Diesel surcharge in transport: how is it calculated?
Do you see a separate item on your invoice next to the freight rate? There is a high chance it is the diesel surcharge. This surcharge ensures that fluctuating diesel prices are fairly settled between you as the shipper and your carrier, without the need to constantly renegotiate the agreed base price of your transport. But how exactly is this surcharge calculated and why is it separate from your freight rate? In this blog, you will read everything you need to know about the diesel surcharge in road transport.
What is a diesel surcharge?
The diesel surcharge is also known as a fuel surcharge. It is that separate amount next to your freight rate on the invoice: a variable amount that accounts for fluctuations in the diesel price. Your freight rate itself is based on fixed factors such as route, weight, and loading meters, and is not constantly revised. The diesel surcharge is the component that does fluctuate, so that a rising or falling diesel price does not immediately put the entire price agreement under pressure.
For you as a shipper, this means your invoices consist of two clear components: a stable freight rate and a transparent surcharge that reflects current fuel costs. This way, you know exactly where each part of the bill comes from.
Why is a diesel surcharge necessary?
You are contributing to one of the largest cost items in road transport. According to the industry association TLN, fuel easily accounts for about 20 to 25 percent of total transport costs. With such fluctuating diesel prices, a fixed rate without a surcharge would quickly turn out to be unfair for one party or the other.
A diesel surcharge prevents carriers from making a loss on a previously agreed rate when diesel prices rise. At the same time, it prevents you as a shipper from structurally paying too much as soon as the diesel price drops again. Both parties therefore benefit from a system that calculates fuel costs separately and up-to-date, rather than an estimate that may already be outdated when the contract is signed.
How is the diesel surcharge calculated?
Most Dutch carriers, including Easy Road Transport, base their diesel surcharge on the TLN methodology. This compares the current diesel price with a set base price and multiplies the difference by the average share that fuel represents in the total transport costs.
Simply put: if the diesel price rises by 5 percent and the fuel share is 20 percent, this results in approximately a 1 percent surcharge on your freight rate. Because only the fuel share fluctuates and not the full price, the calculation remains in proportion to the actual cost increase.
The TLN fuel index and CBS diesel prices
To determine the diesel surcharge, carriers follow an index: a fixed reference point that tracks the development of the diesel price. TLN publishes a fuel monitor for this purpose with current and historical diesel prices, often in combination with figures from the CBS (Statistics Netherlands) on the price development of motor fuels.
The surcharge is not adjusted daily, but based on a fixed, pre-agreed revision period, usually weekly. This keeps the indexation predictable for both parties, rather than every small price movement being calculated separately. For the current percentage at this moment, we refer you to the TLN fuel monitor, as this percentage changes regularly.
Fuel clause in a transport contract
It is no coincidence that you find the diesel surcharge on your invoice: the agreement regarding it is laid down in a fuel clause. This is a contractual provision that links the freight price to the development of the diesel price and how it is settled, so that both parties know where they stand in advance. It is estimated that about 80 percent of carriers in the Netherlands use some form of this clause.
A fuel clause prevents discussion afterwards. Once the surcharge is described in the contract or the order confirmation, you as a shipper know in advance what a rising or falling diesel price means for your invoice. At Easy Road Transport, this agreement is a standard part of the contract, so you are never faced with surprises.
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Easy Road Transport and a transparent diesel surcharge
As a shipper, you don’t have to arrange anything regarding the diesel surcharge: we apply it automatically and according to the TLN methodology to your invoice, on top of your freight rate. No hidden markups, no surprises afterwards, just a clear breakdown between your fixed rate and the current fuel costs. Do you want to know how the diesel surcharge, together with other cost items, determines your total transport costs? Please contact us or calculate your rate directly.
Frequently asked questions about the diesel surcharge
What is a diesel surcharge?
A diesel surcharge is a variable amount on top of your freight rate that accounts for fluctuations in the diesel price, so that the fixed rate does not have to be renegotiated constantly.
How is the diesel surcharge calculated?
By multiplying the percentage by which the diesel price has risen or fallen by the average share that fuel represents in the total transport costs, usually 20 to 25 percent.
What is the TLN formula?
The TLN formula is the calculation method published by the industry association TLN to convert diesel price developments into a surcharge percentage, based on a fixed base diesel price and the fuel share of the costs.
What is a fuel clause?
A fuel clause is the contractual agreement stating that and how a diesel surcharge is applied, so that it is clear in advance how price fluctuations are passed on.
How often is the diesel surcharge adjusted?
Usually at a fixed, pre-agreed interval, in practice generally weekly, instead of with every individual price movement.
Does the diesel surcharge also apply to LTL and groupage?
Yes. For partial loads and groupage shipments, the fuel share of your shipment is also included in the surcharge, in proportion to the space you occupy.