How a Fuel Surcharge Works
Almost every contract references the same weekly government number. Once you know how the mechanism is built, you can check in two minutes whether a surcharge is covering your fuel or quietly subsidising someone else's.
Why fuel is handled separately at all
Diesel moves faster than freight contracts do. Rather than renegotiate every time the price changes, the industry splits the rate: a linehaul rate that stays put, and a fuel surcharge that moves with the market. That is the whole idea, and it is sound. The problems are all in the detail.
The index
Most US fuel surcharge formulas reference the weekly on-highway diesel price published by the Energy Information Administration, generally released on Mondays. It is published nationally and by region, which matters if you run mostly in an expensive region such as California or the West Coast while your surcharge references the national figure.
The mechanism: peg and step
A surcharge formula has three parts:
- The peg. A base fuel price at which the surcharge is zero, on the theory that the linehaul rate already covers fuel at that price.
- The step. How much the price must move before the surcharge changes.
- The increment. How many cents per mile the surcharge changes by, per step.
So: for every step above the peg, add the increment. The arithmetic is trivial. The negotiation is entirely about the three inputs.
The peg is where the money is. A high peg means fuel has to rise a long way before you are paid anything, and the linehaul rate is quietly assumed to be covering fuel up to that point. Two contracts with identical increments can be worth very different amounts. When a surcharge feels stingy, look at the peg first.
Checking whether yours actually covers your fuel
Do this over a real month rather than a single load:
- Total the fuel you bought and what it cost.
- Total the surcharge you were paid.
- Divide both by total miles.
If your fuel cost per mile is meaningfully above the surcharge per mile, the difference is coming out of your linehaul — which may be fine if the linehaul was priced for it, and is a problem if you assumed the surcharge was covering fuel.
Two things distort this quietly: empty miles, because surcharge is usually paid on loaded miles while fuel is burned on all of them, and your actual fuel economy, since formulas are built around an assumed miles-per-gallon that may be better than what your truck does loaded and into a headwind.
Questions to ask before signing
- Which index, and national or regional?
- What is the peg?
- How often does it reset — weekly, or monthly on a stale number?
- Is it paid on loaded miles or all miles?
- Is it a percentage of linehaul or cents per mile? Percentage formulas mean a cheap load pays less fuel for the same diesel burned.
- Is there a cap?
Where it fits in your numbers
Treat the surcharge as revenue and fuel as cost, and let the cost per mile calculator tell you what your fuel line really is. ATRI's 2026 analysis put average industry operating costs at $2.336 per mile all-in and $1.854 excluding fuel — the gap between them, about $0.48, is roughly what fuel represents for the industry. If your fuel per mile sits well above that, utilisation or fuel economy is worth attention before rate negotiation.
Frequently asked questions
Which index do fuel surcharges use?
Most US formulas reference the weekly on-highway diesel price published by the Energy Information Administration, available nationally and by region.
What is the peg in a fuel surcharge?
The base fuel price at which the surcharge is zero. Above it, the surcharge rises in steps. A higher peg means less surcharge for the same diesel price.
Should the surcharge be paid on all miles or loaded miles?
Most are paid on loaded miles, but fuel is burned on empty miles too. That gap is real and belongs in your rate arithmetic.
Related
Sources
- Gasoline and Diesel Fuel Update — U.S. Energy Information Administration.
- Operational Costs of Trucking — ATRI, 2026 edition.
General information, not legal advice. Regulations change; confirm current requirements with the agency before acting.