Question

explain why fuel surcharge is an impotant componant of a ship operating cost

Answer 1

Fuel surcharge

A fuel surcharge is an extra fee that trucking companies (or third parties) charge to cover the fluctuating cost of fuel. It is calculated as a percentage of the base rate and is usually added to a shipper’s freight bill to cover the cost of operations. The fuel surcharge depends on the average fuel price and can be different for each shipper or industry, depending on fuel cost to revenue ratio. It covers additional fuel costs and keeps carriers profitable, even when the cost of fuel rises.

why fuel surcharge is an impotant componant of a ship operating cost?

Remember, most carriers are ready to negotiate a fuel tax level. If you are able to pay a higher overall rate, it is possible for carriers to decrease or even eliminate the surcharge. It is always good to have options, especially when diesel fuel prices go up and increase surcharge rates. Develop a market fuel surcharge program—third parties, like a 3PL, are excellent sources for this information because they typically deploy many programs. According to a Dallas-based third-party logistics provider, in a survey of 150 large shippers, for a shipper with $100 million in annual truckload spend, a one-cent-per-mile adjustment in the formula for calculating fuel surcharges could cut the company’s annual bill to $32 million from $38.8 million.