Fuel Surcharge Clarification Update

Since the new Fuel Surcharge policy went into effect in April and May of this year, there have been many questions and concerns that have come forth regarding the applicability of the policy. There have been many individuals from the industry, including the associations that have been working hard to clarify these questions with SDDC. Chuck White of the HHGFAA recently released the following update in their portal on this issue:

Fuel Surcharge & Delivery Out of Storage
For military shipments the fuel surcharge (FSC) associated with the “Delivery out of SIT” has always been tied to the date that the delivery occurred. But, the transportation charges for delivery from SIT has been tied back to the actual pick-up date for the shipment. In the past this has not been a major issue.

But…..with the change in the FSC baseline from $1.30 to $2.50 which took effect on April 1 for International shipments and May 1 for Domestic shipments the fuel surcharge for delivery out of storage has become a big issue.

SDDC tried to mitigate the impact of the FSC baseline change by increasing accessorials in both the Domestic and International solicitations by 12% (the approximate amount of revenue that would be lost due to the baseline change) but a “hole” remained in the mitigation strategy.

If a shipment picked up before the FSC baseline change (April 1/May 1) but delivers out of storage after the baseline change the agent handling the shipment incurs what I am terming a “double whammy”! Since the FSC for the delivery out of storage is tied to the delivery out date they will only get the reduced FSC AND they will not get to take advantage of the 12% accessorial increase since the delivery out of storage linehaul is tied to the pickup date (before April 1/May1). The agent loses on both accounts!

HHGFAA has addressed this issue with SDDC and we thought that SDDC understood the issue. We had been told that they would issue a Fuel Surcharge clarification that would cover this scenario and rectify the situation. A clarification was issued by SDDC on June 5, 2007 but the clarification did NOT deal with the issue at all.

We have gone back to SDDC and once again re-addressed the issue. We have been told that a further clarification regarding this specific issue will be forthcoming shortly.

Link to Fuel Surcharge “Clarification” message issued 6-5-07 fuel surcharge clarification

Source: HHGFAA

Related Posts

1. OTO Fuel Surcharge Billing Clarification - November 7th, 2006
2. Fuel Surcharge Application Date Clarified - February 5th, 2010
3. Fuel Surcharge Update - August 1st, 2007