Fuel surcharge, and who it actually protects

Fuel surcharge exists so that a rate agreed in March is not destroyed by a fuel price in June. That is the theory. In practice a surcharge is a formula somebody else wrote, and whether it protects you depends entirely on inputs you did not choose.

1. 1The index it references — for example the U.S. Energy Information Administration's weekly on-highway diesel price, national or regional.
2. 2The baseline, or peg: the fuel price at which surcharge is zero. Everything above the peg generates surcharge; everything below generates nothing.
3. 3The assumed fuel economy. The formula divides the price difference by an MPG figure to get a per-mile surcharge — and that figure is an assumption about your truck.

Change any one of those and the same diesel price produces a materially different surcharge. A generous-sounding percentage attached to a high peg can pay less than a modest one attached to a low peg.

Surcharge may be paid on loaded miles only — read which. You burn fuel on empty ones too. That gap is the same one that distorts cost per mile, and it means a surcharge can look like full protection while covering only the paid portion of your running.

Carry on the example: in a week of 2,000 loaded miles and 300 empty ones, a 50-cent surcharge on loaded miles pays $1,000, while the fuel above the peg across all 2,300 miles, at the formula's own 6 mpg, costs $1,150.

It is not a reason to refuse the load. It is a reason to treat surcharge as partial coverage rather than a hedge, and to price the linehaul accordingly.

• Is the surcharge stated as a figure, or as a formula you would have to reconstruct? A figure you cannot verify is a figure you cannot dispute.
• Which index and which week — a surcharge referencing a stale week during a rising market silently underpays.
• Is it included in the linehaul rate or paid on top? The same total looks very different depending on the answer, and only one of them adjusts if fuel moves.
• Does it appear on the rate confirmation at all? If it was agreed on the phone and is not in the document, it does not exist.
• What MPG does the formula assume, against your own twelve-month average? Loaded weight, age and hilly lanes all pull a truck below a formula's figure.

Then do the only test that matters: total revenue for the load, divided by every mile the truck will turn, against your own cost per mile. Surcharge is a component of that number, not a separate win.