A fuel surcharge, or FAF, is a type of extra charge that is added onto the base freight rate calculation. The FAF reflects the variation in the cost of fuel since the base rates were first set. It is a % value that is added, or subtracted to the base rate calculation.
Fuel Surcharge values can be positive, if the cost of fuel has increased since the base rates were set, or negative, if the cost of fuel has decreased since the base rates were set (we don't see that much these days :-)
FAF rates are set for each individual customer and carrier, which means if you're a logistics provider with 3 carriers and 10 customers you'd have to maintain 30 separate FAF values. This flexibility is required to support different rating structures and timings of new rates.
Create a new Fuel Surcharge
To create a new FAF entry select the Extra Charges option from the Invoices menu. Then select the appropriate Customer, Carrier and Rate Extra values (Fuel Surcharge) and select Search.
A New button will be displayed where no current Fuel Surcharge value exists for the search combination.
Click the New button to enter a new Fuel Surcharge. This will open a new form to enter the charge details:
A new charge requires the following information:
- Value: The value to be applied to the base rate. By default this is a percentage value.
- Optional: Defines where the charge can optionally be added to a base rate. Leave as 'No' for Fuel Surcharges so these are always applied.
- Order: Defines the order in which the extra charges are added to the base rate. For example if a FAF rate should be applied before or after a Management Fee. Should be set to 1 for FAF rates.
- Valid From: The effective date from which the extra will be applied. This could be today, last week or next month.
Save the new charge to apply.
Updating existing Fuel Surcharges
To update an existing Fuel Surcharge(s) select the Extra Charges option from the Invoices menu. Then select the appropriate Customer, Carrier and Rate Extra values (Fuel Surcharge) and select Search.
Select the Edit button then modify the rate appropriately.
Note: Editing charges is only to be used when the current rate has been entered incorrectly when originally setup. When a new FAF rate is available the Supercede option should be used. This will mean the current FAF rates are preserved for historically calculations and the new rate can be setup in advance.
To Supercede rates select the appropriate rates, click Supercede then enter the new rate value. It's important to select the Valid From date. This will then expire the current rates at the valid from date, and create new rates from that date.