Friday, May 13, 2011

Hedging Your 'Fuel-ish' Bets

Hedging Your ‘Fuel-ish’ Bets.

Private fuel surcharge helps protect clients against oil price volatility.

When planning for logistics expenses, fuel price surcharges are the wildcard in the deck. All carriers impose these overrides on an index of fuel prices, the national U.S. Energy Information Administration (E.I.A.) Weekly Retail On-Highway Diesel Prices or a regional index, tacking on a percentage to your freight bill.

The carriers publish the fuel surcharge schedules to protect themselves from price volatility in fuel, particularly diesel. This of course translates to increased costs for you, their customer. Surcharges represent a smaller portion of small package costs, but loom large in truckload and less-than-truckload (LTL) shipments.

For years, TOTALogistix has maintained a private fuel surcharge, offering our clients a large degree of protection from fuel price volatility. The schedule was in place long before fuel prices went crazy. Costs will still go up as the national fuel index climbs, but at a more manageable rate.

Freight in general, for all its nuances and pitfalls, can be budgeted for. Being fully exposed to the effect of oil price spikes, though, can throw a major monkey wrench into your projections. We asked in this space last week, what can you do to better manage your costs? Here’s one answer: take advantage of the risk mitigation the TOTALogistix fuel surcharge schedule provides.

Does our private surcharge program make sense for you? Not being beholden to any carrier, we can give you expert, independent recommendations that put your best interests first.

Kirk Shearer
800-989-0054 x103

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