“Recent news reports indicate that rising fuel costs effect all segments of the United States economy.[1] Industry experts agree, noting that consumers are affected by higher transportation costs passed on by shippers to their customers.[2] Although many consumers experience high gasoline prices at the pump, few realize the degree to which high fuel costs also influence prices paid for other goods and services; fuel surcharges drive up shipping costs and often are passed on to buyers in the form of higher prices.[3] For transportation service providers, shipping prices are typically set using a combination of a base rate along with surcharges or discounts. Base rates can vary by mode of transportation, but generally they are a contractual amount to move freight from origin to destination on the basis of mileage and volume. In addition to fuel surcharges, other common surcharges pass on the cost for deadheading (making a return trip without passengers or freight), insurance, and security. The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output, and fuel surcharges can have a significant impact on the prices received by various transportation companies. This was evident during the turbulent business cycles of 2008 to 2011, including the commodity price surge through mid-2008, the subsequent recession in 2009, and the economic recovery that followed.”
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