Fuel Surcharge (FSC)

A fuel surcharge is a fluctuating charge added to the base freight rate to account for changes in diesel fuel costs. Because fuel is a significant portion of a carrier's operating expense – and because diesel prices can swing substantially over the life of a freight contract – the surcharge mechanism lets carriers and shippers share fuel price risk rather than baking an uncertain fuel estimate into the base rate.

Fuel surcharges are typically calculated using a fuel surcharge schedule or table that ties the surcharge percentage to a national diesel price index, most commonly the DOE (Department of Energy) weekly national average. As the index price rises, the surcharge percentage increases; as it falls, the surcharge decreases. The specific table – the thresholds, the increment size, and the base fuel price at which the surcharge starts – varies by carrier and is negotiated as part of the contract. Two carriers with identical base rates can produce meaningfully different all-in costs depending on their fuel surcharge structures.

This is one of the most overlooked areas in freight procurement. Shippers who focus exclusively on base rate during negotiations and treat the fuel surcharge as a pass-through often leave money on the table. Negotiating the fuel surcharge table – the floor price, the escalation increments, and whether it's applied to linehaul only or to the total invoice including accessorials – can move total freight cost by several percentage points. It also affects invoice auditing: fuel surcharges should match the agreed schedule for the week the shipment moved, and discrepancies here are a common source of billing errors.