With diesel prices at $4.05 per gallon as a national average, it can cost you around $0.63 per mile traveled to fill your tank. That's based on 6.4 MPG and the national average cost of diesel, published by the U.S. Department of Energy. Your mileage may vary, and so will your costs, depending on prices in your region.
The fuel surcharge is designed to cover rapid change in the price of diesel fuel. Most carriers negotiate a variable fuel surcharge into their long-term contracts, but when you are working with a broker on a one-time haul, you might not see an increase in rates when fuel goes up. Many brokers quote an all-inclusive rate, without breaking out the fuel from the line haul rate.
When fuel prices rise fast, the fuel surcharge can put carriers at a disadvantage. It can take 25 to 30 or more days to get paid for the trip you took today, and by that time, it will cost more to refill your tank. Of course, when fuel prices are dropping, the carrier benefits, but somehow prices never fall as fast as they rise.
Nationwide, fuel prices rose by more than 25 cents per gallon between January and February. It cost you more in February to make the same trip as it did in January, so you'd like to get paid more, too. On your next trip, brokers might offer you the same pay, however, because they know that's what they paid for the same haul last time. You may need to remind them about the change in fuel prices, and explain that you need to increase your rate or add a fuel surcharge.
How do you know what to charge? When fuel prices are rising fast, my rule of thumb is this:
For each one-penny increase per gallon, ask for an additional dollar per day. So if you got paid $1,000 on a two-day trip at the beginning of January, you want to get $1,050 this time.
Remember, the formula says to add a dollar per day for each penny increase, so when fuel goes up 25 cents, that gives you an additional $50 for a two-day trip. Roughly, this is based on a 500-mile day and 5.0 MPG average, which would burn 100 gallons per day -- but you have to cover the deadhead miles as well, and this is an easy formula to calculate.
Brokers generally can pass along fuel surcharge increases, so if you request a reasonable adjustment you are more likely to get agreement.
Rapid increases in the price of diesel can lead carriers to ask for a rate increase or a fuel advance.
Categories: Carrier News