The dollars per gallon of fuel are, at the time of writing, on average over $5 and rising. Because of this, many companies are looking at fuel surcharges when transporting goods. To do this, they need a fuel surcharge calculator that is both lean and adaptable to ever-changing circumstances.
Below we explain what a fuel surcharge is and how you can calculate it. We also explain how that relates to diesel fuel also, and the difference between gasoline and diesel surcharges.
You might be wondering what a “fuel surcharge” is, meaning charges upon potential fuel bought by transport companies.
The current economic situation in America is affecting all areas of commerce and transportation. It has led to companies wanting to protect themselves from fluctuations in the market.
One of the ways companies can protect themselves is by including an extra charge to the individual wanting to transport the goods. Not all areas of the market welcome this move, as it is yet more overheads for them. Still, it is an unfortunate reality that they must contend with as the price of oil increases further.
To the DOE, a fuel surcharge makes sense and they understand that every company might calculate it differently. As such, for the information on any specific company’s charges, you must seek out its data. One of the best ways to do this is by checking their website.
When you ship freight across the country, specific calculations must occur to work out how much money you owe via the surcharge. The following is a rough guide on how to calculate fuel surcharge:
First of all, you need to have information on the mileage that the goods will move for. Without this, you will be unable to work out the total amount of distance that you are charging the client for, and thus the amount of fuel.
If you wish for accurate mileage readings, then you need an accurate method of collecting that data. For example, use individual electronic or physical logs for each vehicle, tracking how far they move with each job. If you are not being completely accurate, then having an average mileage rate per vehicle doing the same job should do.
Remember that the only area you can bill customers for is the time between when the vehicle picked up their goods and dropped them off. This does not include travel to and from clients’ sites.
There should be an amount under which you apply no surcharge. This would occur in times when the cost of gas is low enough that no surcharge is necessary. This allows your customers to feel more comfortable in hiring you to transport their goods during times when fuel is cheaper.
You can even have more than one threshold. For example, it might be that between $2.50 per gallon and $3 per gallon, you charge a 1% fuel surcharge. Then over $3 per gallon, you can charge a 5% surcharge.
Having many thresholds allows you more control over how much you are charging. This also prevents you from overcharging customers. Such actions may allow customers to put more trust in your ability to provide a good service for less.
As described above, you may have one or more surcharge percentages. These are the amount you will add to any price based on the amount of fuel you estimate to use.
You should investigate how much you are currently spending on fuel. Then, try to calculate how much you would have to add to the price to prevent too much of a dip in your profits.
Finding this data may depend on many variables. For example, including how often your vehicles stop, the kind of terrain the vehicles are traveling on, and the types of vehicles you have.
To finally calculate the fuel surcharge, you must run through the following steps one after the other:
Work out the fuel threshold difference. Subtract the amount that your fuel threshold is set to from the price of fuel that you will be buying. This gives you a dollar amount of fuel used for a single journey.
Determine the price per gallon. Divide the dollar amount of fuel used in a single journey by the number of miles that the driver traveled in that job. This will give you a per-mile amount that you can apply as a surcharge.
You should note that this will not always work. There may be times when journeys will have extraneous circumstances that affect the fuel price. It may also be that the price of fuel will go up or down much more than you expect.
Although, this is a good ballpark for you to work from.
The US Energy Information Administration has many charts that you can use to track the price of fuel over time into the past. These are available to the public and you can make good use of them in your calculations. They can help you work out how much you can expect to charge for fuel and what your thresholds should be.
You can treat diesel fuel in the same way as gasoline fuel when it comes to surcharges. Although, you should be aware that diesel is by and large more expensive than gasoline.
As you determine the thresholds of prices for setting surcharges, be careful. You should ensure that you do not set a threshold as lower in comparison to gasoline. Have separate thresholds that are only to calculate diesel surcharges.
Now that you have absorbed the above information, you should be more comfortable discussing fuel surcharges. To that end, we have a fuel surcharge calculator that you or others can use.
Our calculator will only work for goods transported by Amertrans. Still, it should give you a good idea of how much extra you can expect to pay when transporting. So, give it a go today and get a realistic idea of what transporting goods will cost you.