While we have endeavored to cover most of the commonly asked questions, please feel free to Contact Us if there is something we have missed!
Why do Trucking companies charge a fuel surcharge in the first place?
In an effort to offer the most aggressive rate packages possible, transportation companies need to know that they are covered against sudden spikes in the cost of diesel. Without the protection of a fuel surcharge, trucking companies would have to charge higher rates to ensure their pricing is sustainable long term.
Very similar to variable interest rates at a bank, if the price is fixed the bank must charge more.
What is the issue with this?
The issue that many companies (both carriers and shippers) have identified is that often times there is little to no correlation between the fuel surcharge that is being posted and the price of diesel. This trend in the industry makes it difficult for carriers to compete with other carriers who adjust their surcharge randomly, and makes shippers lose faith in a system that was originally intended to work for all parties.
While charter banks use the federal bank as an index, and post their interest rates publicly as a way to provide transparency and a level playing field, in the trucking industry, the fuel surcharge is often swept under the rug with little accountability.
What is the FuelWise Solution?
The FuelWise Solution is consists of three stages intended to benefit supply chain members and stakeholders.
- AWARENESS - Fuel Wise works with supply chain stakeholders (shippers, carriers, etc) to analyze their freight movement patterns and understand all of the options on the table to consider in developing their unique fuel surcharge policy and how their company should approach fuel surcharges.
- COMMUNICATION - Fuel Wise provides historical and ongoing fuel pricing data, as well as suggested fuel surcharges that are customized to the specific market region of the stakeholder.
- PARTNERSHIP - Fuel Wise works with supply chain stakeholders as a partner to develop, implement, and liaison with regard to each partners unique fuel surcharge policy. The specifics of how Fuel Wise can best partner are defined in the strategy planning session with each client.
Fuelwise has no vested interest in the fuel surcharge, and indexes the posted rate to the actual average price of diesel as reported by the government of Canada and the U.S. Energy Administration.
When do we receive our fuel data and surcharge updates?
Your fuel surcharge update will be sent to you every Monday for the duration of your subscription.
Why do we need a specific fuel surcharge for our market region?
Across Canada fuel prices differ, sometimes significantly. They also fluctuate at different rates, and at times trend in different directions. By selecting your specific market region, you are able to get the most accurate pricing for your region, and the most benefit.
Do you offer a fuel surcharge solution for international shipments between Canada and the USA?
Yes, after receiving several requests for an international fuel surcharge, we began offering an international solution in the fall of 2017.
How is your fuel surcharge calculated?
The FuelWise suggested fuel surcharge is calculated off of a base rate of $0.55/L. For every $0.01 increase over the base in the average price of diesel, as reported by Stats Canada, the fuel surcharge is 0.21% for LTL shipments.
The TL rate is the LTL rate multiplied by 2.352.
The HEAVY TL rate is the TL rate multiplied by 1.121
How do you calculate your international fuel surcharge?
The US Energy Information Administration reports on the average price of diesel weekly, similar to how Stats Canada does. Our formula converts the price per gallon into a price per liter (divide by 3.785), we then convert the USD price per liter into a CAD price per liter.
Once we have the average CAD price per liter across the USA, we average that with the Canadian National diesel average to arrive at our International average. *note that the weighting is 50:50.
The same formula that is used for our domestic market regions is then applied to the weekly International average to come up with the International Fuel Surcharge for that week.
Does it make sense to reveal your fuel surcharge formula?
Our fundamental principle is transparency. This allows transportation providers to understand and allow for the fuel surcharge to be accurately reflected in their rates.
We believe that even if you know how to calculate the formula, it is more efficient for you to have the email subscription instead of going to the work of researching the average price of fuel, calculated the surcharge, and communicating it to your customers and suppliers.
What if I do not currently have a fuel surcharge?
Fuel Surcharges should never be viewed as 'in addition' to freight rates, but rather as 'a portion' of. If you do not have the line item for the fuel surcharge, it just means you do not benefit from the protections provided by a fuel surcharge. Rates should be re-negotiated using the best practices of a transparent, 3rd party managed, region specific fuel surcharge which benefits both parties. Shippers should see an immediate reduction in freight costs, and carriers benefit from protection of upward swings in diesel prices.
Is this service intended for trucking companies or for shippers?
Both! Trucking companies benefit from a transparent fuel surcharge that is specific to their market region and is supplied weekly to them without the need for internal resources to track and manage.
Shippers benefit from accountability of a 3rd party managed fuel surcharge and by requiring all of their carriers to quote based on the same fuel surcharge; providing a true apples to apples comparison of rates.
What is the recommended best practice for working with customers and/or vendors to implement a shift to the FuelWise Solution?
Communication is key. We will provide you with template letters, that you can customize if necessary, to advise stakeholders of your shift to a 3rd party fuel surcharge solution. Because the Fuel Wise fuel surcharge formula is transparent, stakeholders then have the choice of calculating it weekly themselves, or simply subscribing to the service and having the convenience and credibility of a 3rd party managing their fuel surcharge as well.
What is the cost to subscribe to FuelWise?
You have the option of choosing a monthly or annual subscription. Our annual subscription is the most cost effective at $600.00 CAD per year, which works out to less than $12 per week. The monthly subscription is $67.00 CAD per month.
Take control of your costs and profits by benefiting from a 3rd party fuel surcharge system.
Subscribe now to receive your region specific fuel surcharge delivered to your inbox every week.