Fuel is the lifeblood of any transportation and logistics company. When circumstances arise that send fuel prices ahead of the consumer price index, we must implement an offset.
U.S. Messenger’s rates are directly affected by the price of fuel, and we utilize a variable fuel surcharge (FSC) that offsets the cost of regular reformulated gasoline (RRG), the fuel mandated for air cleanliness in most major U.S. cities. We use the U.S. Department of Energy Information Administration’s (EIA) weekly published retail gasoline prices for the Midwest (PADD 2) and then the regular reformulated gasoline row in that chart for the most recent fuel price. Unfortunately, this EIA report operates at one to two weeks behind actual pump prices.
The FSC is applied to all motor vehicle deliveries. It is applied only to the base delivery rate. Appropriately, we do not surcharge bicycle deliveries or assessorial (non-transportation related) charges, such as weight, waiting time and overtime, that may be attached to any motorized vehicle delivery. The variable portion is that each week after the fuel cost is published, U.S. Messenger applies that calculated increase/decrease rate to the following week’s or month’s (if as a monthly billed contractually) sale. Using this method allows us to be consistent and accounts for delays in the DOE releasing the weekly published rate. When the cost of fuel decreases, the percentage lowers using the same method. Most carriers and logistics services providers across the nation use this method as “the standard.”
With the recent drastic upward change in the price of regular reformulated gasoline (RRG), we have issued a Temporary War FSC. As the name says, we intend this to be a temporary event. Once fuel prices drop back down to an inflation-corrected amount compared to the January 3, 2022 rate of $3.22 per gallon, the Temporary War FSC will go away, and the current FSC will resume its fluctuation.