We strongly believe that a fuel surcharge should not be a profit center, or a sneaky way to impose hidden costs on customers.
Throughout most of our history, CDC did not even assess a fuel surcharge. A few years ago, when gas prices began escalating at a rate far exceeding inflation, we reluctantly decided to join our suppliers and industry peers in adding a fuel surcharge to each invoice. Unfortunately, as a distribution company with over 90 delivery trucks and service vans on the road each day, fuel is a significant cost of business.
However, we went about our surcharge in a unique way. Rather than use a fixed charge, we are upfront about the fact that our fuel surcharge will vary directly with our current fuel costs — both up and down. Should diesel and gas prices fall low enough, the fuel surcharge would even be eliminated entirely. Since we implemented our fuel surcharge, it has varied as low as $0.50 per invoice, and as high as $3.50 per invoice (during the Summer 2008 fuel price spike).
Recently, fuel prices have been on the rise again, and we have just adjusted our surcharge to $1.50 per invoice, as highlighted on the below chart:
Our “Fuel Cost” represents a mix of gas and diesel prices in the vicinity of our Garden City Park, NY warehouse. It is common for companies to raise fuel surcharges as their costs increase, but at Coffee Distributing Corp. we think it’s only fair to automatically pass along our savings to our customers when fuel costs come back down.
UPDATE 3/7/2011: For transparency, we will base our “average fuel cost” on the Department of Energy’s published Petroleum Administration for Defense District (PADD) data for the East Coast – New England Region, taking an average of the posted regular gasoline and diesel prices.