How a Fuel Surcharge Works, and How to Check Yours

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.

Run your own numbers in the fuel surcharge calculator →

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. The price is collected as of Monday and published around 10:00 a.m. Eastern on Tuesday; in a week with a federal holiday, release moves to Wednesday but still reflects Monday's price. 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 regional gap is not small. For the week of October 5, 2026, EIA put the US average at $6.199 a gallon, the West Coast at $7.229 and California at $8.082, against $5.819 on the Gulf Coast. A year earlier the national average was about $3.71.

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.

A worked example, with the arithmetic

Illustrative contract terms, not market terms. Assume a peg of $2.50, a step of $0.06 and an increment of 1 cent per mile, priced against the EIA US average of $6.199.

Price above the peg: $6.199 − $2.50 = $3.699.
Whole steps: $3.699 ÷ $0.06 = 61.65, so 61 steps.
Surcharge: 61 × $0.01 = $0.61 per mile.

Notice what the step and increment imply. Paying 1 cent per 6-cent step is the same as assuming the truck does 6 miles per gallon: the formula version of the same contract is ($6.199 − $2.50) ÷ 6 = $0.617. Divide the step by the increment and you have the fuel economy the formula assumes. A 5-cent step paying 1 cent assumes 5 mpg, which is more generous to the carrier.

Whether $0.61 is enough depends on your own fuel economy, because the extra fuel cost above the peg is ($6.199 − $2.50) ÷ your mpg:

Illustrative: same contract, different trucks. Loaded miles only.
Your mpg	Fuel cost above peg, per mile	Surcharge paid	Difference
7.0	$0.528	$0.61	+$0.082
6.5	$0.569	$0.61	+$0.041
6.0	$0.617	$0.61	−$0.007
5.5	$0.673	$0.61	−$0.063

Then add empty miles. If 12 percent of your miles are empty and the surcharge is paid on loaded miles only, it averages $0.61 × 0.88 = $0.537 per mile driven, while the truck burns fuel on every mile. At 6.0 mpg that is about 8 cents a mile short across the whole operation.

And the regional gap: on a national index, fuel bought in California that week cost $8.082 − $6.199 = $1.883 a gallon more than the index assumes — about 29 cents a mile at 6.5 mpg. On the West Coast average, about 16 cents.

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?

On percentage formulas, the arithmetic is simple to see. At an illustrative 30 percent of linehaul, a $2.00 linehaul pays $0.60 a mile in fuel and a $1.60 linehaul pays $0.48 — for the same diesel burned on the same road.

Common mistakes

Judging the surcharge without the peg. The increment looks generous or stingy only relative to where it starts.
Assuming the formula's mpg is yours. Check your loaded fuel economy, not the figure on the dash after a light week.
Ignoring the reset lag. A monthly reset on a rising market pays last month's price for this month's fuel. The lag works in your favour when prices fall, but you cannot plan cash flow on it.
Mixing up the national and regional series. Know which one your contract names before you check the number.
Leaving fuel out of a spot rate. An all-in spot rate has a fuel portion inside it whether or not anyone itemises it. Work out what it is.

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.

That $0.48 reflects 2025 diesel prices, though. ATRI's surveyed fleets averaged 7.43 mpg in 2025; at the October 5, 2026 US average of $6.199, the same fuel economy works out to $6.199 ÷ 7.43 = about $0.83 per mile. Any benchmark or cost per mile built on last year's fuel price needs that line updated before it is used.

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.

When is the EIA diesel price published?

Weekly. Prices are collected as of Monday and published around 10:00 a.m. Eastern on Tuesday, or on Wednesday in a week with a federal holiday.

How do I tell what fuel economy my surcharge assumes?

Divide the step by the increment. A 6-cent step paying 1 cent per mile assumes 6 miles per gallon. If your truck does worse than that, the surcharge will not fully cover fuel above the peg.

How a Fuel Surcharge Works