A Fuel Surcharge—commonly referred to as an FSC—is deﬁned by Flexport as a fee assessed by a carrier to account for regional or seasonal advantages in fuel costs. An FSC is most common in trucking industries, but ocean or air carriers may also assess fuel surcharges during critical times or seasons.
Changing FSC rates are tied directly to the price of gas and diesel, which ﬂuctuates with factors such as availability, oil pricing, and seasonality. Crude oil has seen massive ﬂuctuations over the past thirty days, starting around $90/bbl in early February and jumping as high as $130/bbl by mid-March. Crude oil prices have gone back down to around $95/bbl while writing this blog entry (3/15/2021).
Logistics carriers deﬁne FSCs by a percentage. Historically, these percentages can be as low as 25% to as high as Q1 2022’s 65-70% charges. Logistics carriers may also provide an “all in” freight quote, which has the current FSC rate built on. They may also charge a line haul plus an FSC at the time of booking, which accounts for rapidly ﬂuctuating FSC rates.
For example, if a line haul quote is $2000 plus FSC—with the current FSC rate at 50%—the “true” cost becomes $3000.
Because of the logistics market’s rapidly ﬂuctuating FSC rates in the past thirty days, it’s critical to keep a close eye on freight rates and cost bases. It’s also crucial to have a realistic outlook on what’s happening with gas and diesel costs and how that will affect inbound and outbound raw materials or