Diesel Fuel Index & Surcharges

If there is one thing that we can count on, it is the volatility of fuel prices. In an effort to provide stability against the ups and downs of the fuel market, carriers created and adopted a practice during the 90s to tie the price of fuel into shipping rates. This fuel surcharge was and still is added in addition to the price of the shipment but only as a means of protecting carriers against the volatility of the fuel markets. However, there’s a new challenge, one that threatens many carriers if it’s not properly addressed.

The Energy Information Administration (the E.I.A.) is a section of the Department of Energy (DOE) which provides ongoing analysis and projections of fuel prices for the United States. The E.I.A. has been in the process of developing new statistical methodologies of estimating on-highway diesel fuel prices and these prices were supposed to be viewable by the public as of June 13, 2022. However, June 13th was the last day that these prices were available to the public for nearly a month. Updates resumed as of July 7th, 2022. The E.I.A. cited technical difficulties for why these prices were not displayed, and most carriers simply used the June 13th rate as their go-to when creating contracts, regardless of market conditions.

The E.I.A. worked hard to get diesel prices live on their website, but they also announced that once prices were live, they would provide a comprehensive list of diesel prices from June 13th through July 7th. The E.I.A. is only providing information, why would this be a problem?

Well, as with all markets there was a degree of fluctuation in the prices of diesel during this interim. When carriers billed for services rendered during this interim, they were using diesel prices as of June 13th for their pricing. They were simply relying on the information they had available to them. Any volatility in pricing opens up the possibility that shippers and carriers who subcontracted between June 13th and July 7th will come back to challenge any and all discrepancies pertaining to fuel surcharges. Many carriers are worried about having to retroactively adjust their freight bills due to market fluctuations.

We would like to take a moment and assure any carriers that we have worked with during this time that we have no intention of calling attention to any discrepancies or ask you to retroactively adjust freight bills to reflect updates from the E.I.A. 

With that in mind, we’d also like to state that Zip Xpress has worked diligently to treat all customers with fairness in our pricing practices and would like to call attention to item 120 in the Application of Surcharges on our Rules Tariff:

“If for some reason the E.I.A. is not able to post the weekly index, the most recent prior posting will be used. If after a period of time of lapsed postings the E.I.A. publishes fuel prices for prior weeks, ZPXS will not retroactively adjust freight bills to reflect those updates.”

As you can see, we will not be retroactively adjusting freight bills to reflect the updates from the E.I.A. We are dedicated to providing all of our customers with the best possible service and we hope that shippers will understand that this was not an attempt from carriers to manipulate pricing, but only a means of operating and getting shipments delivered on time and undamaged. We look forward to serving you and providing you with the customer carrier solutions that will help your business succeed. To see this for yourself, start today with Zip Xpress!