A fuel surcharge is an additional fee imposed by shipping companies or third parties to offset the variable cost of fuel. Typically calculated as a percentage of the base rate, this surcharge is appended to a shipper’s freight bill to address operational expenses. The exact surcharge amount hinges on the prevailing fuel prices and may vary among shippers or industries, reflecting the fuel cost to revenue ratio. By covering extra fuel expenses, this mechanism ensures carriers remain profitable even amidst fuel price escalations.
Fuel surcharge policies lack federal oversight. Instead, individual shippers and carriers negotiate and establish these terms within contracts. This regulatory vacuum creates opportunities for fraudulent practices, as there are no legal mandates governing the transparent transfer of collected fuel taxes from shippers to fuel purchasers. Given that fuel ranks among the highest operational costs for carriers, alongside drivers’ wages, implementing a surcharge facilitates negotiations for long-term contracts. In such agreements, where base rates remain constant, the fuel surcharge serves as a buffer against short-term fuel price fluctuations.