US Foods® Fuel Surcharge

As we all know, fuel prices have been volatile over the last several years, and depending on the average diesel fuel prices in the market, US Foods® has applied a fuel surcharge to customer invoices, based on the average diesel fuel prices published by the U.S. Energy Information Administration.

Although US Foods continues to use diesel fuel to service customers from its Austin distribution center, to reduce its environmental footprint and to allow US Foods to serve its customers in an energy-efficient way, the US Foods fleet now consists of a considerable number of Compressed Natural Gas trucks. US Foods currently estimates that 60% of its energy costs are attributable to diesel fuel and 40% to CNG. As a result, US Foods has updated the fuel surcharge to reflect its use of diesel fuel and CNG.

Effective with orders placed on or after February 1, 2019, each month US Foods will apply a fuel surcharge to your invoices, based on standardized fuel surcharge grids and information published by the United States government regarding the average prices of diesel fuel and CNG. Under this structure, the fuel surcharge applied to your invoices continues to appear as a single figure, but it is the sum of two components: a diesel fuel surcharge and a CNG fuel surcharge.

The grid below is used to determine the diesel fuel component of the surcharge for the following month’s deliveries.*The diesel fuel component is determined by the average diesel fuel prices published weekly by the U.S. EIA. The EIA measures the average on-highway price of diesel fuel for different areas of the country.  US Foods categorizes customers into US Foods markets based on the distribution center that services a customer. The location of the distribution center within one of the EIA Areas determines the applicable fuel surcharge grid for a customer. For your reference, you are a customer in US Foods’ Austin market, which is within the EIA’s Gulf Coast Area. To monitor diesel fuel prices for the Gulf Coast Area, visit the EIA website at: https://www.eia.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_dpgal_w.htm.

The grid below is used to determine the applicable CNG fuel component for the following month’s deliveries. The CNG fuel component is determined by the Clean Cities Alternative Fuel Price Report, published quarterly by the U.S. Department of Energy. The AFPR summarizes prices that were submitted by Clean Cities coordinators, fuel providers, and other Clean Cities stakeholders. Again, you are a customer in US Foods’ Austin market, which is within the Gulf Coast Area listed in the AFPR. To monitor CNG prices for the Gulf Coast Area, simply visit the AFPR website at: https://afdc.energy.gov/fuels/prices.html and visit the most recent quarterly report published by the U.S. Department of Energy, and refer to Table 6 of the report summarizing CNG prices in the form of Diesel Gallon Equivalents. Merely as a point of reference, as of January 1, 2019, the most recently published quarterly report is from July 2018, a copy of which can be found at: https://afdc.energy.gov/files/u/publication/alternative_fuel_price_report_july_2018.pdf.

On either the third or fourth Tuesday of the month, US Foods will use (i) the published EIA average diesel prices for your area and (ii) the last published quarterly AFPR to set the fuel surcharge amount per delivery for the next month, based on the grids above. For transparency, the fuel surcharge, when applicable, will continue to be shown as a separate line item charge on your invoices.

For your reference, the Austin US Foods market is within the Gulf Coast Area listed on the EIA website.

US Foods applies a one-time charge per delivery. For every $0.50 increase in the average price of diesel fuel or CNG, your surcharge increases by $1.00. So, for example, this month, if the average price of diesel fuel is between $2.50 and $2.99, US Foods will apply a fuel surcharge of $4.00 per delivery, and if the average price is between $3.00 and $3.49, the fuel surcharge will be $5.00.

US Foods reserves the right to modify or change the fuel surcharge fee structure described herein at its sole discretion, including its estimated energy costs attributable to diesel fuel and CNG, and the pro-rated allocation of diesel fuel and CNG components. You agree with respect to any dispute arising out of your purchases from US Foods: (i) you are giving up your right to serve in any representative capacity, or to participate as a member of a class, in any lawsuit; (ii) you also agree, at the sole option of US Foods, to submit all claims to binding, individual arbitration; (iii) such arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 and conducted in accordance with the Commercial Rules of the American Arbitration Association; and (iv) each party shall pay half the costs of arbitration, and separately pay its own attorneys’ fees and costs.

*If you have an agreement with US Foods that expressly addresses the calculation of the fuel surcharge, please refer to that agreement.

**US Foods notes that to the extent diesel and/or CNG prices exceed $7.49 per gallon, the applicable fuel surcharge shall increase proportionately.