WSCA Advice On Fuel Surcharge Calculations

Fuel costs have risen by as much as 30 per cent or more over prices that were current when most of this year’s work was bid or negotiated. There are standard formulae for contractors to negotiate fuel surcharges with clients.

We don’t need to tell anyone that fuel prices have risen by as much as 30 per cent or more over prices that were current when most of this year’s work was bid or negotiated. And now those additional costs are hitting home. Fuel surcharge calculations for contractors are common across the forest and trucking industry. They vary from mill to mill. And of course contractors, depending on their operations have different fuel costs as a percentage of their gross revenues. But it is not an uncommon business practice to negotiate with clients an additional percentage of a contract bid price or rate to compensate for the extraordinary rise in fuel prices that have occurred during volatility in the commodities market over the last few years, including this spring’s rise.

The BC Truckers Association has a basic formula for calculating fuel surcharges which is the recommended standard across the trucking industry. It has been adopted in the forest sector as well by various logging associations. It requires some simple math including your operation’s percentage of gross spent on fuel.

I have canvassed contractors across the province for information on their fuel costs as a percentage of gross. There is a range, as you would expect. The most typical percentage falls between 4.5 and 4.9 percent of gross as an average cost. This may or may not be useful. See the appended document below or go to:

http://newsletter.bctrucking.com/2011/05/12/bcta-reminder-formula-calculating-fuel-surcharges?mail_link=2bd3b181c605334e6266ad194274c16b