What Is a Fuel Surcharge in Shipping and Logistics?
Published on November 24, 2025
• 7 min read
A fuel surcharge is an extra fee that carriers add to the base shipping rate to cover changes in fuel costs. This means the total shipping charge is not fixed but adjusted when fuel prices rise or fall.
In simple terms, the fuel surcharge is the cost that carriers pass on to customers to offset unpredictable fluctuations in fuel prices. It ensures that carriers can continue delivering services without sudden losses due to rising fuel expenses.
Large carriers, such as UPS, FedEx, and DHL, almost always apply a fuel surcharge. Some regional carriers may also include it, but not all follow the same practice.
What many e-commerce brands don’t realise is that fuel surcharges are not standardised. Each carrier calculates them differently, and they may apply to only certain shipping services.
Why Do Carriers Charge Fuel Surcharges?
Fuel surcharges (FSCs) act as a financial safeguard for shipping carriers. They protect against unpredictable spikes in fuel prices, which directly affect operating costs.
These charges can appear in different forms:
- A fixed fee is added to the shipment.
- A rate based on the total distance travelled.
- A percentage added to the base shipping rate.
Types of Fuel Surcharges in Shipping
Fuel surcharges vary depending on how they are calculated and the mode of transport used.
The most common types include:
- Percentage-based surcharge: A set percentage added to the base shipping rate.
- Rate-per-mile surcharge: A fee that increases with the distance travelled.
- Flat-rate surcharge: A fixed charge, regardless of distance or order size.
Different shipping modes also have unique methods:
- Air cargo often uses index-based fuel surcharges.
- Maritime shipping applies a Bunker Adjustment Factor (BAF) to cover fuel costs.
- The type applied depends on the carrier, route, and shipping method chosen.
How Are Fuel Surcharges Calculated?
Fuel surcharges are not a flat fee. They are calculated using a standard formula that takes into account changes in fuel prices, mileage, and vehicle efficiency.
Standard Fuel Surcharge Formula
The most common fuel surcharge formula is:
Fuel Surcharge = (Actual Fuel Cost – Base Fuel Cost) / Vehicle Fuel Mileage × Miles Travelled
This means the surcharge depends on:
- The difference between the base fuel price and the current fuel price.
- The fuel efficiency of the vehicle.
- The distance travelled.
Example Calculation of Fuel Surcharge
Let’s walk through a real-world example to see how the formula works.
- Base fuel rate: $4.00 per gallon
- Actual fuel rate: $4.50 per gallon
- Vehicle mileage: 10 miles per gallon
- Distance travelled: 100 miles
Step 1: Subtract base fuel cost from actual fuel cost → $4.50 – $4.00 = $0.50
Step 2: Divide difference by mileage → $0.50 ÷ 10 = $0.05 per mile
Step 3: Multiply by distance → $0.05 × 100 = $5.00 surcharge
Calculating Fuel Surcharges Step by Step
Here’s a breakdown of the process in simple terms:
Determine the Base Fuel Rate
- Use government data, such as that from the Energy Information Administration (EIA), or a fixed base rate.
Note Vehicle Fuel Mileage
- Check EPA ratings or track actual fleet mileage under real-world conditions.
Figure Out the Travelling Distance
- Use GPS tools to calculate exact mileage between pickup and delivery points.
Determine the Actual Fuel Price
- Compare current EIA data with the base price used at the time of the quote.
Crunch the Numbers
- Apply the formula to calculate the surcharge.
- Some companies apply it only if the price increase crosses a threshold (e.g., 10%).
Gasoline and Diesel Fuel Price Trends
Recent Price Levels
- As of April 2025, the average U.S. retail prices for regular gasoline and diesel were approximately $3.17 and $3.57 per gallon, respectively.
- In the week of September 22, 2025, the U.S. average gasoline price stood at $3.173/gal, while diesel averaged $3.749/gal.
