Because current fuel surcharges rely on outdated, low-MPG baseline assumptions, shippers miss out on the financial benefits of modern, highly efficient trucking fleets.
- The Flaw in Surcharges: Standard fuel surcharges are typically keyed to inefficient 5-to-7 MPG trucks, allowing fleets running at 8 to 11 MPG to keep the extra profit while shippers absorb the losses.
- Lack of Shipper Savings: While fuel efficiency benefits a carrier's bottom line, it offers little to no financial relief to shippers or end consumers dealing with inflation.
- The Power of Intentional Pairing: Research by NACFE shows that strategically pairing tractors, trailers, and drivers based on performance can significantly lower costs per mile and improve overall fuel economy.
- The Role of AI and Big Data: Digital databases, vehicle identification numbers (VINs), and AI tools can easily automate MPG tracking to tie shipping rates to actual performance rather than default baseline averages.
Fuel surcharges have always bothered me. It is a bit like having grants and incentives for alternative-fuel vehicles. Where is the motivation to improve? To be competitive?
The magic of fuel surcharges is that the volatility of diesel pricing gets shouldered by the shippers. If diesel prices go up, that increase gets passed through to the shipper. Yes, there is some lag between oil prices going up and the shipper seeing the bill, but it is pretty minor when talking about months or years of increased prices. The shippers ultimately do not work for free, so at some point, they too pass the increased cost of fuel on to their customers. To consumers, this is collectively known as inflation.
Fuel surcharges exist alongside market competitive forces like spot rates and contract rates to ship freight. Shippers pay the going market price to ship. In a capacity-constrained market, the shippers have very little room to negotiate shipping costs. Freight carriers also have limitations. They cannot really negotiate much on fuel price. They are subject to market pricing fluctuations.
Sure, there are ways to hedge by buying in bulk or locking in futures, but those advantages disappear with time. Ultimately, they have to face a price increase. And in the unlikely event that fuel prices actually decrease, those bulk purchases or futures contracts may result in a fleet shouldering higher-than-market fuel costs for some period.
The flaw in the magic
Fuel surcharges are magic. The surcharge often is based on very inefficient truck MPG. The surcharge is keyed to a 5-, 6-, or 7-MPG average truck. A fleet with new trucks and good drivers might be running at 8 MPG to as much as 11 MPG.
Surcharge math means that fleet gets to pocket the extra profit for running more efficient trucks. The shipper, on the other hand, gets no benefit. Stuck paying market shipping rates, the shipper does not get to share in the benefits of more efficient trucking.
I can see why freight haulers want more efficient trucks. The performance goes straight to the bottom line of their profitability. Shippers, and ultimately the consumers, get little financial benefit from improved truck efficiency.
There might be some secondary benefits from fleets using less diesel, which means less demand for fuel. Less demand can push fuel prices downward, but I think that takes place on the scale of years and might have unintended supply consequences, such as refineries retiring aging capacity to match demand.
Parallels with grants and incentives
Grants and incentives are similar to fuel surcharges. The argument about grants and incentives for alternative-fuel vehicles is that they artificially prop up the marketplace, largely eliminating the need for competitive pricing.
Grants and incentives, over time, tend to disincentivize OEMs to reduce cost. Free money means product pricing is being subsidized. The 2025 ICCT report, Battery Electric Commercial Vehicle Pricing in the United States, for example, documents that battery electric truck pricing in North America has not decreased over time, while it has decreased nearly everywhere else in the world.
The ICCT graph shows pricing over the years from 2020 to 2025.
Diesel surcharges have similarly artificially inflated shipping costs. Improved efficiency doesn't mean lower shipping costs. It does mean greater profits for those fleets running more efficient trucks.
What if shippers could choose more efficient trucks, trailers, and drivers when they want their products moved? Would they pay a premium for more efficient hauling if their shipping costs could decrease?
NACFE, in concert with the Volvo SuperTruck II project, researched the opportunity presented by intentionally pairing a specific tractor to a specific trailer and even a specific driver based on their expected efficiency. The free report is conveniently called Intentional Pairing.
NACFE documented that MPGs can significantly improve and the cost per mile can significantly decrease if the freight system in a region could intentionally pair an available driver, tractor, and trailer based on efficiency performance.
Tapping into Digital Data and AI
Enabling this ability means brokers and shippers need to know the specifications of the trailer, the capability of the driver, and the configuration of the tractor. Fleets need to know the performance of their drivers. Fleets need to track their drivers' efficiency. Drivers need to care about how efficiently they drive. Trailer and tractor OEMs need to produce some reasonably accurate system-level performance estimates for tractors with trailers.
It is likely all that performance information already exists somewhere in databases, where some additional fields need to be populated. And that data is no longer on paper. The data is digital and available to be tapped by AI tools and application builders.
Silos of data are everywhere.
Creative application developers are everywhere.
AI tools now can engage these silos with ease.
For example, the Vehicle Identification Number (VIN) exists for both tractors and trailers. The basic information on tractors and trailers is in a government database. Admittedly, that DOT database often has a lot of empty fields, but the fields are there, waiting to be populated.
Fleets already track and report fuel use and miles. That data is collected per truck, and likely per driver—a necessary part of billing and payments. Someone is aggregating it for IFTA fleet purposes and annual financials.
The data exists that says this driver in that truck averaged $X$ number of miles per year using $Y$ number of gallons of fuel. That is an average MPG calculation waiting to automatically be made, no additional human involvement needed.
And yes, you can argue that Bob driving a 2006 beater truck cannot get the same MPG as Mary driving a 2026 new one. The fact is that the shipper paying for the fuel did not get to decide which truck or driver they paid for—the system is billing the shipper as if all the trucks are beaters.
Rethinking the Marketplace
The marketplace is supposed to incentivize improvement and be supposed to want cost reduction. Today, fuel surcharges are not giving the shippers the detail needed to make smarter choices on shipping.
$6-a-gallon diesel should be a market opportunity to demand better choices, especially for those shippers that have to pay extra for fuel that is not actually being used. Super-efficient fleets could offer slightly more competitive rates to secure business, but in a capacity-constrained freight world, why would they? They all charge market rates to the shippers.
What if super-efficient fleets priced their shipping based on their actual MPG rather than the default surcharge MPG?
Commercial rates would see some disruption.
There would be a greater need to replace older, less efficient trucks in order for a fleet to remain competitive.
Shippers might prefer more efficient fleets.
They might even pay a premium for that if they got a cut of the fuel savings.
Revisiting the institution of diesel fuel surcharges seems like an opportunity for AI and big data to reduce shipper costs, which should reduce consumer costs, reduce fuel use, get better trucks on the road, and inherently also reduce emissions.
Would staking fuel surcharges to actual fleet performance irreparably harm fleet profitability? Perhaps. Or it could drive more business to those more efficient fleets. With diesel at $6 a gallon, opportunity is knocking.
