05/03/2026
Fuel Surcharge Denied
Everyone in this business is experiencing the same things. Inflation has affected everything about this business in the last four years. Retail prices and wholesale towing and road service prices the like have been stagnant for longer than that. Obviously the most recent cost increase affecting the transportation industry is fuel. The increase has risen to $2.60/gallon for me and I know that it’s higher than that for many businesses. It is evident just looking at the online chatter in regard to recent posts discussing fuel surcharges. But what happens when you actually try to institute such a charge???
I have always operated on the rule of thumb that for every ten cents that the price rises above a certain price that a 1% surcharge applies. Using that math we should be at a 26% surcharge today.
What does that look like on a retail level??? Well, using $150 as the rate for an average tow that would be a $37.50 surcharge. This would bring that average price to $187.50. We added a 10% increase a few weeks ago. However with consumers also feeling the squeeze even that $15 increase results in more potential customers price shopping for the lowest price rather than just engaging the service. So we have been playing with the surcharge a bit. If we have trucks just sitting we waive it in an effort to gather data. We have found that most customers are sticker shocked by even the 10% increase. For whatever reason a $150 quote is accepted but $165 is grounds to call the next company. We lose the job for the price of an average cheeseburger. Fuel surcharge denied!!!
I have been avoiding talks with any of our wholesale accounts, especially the big corporate towing consolidators. It’s pretty much a given that the answer will be no. However, I brought it up casually during a conversation on another matter. The answer was basically what I expected. The reply was, “rates were set in 2022 when fuel prices were $4.80 per gallon. Prices have been more than $1.50 per gallon lower than that for almost two years and we haven’t asked you to reduce your rates. You will have to weather the storm for a while.” Fuel surcharge denied!!!
It’s true that fuel prices dropped. But at that same time insurance, labor, equipment costs, and more increased 50% or more. The drop in fuel helped offset that a bit. That is the sole reason that most companies were able to weather the other cost of doing business increases without having to request rate increases. But what does the fuel increase actually look like financially?? Most operators see the numbers at the pump daily but do they consider the total cost??? For example, a company running 12 trucks daily working wholesale high volume commercial accounts may burn 3000 gallons per week. 3000 gallons at the $3.85 price from March would total $11,550 per week. The same 3,000 gallons at $6.35 today would cost the company $19,050. That’s a $7,500 difference. Thats per week!!!!!!! That’s an additional $30,000 per month!!!!!!!!
You cant tell me that there are tow companies out here that can absorb that kind of money. Even if you scale those numbers back to a one truck operation it’s an additional $2600 per month. The INCREASE in fuel cost is equivalent to a monthly payment on a brand new truck! Big company or small this kind of money is not something that can be ignored or absorbed.
In a heavy wrecker or tractor where the company is purchasing 175 gallons to refill the tanks, just the variance in price from one station to the next is significant. If one station is $6.00 per gallon and the next is $5.79 per gallon, after doing the math you’re looking at a $36.75 difference in cost between one station to the next. Let’s drill in a bit though on this issue. The $6.00/gal station is 5 miles from your yard and the $5.79/gal station is 15 miles. A heavy duty wrecker that averages 5mpg is going to use 6 gallons of fuel to drive to the cheaper station and back. Thats $34.74 just in fuel cost. Any savings that you would gain by going to the cheaper station you would lose in time and fuel cost.
How many times have you missed an exit or had a customer tell you that they were on the interstate heading one direction but they were actually heading the opposite? Then nothing but a jersey wall for 7-8 miles until the next exit?? A truck could burn $35 in fuel for a simple mistake like that. $35 is a drop in the bucket!!! A company can lose that much by missing an exit, getting fuel at a station with a 21¢ per gallon higher cost, or simply by driving the truck to a station and back. Yet when you try to up your $350 heavy hook up rate or hourly rate by 10% suddenly folks get unhinged by that $35 number. And remember the real number for that surcharge justifiably should be more than 10%.
So what’s the reality of this?? Do companies just chalk this off to a bad couple months and absorb the loss?? What if it becomes more than just a couple months??? How many months can that owner operator absorb a $2600 increase?? How many months can that 12 truck company absorb their $30k increase. How about the companies that are running dozens of trucks?? The costs related to this fuel increase get real big real fast. At some point the “fuel surcharge denied” is going to have to be met with some resistance. Unless fuel prices recede back to less than $4/gal. What are the odds of that happening soon??? Probably slim but likely better than the fuel surcharge being approved passively.
There is not enough meat on the bone for the owner op the trim $2600 from somewhere else in their budget. There is no way that a company is going to find $30k or more per month either. If they have that kind of money to move around to balance a budget they were already charging enough already and sincerely don’t need a surcharge. I feel like that’s not the case with most tow companies. Porter
