Paying Too Much in Fuel Surcharges?

One shipper discovered its fuel surcharge was 14% higher than a competitive alternative. The surprising part? We didn't need diesel prices to drop to find the savings opportunity.

We just needed to look at how the shipper was being charged.

And that raises a question every transportation professional should be asking: Are you negotiating your freight rates while overlooking one of the biggest opportunities to reduce your transportation costs?

The Problem: Fuel Costs Are Rising, But Are You Paying More Than You Should?

Over the last couple of months, we've been talking about the impact of rising diesel prices on transportation costs. The numbers have been eye-opening.

Depending on their freight profiles, some LTL shippers have experienced cost increases of approximately 20%, while truckload shippers have seen increases as high as 25–30% compared to the beginning of the year.

That's a serious hit to any transportation budget, but here's what bothers me. Most shippers spend considerable time negotiating linehaul rates. They'll challenge a carrier over a few percentage points, compare bids, and analyze lanes.

Then they turn around and accept the carrier's published fuel surcharge schedule without asking a single question.

After 40 years in logistics, I can tell you that what's hiding in your fuel surcharge program can be just as important as what's in your linehaul rate.

Let’s take a look at an example.

A Shipper Challenged Us to Find them Savings

Recently, a shipper asked us to demonstrate that meaningful fuel surcharge savings were actually possible. We welcomed the challenge.

We put the company's transportation data through our proprietary Freedom Logistics sourcing process. We examined its freight characteristics, linehaul rates, shipping patterns, and fuel surcharge structure.

We weren't looking for a cheaper diesel price. We were looking for a better way to manage the cost of fuel. What did we find?

The shipper's fuel surcharge was approximately 14% higher than the surcharge used in our Freedom Logistics LTL freight management program.

The same fuel market. The same economic conditions. But a meaningful difference in what the shipper was being charged.

The opportunity wasn't created by waiting for the market to improve.

It came from questioning a cost that many shippers simply accept.

Here's What Most Shippers Don't Realize About Fuel Surcharges

In my experience, one of the biggest misconceptions in transportation purchasing is that fuel surcharges are fixed, nonnegotiable costs.

They're not.

Carriers often use standardized fuel surcharge schedules tied to a national diesel price index. But your freight network isn't necessarily standard.

Your shipping lanes, freight volumes, geographic concentration, and carrier mix all influence what a competitive fuel surcharge program could look like.

And here's the insight that gets overlooked:

Two shippers can have similar freight rates and still pay significantly different total transportation costs because of how their fuel surcharge programs are structured.

That's why negotiating linehaul rates alone doesn't tell you whether you're getting a competitive deal.

A lower linehaul rate combined with an unfavorable fuel surcharge can leave you paying more than you expected.

And depending on where your freight moves, the national diesel index used by your carrier may not accurately reflect the fuel economics of your network.

That doesn't automatically mean a regional index is better. It means the index, surcharge percentages, and calculation method deserve the same scrutiny as your freight rates.

We've identified opportunities for companies to reduce their fuel surcharge costs by 10–15%.

Not every shipper will see those results. But you won't know what's possible until you examine the numbers.

One Thing You Can Do This Week

I'm not going to suggest you launch a major transportation sourcing project this week.

Start with something simpler.

Pull your most recent LTL freight invoice and your carrier's current fuel surcharge schedule.

Then answer three questions:
1.    What fuel surcharge percentage are you actually paying? Don't estimate. Find the number.
2.    What diesel price index drives that percentage? Is it national, regional, or based on another formula?
3.    When was the last time you compared that surcharge structure against a competitive alternative? If you can't remember, that's your warning sign.

You can do this on your own, this week.

And while that review won't tell you exactly how much you could save, it will tell you whether you're managing your fuel surcharge or simply accepting it.

The Bottom Line

After four decades in this business, I've learned that some of the best transportation savings opportunities aren't buried in complicated contracts.

They're sitting right there on the freight invoice.

Fuel surcharges are a perfect example.

You can't control diesel prices. You can't control the global energy market.

But you can challenge how your company is being charged for fuel.

And when a shipper discovers its fuel surcharge is 14% higher than a competitive alternative, that's a conversation worth having.

So here's my question:

Are you confident your fuel surcharge is competitive, or are you leaving a potential 10–15% reduction in fuel surcharge costs on the table?

At Freedom Logistics, we can benchmark your current fuel surcharge structure against the programs we're managing today and help you understand whether a meaningful savings opportunity exists.

Want to see the proof?

Get in touch and tell us, "Show me the numbers."

We'll take a look at your freight profile, evaluate your fuel surcharge structure, and show you what the numbers say.

Because in transportation, what you don't question can cost you.

Here's how to get in touch:

☎️ Give us a call at 630-833-0890
✉️ Send us an email at solutions@tranzact.com 
💻 Contact us by completing our online form 
🕑 Schedule a conversation with a member of the TranzAct team