U.S. Regular Gasoline Prices (Dollars per Gallon)
| Region | 09/15/25 | 09/22/25 | 09/29/25 | Change from Week Ago | Change from Year Ago |
| U.S. Average | 3.168 | 3.173 | 3.118 | -0.055 | -0.061 |
| East Coast (PADD1) | 3.016 | 3.030 | 2.983 | -0.047 | -0.077 |
| New England (PADD1A) | 3.096 | 3.075 | 3.034 | -0.041 | +0.015 |
| Central Atlantic (PADD1B) | 3.187 | 3.187 | 3.147 | -0.040 | -0.031 |
| Lower Atlantic (PADD1C) | 2.889 | 2.920 | 2.866 | -0.054 | -0.129 |
| Midwest (PADD2) | 2.981 | 3.008 | 2.928 | -0.080 | -0.177 |
| Gulf Coast (PADD3) | 2.774 | 2.716 | 2.672 | -0.044 | -0.023 |
| Rocky Mountain (PADD4) | 3.180 | 3.184 | 3.110 | -0.074 | -0.305 |
| West Coast (PADD5) | 4.273 | 4.272 | 4.238 | -0.034 | +0.196 |
| West Coast (less California) | 4.063 | 4.059 | 4.013 | -0.046 | +0.364 |
Source: EIA
U.S. On-Highway Diesel Fuel Prices (Dollars per Gallon)
| Region | 09/15/25 | 09/22/25 | 09/29/25 | Change from Week Ago | Change from Year Ago |
| U.S. Average | 3.739 | 3.749 | 3.754 | +0.005 | +0.210 |
| East Coast (PADD1) | 3.748 | 3.745 | 3.750 | +0.005 | +0.179 |
| New England (PADD1A) | 3.961 | 3.962 | 3.962 | 0.000 | +0.174 |
| Central Atlantic (PADD1B) | 3.920 | 3.908 | 3.902 | -0.006 | +0.100 |
| Lower Atlantic (PADD1C) | 3.663 | 3.664 | 3.673 | +0.009 | +0.210 |
| Midwest (PADD2) | 3.710 | 3.731 | 3.731 | 0.000 | +0.211 |
| Gulf Coast (PADD3) | 3.389 | 3.400 | 3.413 | +0.013 | +0.201 |
| Rocky Mountain (PADD4) | 3.722 | 3.747 | 3.732 | -0.015 | +0.120 |
| West Coast (PADD5) | 4.523 | 4.524 | 4.532 | +0.008 | +0.306 |
| West Coast, less California | 4.134 | 4.123 | 4.143 | +0.020 | +0.346 |
| California | 4.971 | 4.985 | 4.981 | -0.004 | +0.262 |
Source: EIA
The Future of Fuel Surcharges in Logistics
The future of fuel surcharges is closely tied to global energy shifts, sustainability policies, and innovations in logistics.
Greater Linkage with Carbon Pricing Policies
- Countries like Japan plan to introduce fossil fuel surcharges in conjunction with carbon pricing and emissions trading schemes (ETS).
- This signals a move beyond just recovering fuel costs, toward integrating climate objectives into logistics pricing.
Alternative Fuels and Electrification
- The rise of electric trucks, biofuels, and hydrogen-powered fleets could change how surcharges are structured.
- Instead of pegging costs only to diesel or gasoline, future formulas may include benchmarks for electricity or sustainable fuel sources.
Smarter and Dynamic Surcharge Models
- With real-time data from fleet management systems, AI, and IoT sensors, surcharges are expected to become more dynamic.
- Instead of fixed weekly or monthly adjustments, businesses could see live, mileage-based fuel surcharge updates in real-time.
Pressure for Transparency and Standardisation
- Future regulations or industry standards may prompt carriers to adopt uniform, transparent methods to prevent customer confusion and enhance trust.
Declining Fuel Surcharges in the Long Run
- As global governments pursue net-zero targets and renewable adoption accelerates, reliance on fossil fuels is expected to decline.
- Over time, this could reduce the importance of fuel surcharges in logistics pricing or replace them with green surcharges linked to carbon usage.
Smarter Shipping & Logistics Management With WareIQ
WareIQ is a Y-Combinator-backed full-stack eCommerce platform designed to streamline multi-channel fulfilment across D2C, Marketplaces, Quick Commerce, and B2B (General & Modern Trade).
Key Benefits of WareIQ
- Pan-India Fulfilment Network:
Operates across 12+ cities with Seller Flex & FAssured compliance, and provides last-mile delivery through shipping partners to over 27,000 pin codes.
- Multi-Channel Fulfilment:
Plug-and-play integrations with marketplaces (Amazon, Flipkart, Myntra, Nykaa), D2C platforms (Shopify, Magento, WooCommerce), WMS, and ERPs. Supports fulfilment across distributors, flagship stores, and eCommerce channels with actionable analytics to track operational performance.
- Inventory LogIQ:
AI-driven multi-channel inventory planning to minimise stockouts and automate replenishment.
- Returns QC Solution:
Tech-enabled inspection system captures, stores, and indexes HD media of damaged or missing returned products to prevent marketplace claim rejections.
- Seller Enablement & Support:
Dedicated account manager, APOB/PPOB registrations, GST registration, NDR & COD verification, catalogue listing & management, SPF claims filing, and more.
- Seller of Record:
Go live on multiple marketplaces quickly with premium-tier access, simplified operations, and zero compliance risks, accelerating revenue growth.
FAQs
Can fuel surcharges vary for international shipments?
Yes. International fuel surcharges are often calculated separately for each country or region, reflecting local fuel costs, taxes, and import/export regulations.
Do fuel surcharges apply to returns as well?
Some carriers include fuel surcharges on return shipments, especially if the return is long-distance or involves premium services, though policies vary by carrier.
Are fuel surcharges tax-deductible for businesses?
In many countries, fuel surcharges billed by carriers are considered part of shipping expenses and can often be claimed as a business expense, depending on local tax regulations.
Can businesses negotiate or reduce fuel surcharges?
Yes. Large-volume shippers or long-term partners may negotiate lower or capped fuel surcharges with carriers, especially during periods of stable fuel prices.
How do fuel surcharges affect e-commerce pricing strategies?
Fuel surcharges can impact product pricing, shipping offers, and promotions. Businesses may choose to absorb the surcharge to offer “free shipping” or pass it on to customers transparently, thereby maintaining their margins.
