Fuel Surcharge
Also known as: FSC, Fuel Adjustment
Definition
A fuel surcharge is an extra fee that carriers add to shipping costs to account for changing fuel prices. Rather than constantly adjusting base rates, carriers use this variable percentage that rises and falls with fuel costs.
How Fuel Surcharges Work
The surcharge is typically calculated as a percentage of the base transportation rate:
Total Cost = Base Rate + (Base Rate × Fuel Surcharge %)
Example:
- Base rate: $15.00
- Fuel surcharge: 8.5%
- Fuel surcharge amount: $15.00 × 8.5% = $1.28
- Total: $16.28
Current Fuel Surcharge Rates
Carriers publish weekly fuel surcharge rates tied to the national diesel fuel index. As of recent averages:
| Carrier | Ground | Express/Air |
|---|---|---|
| UPS | 7-10% | 8-12% |
| FedEx | 7-10% | 8-12% |
| USPS | Included in rates | Included in rates |
Note: USPS bakes fuel costs into their published rates rather than showing a separate surcharge.
Why Carriers Use Fuel Surcharges
- Volatility protection - Fuel prices can swing dramatically
- Rate stability - Base rates stay consistent longer
- Transparency - Customers see fuel cost separated from service cost
- Quick adjustments - Update weekly without full rate changes
Impact on Shipping Costs
Fuel surcharges add up significantly over time:
- On a $15 shipment at 9% FSC = $1.35 extra
- Ship 1,000 packages/month = $1,350 in fuel surcharges alone
- Annually = $16,200 in fuel surcharges
How to Minimize Fuel Surcharge Impact
- Negotiate caps - High-volume shippers can negotiate surcharge caps
- Use USPS - No separate fuel surcharge line item
- Plan shipments - Consolidate to reduce total shipments
- Compare carriers - FSC percentages vary between carriers
- Monitor trends - Fuel surcharges lag actual prices; time purchases accordingly
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