How do you calculate a fuel surcharge per mile?
Take this week’s diesel price, subtract the peg price in your contract, and divide by your trucks’ miles per gallon.
Surcharge per mile = (diesel price − peg price) ÷ MPG
The peg is the fuel price already built into your linehaul rate, so the surcharge only covers fuel above it. When diesel is at or below the peg, the surcharge is zero.
Example: diesel at 4.10 dollars, a 2.50 peg and 6.5 MPG gives 1.60 ÷ 6.5 = 0.246, or 25 cents a mile. On a 1,200-mile load that is 300 dollars.
How do you calculate a fuel surcharge percentage?
Work out the surcharge per mile, then divide it by your linehaul rate per mile before fuel.
Surcharge % = ((diesel price − peg price) ÷ MPG) ÷ linehaul rate per mile
The percent is then applied to the linehaul charge on each load. Write the linehaul rate you used into the contract, since the table depends on it.
Example: with the 25-cent surcharge above (0.246 exact) and a 2.75-dollar linehaul rate, 0.246 ÷ 2.75 = 8.95%, or 9.0% rounded to a tenth. On a 3,300-dollar linehaul that is 297 dollars.
How do you make a fuel surcharge table?
Split diesel prices into bands of equal width starting at the peg, and work out the surcharge at the start of each band.
Band start = peg + (number of steps × step size)
Surcharge for the band = (band start − peg) ÷ MPG
Pick a step size (5 cents a gallon is easy to read), a start and an end price wide enough for a bad year, and a rounding rule. LTL carriers publish the same kind of table: Estes ties its percent to the DOE national average in 2-cent steps.
Example: with a 2.50 peg, 5-cent steps and 6 MPG, a diesel price of 4.032 falls in the 4.000 to 4.049 band. The surcharge is (4.00 − 2.50) ÷ 6 = 25 cents a mile.
Where do I find the DOE diesel price each week?
The U.S. Energy Information Administration (EIA), part of the Department of Energy, publishes it in the Gasoline and Diesel Fuel Update.
- It is Monday’s price, published around 10 a.m. Eastern on Tuesday.
- After a federal holiday Monday, it comes out on Wednesday.
- It covers the U.S. average and regions such as the Midwest, Gulf Coast and West Coast.
- Prices are in dollars per gallon and include all taxes.
Say in the contract which price you use and the day a new price takes effect. Estes, for example, applies Tuesday’s change from the following Wednesday.
How do I build a fuel surcharge calculator in Excel?
Put the diesel price in B1, the peg in B2, MPG in B3 and the step size in B4, then use one formula.
=ROUND(MAX(0, FLOOR.MATH(B1-B2, B4)) / B3, 2)
FLOOR.MATH rounds the price change down to the start of its band, and ROUND gives whole cents. To skip the setup, download the table above as CSV and open it in Excel.
Example: with 6.292 in B1, 2.50 in B2, 6 in B3 and 0.05 in B4, the formula returns 0.63, or 63 cents a mile.
To put the surcharge on invoices automatically every week, see how we handle fixes and connections. Our trucking cost per mile calculator shows what each truck costs to run.
Questions
What peg price should I use?
Use the diesel price from when your linehaul rate was set, since that fuel cost is already in the rate. Write the peg, step size and MPG into the contract.
How do I add the surcharge to a QuickBooks Online invoice?
Create a service item called Fuel surcharge under Sales & Get Paid > Products & services > New > Service. Add it as its own line on each invoice with the amount from this tool.
Which MPG should the table use?
Use the fleet average for loaded miles from your fuel and mileage records. A lower MPG gives a higher surcharge, so keep the records that show how you got the number.
Is anything I type saved or uploaded?
Nothing is uploaded. Your terms are kept in this browser, so next week you only change the diesel price.
Sources
- Gasoline and Diesel Fuel Update, U.S. Energy Information Administration,
- Gasoline and Diesel Fuel Update release schedule, U.S. Energy Information Administration,
- Fuel surcharge, Estes Express Lines,
- Add product and service items to QuickBooks Online, Intuit QuickBooks,
- FLOOR.MATH function, Microsoft Support,
