pump price which we obtain from the website www.pricewatch.co.nz. Sealink Travel bases their FAF on the variance between the base fuel rate and current fuel pricing. FAF% moves by 0.8% per 5 cent change in the Price Watch index.
Businesses can charge a surcharge for paying by card, but the surcharge must not be more than what it costs the business to use that payment type. If a business charges a payment surcharge, it must be able to prove the costs it is based on.
What states Cannot surcharge? ›To date, only two states and one jurisdiction still outlaw the use of credit card surcharges. They are a result of non-qualified transactions of different communications methods.: Connecticut, Massachusetts, and Puerto Rico.
How do you avoid surcharges? ›Multiple Tax Benefits
A money back policy can help you save up to 1,50,000 on taxes under Section 80C, 25000 to 100000 under Section 80D and 20% to % TDS under Section 10(10D). This amount is a major tax relief to avoid surcharges on income tax.
Owner-operators can write off many of their work-related expenses, including food, fuel and lodging, if they can show proof of purchase. It can be hard to track every expense on the road.
Can owner-operators write off mileage? ›Personal Vehicle Mileage: Any miles traveled in your personal vehicle related to your business, such as a trip to the store to pick up supplies or driving to the mechanic to drop of a truck, is deductible. Keep records of dates, mileage, destination, and reason for the trip.
Which fuel card is best for owner-operators? ›- Matrack Fuel Card.
- Wex Fleet Card.
- Fuelman Fuel Card.
- EFS Fuel Card.
- Shell Fleet Navigator Card.
- Exxon Mobile Business Fleet Card.
- BP Business Solution Mastercard.
- Comdata Fleet Card.
For example, say a company charges a 10% increase on every cent that the cost of a gallon of fuel rises by, and the price per gallon rises from $3.00 to $3.03. The total increase in price would be 30% (10% X 3). Likewise, if the price of fuel falls from $3.00 to $2.97, the fuel surcharge rate would decrease by 30%.
What is fuel surcharge for owner operators? ›A fuel surcharge is a fee billed to shippers on top of the freight rate they receive. A fuel surcharge is in place to account for the diesel a trucking company or owner operator will use to haul the shipment of goods from point A to point B.
What is the national fuel surcharge for diesel? ›
...
http://www.eia.gov/oog/info/wohdp/diesel.asp.
| At Least | But Less Than | Fuel Surcharge |
|---|---|---|
| $ 1.801 | $ 1.85 | 3.00% |
| $ 1.851 | $ 1.90 | 3.50% |
| $ 1.901 | $ 1.95 | 4.00% |
| $ 1.951 | $ 2.00 | 4.50% |
If the total fuel cost in a certain month is more than the reference cost, then the additional amount will be added to the consumers' bill and in case the fuel cost is less than the reference cost, the amount be subtracted from the bill and it is called the FCA, he added.
Can a carrier keep the fuel surcharge? ›Nope. Fuel Surcharge goes to the truck 100%. If the carrier can not make it on the percentage of the load they would normally get, then the rate was to low in the first place.