Fuel surcharges were unheard of until Hurricane Katrina struck. The hurricane damaged numerous oil refineries, causing fuel prices to skyrocket to $7.50 per gallon. Even after the refineries were repaired and fuel prices decreased, many operators continued to apply the fuel surcharge as a way to increase profits.
Some brokers pointed out the unnecessary nature of these fuel surcharges to operators, leading most to eventually remove them. However, some operators persisted with this practice; even when fuel prices dropped to $2.85 per gallon, they didn’t adjust their rates accordingly. Ideally, operators should only impose a fuel surcharge when there is a significant and genuine increase in fuel prices.
Fuel prices have remained low for an extended period. As a result, most operators do not add a fuel surcharge, even during short-term price spikes. Instead, they often purchase fuel in advance based on hedged fuel contracts when prices are low. By committing to these contracts, operators can shield themselves from future fuel price increases.
