Fuel surcharging policies

Scope

Shippers and carriers typically agree to a standard rate, tied to a specific fuel price.

Regulatory citations

• None

Key definitions

• Fuel surcharges: Charges directly related to fuel cost increases and agreed to as part of a transport fee.
• Surcharges: Extra fees added onto the original shipping rates determined by the carrier.

Summary of requirements

Typically, a standard rate is agreed to by the shipper and the carrier, tied to a specific fuel price. As fuel increases or decreases from this price, the fuel surcharge is adjusted accordingly.

There are no legal requirements stating that a customer must pay a carrier’s fuel surcharge. Fuel surcharging is negotiated between participants by way of contract. If a carrier chooses to implement a non-agreed upon fuel surcharge, the customer may refuse to pay it and consequently, the carrier has no recourse.

Because of the reduction function in fuel surcharging, the assumption that it won’t always go up, many customers have become more willing to negotiate a fuel surcharge increase rather than a shipping rate increase. Customers see it as more difficult to renegotiate a lower shipping rate based on lowering fuel costs, while a fuel surcharge rate is designed to automatically do that.