It is a temporary fee levied by transportation companies or suppliers to compensate for fluctuations in the cost of fuel. This additional charge is typically calculated as a percentage of the base rate or a fixed amount per unit of measurement (e.g., mile, kilogram). For example, a trucking company might add a percentage to its standard shipping rate if diesel prices rise above a certain threshold. This helps offset the increased operating expenses related to transporting goods.
The importance of this mechanism lies in its ability to protect transportation providers from unpredictable market conditions. By implementing this pricing adjustment, companies can maintain profitability and service levels without absorbing the full impact of volatile energy prices. Historically, these surcharges became increasingly common during periods of significant geopolitical instability or economic crises that caused sharp increases in fuel costs. The practice allows for a more transparent and adaptable pricing structure, reflecting the true cost of transportation services.
