Common use of Fuel Surcharge Clause in Contracts

Fuel Surcharge. A fuel ‘surcharge’ may be applied by the Contractor when the cost of fuel exceeds a negotiated trigger point. When determining whether a surcharge will be acceptable, the Customer will use the U.S. National Average Diesel Fuel Index, as reported on the day the purchase order is issued, to determine the average cost of No. 2 Low Sulfur Diesel fuel for the appropriate delivery region. For disasters events lasting longer than 30 days, the Customer may authorize a recalculation of the surcharge, under a separate purchase order. When the cost of No. 2 Low Sulfur Diesel fuel, as measured above, exceeds the negotiated trigger point, the Contractor may apply a fuel surcharge as calculated by the following method: a) The total distance for the route will be calculated using either a practical or truck shortest routing method. b) The total mileage is then divided by the average MPG for the truck(s) hauling the freight to determine number of gallons used. c) The trigger point (base rate) is subtracted from the average fuel cost within the appropriate delivery region, as indicated above, (route) to determine the cost in excess of trigger. d) The number of gallons used is then multiplied by the cost in excess of trigger to determine the fuel surcharge rate for a specific load.