Shippers Sensitive to Landed Cost
Shippers are increasingly sensitive to total landed cost as fuel surcharges rise, leading to more load board volatility and spot rate fluctuations WPR.
Fuel surcharges, which can add 15-25% to total freight expenses, directly impact shippers' landed costs, squeezing margins when fuel prices are high. These surcharges are implemented by carriers to offset fluctuating fuel costs, protecting them from volatility in global energy markets. Without them, carriers might halt services or unpredictably hike base rates. The calculation of fuel surcharges typically involves a percentage of freight charges tied to weekly fuel indices. Carriers publish tables linking fuel prices to percentages; for example, a diesel price exceeding $5/gallon might trigger a 20% surcharge. These surcharges are often applied on top of base transportation rates and accessorial charges, and are updated frequently, sometimes weekly. Shippers can manage the variability of fuel surcharges by tracking current fuel price indices, subtracting contractual base levels, and multiplying by the carrier's efficiency ratio. Negotiating long-term contracts with carriers, consolidating shipments, and considering multimodal transport options can also help optimize transportation costs. Some high-volume shippers can even customize ratios and caps in their contracts.
