As oil prices rise, the cost of transportation naturally rises in response. Major carriers have instituted fuel surcharges to offset the rising cost of oil.
Since oil prices fluctuate constantly that means they can rise dramatically and eat away at a carrier’s margin. In order to prevent that from happening, fuel surcharges are changed every week. Through the weekly adjusted fuel costs, shippers are impacted by the rising oil prices almost immediately. This article will explain how both FedEx and UPS issue their fuel surcharge.
UPS fuel surcharge
All carriers approach fuel surcharges differently. Recently, UPS introduced separate fuel surcharges for Domestic Air shipments and International Air Export shipments. Formerly linked, these fuel charges are now structured differently.
UPS Domestic and International Air fuel surcharge
For Domestic Air, UPS charges from 5.75% when jet fuel is under $1.68 per gallon to 9.75% when fuel reaches $2.44. For International Air Export, UPS charges from 6.25% when fuel is under $1.67 per gallon to 11% when fuel is above $2.21.
For International Air Import, UPS charges from 8% when jet fuel is under $1.67 per gallon to 12.75% when fuel reaches $2.21. According to UPS, the surcharges are based on the U.S. Gulf Coast (USGC) price for kerosene-type jet fuel as reported by the U.S. Energy Information Administration (EIA) for the week that is two weeks prior to the adjustment.
The Air and International Fuel Surcharge will apply to all domestic and international transportation charges for UPS Next Day Air Early, UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air A.M., UPS 2nd Day Air, UPS 3 Day Select, UPS Worldwide Express Plus, UPS Worldwide Express, UPS Worldwide Express Freight, UPS Worldwide Saver, and UPS Worldwide Expedited. The surcharge also applies to the following accessorial charges.
- Pickup Charges
- Return Services Charges
- UPS Next Day Air Early/UPS Express Plus Charges
- International Extended Area Charges
- Delivery Charges
- Residential Delivery Charges
- Saturday Delivery and Pickup
- Large Package Surcharge
- Oversize Pallet Handling Surcharge
UPS Ground fuel surcharge
For Ground service, UPS charges from 5.75% when diesel fuel is under $2.54 per gallon to 8.50% when fuel reaches $3.75. According to UPS, the surcharge is based on the National U.S. Average On-Highway Diesel Fuel Price as reported by the U.S. Energy Information Administration (EIA) for the week that is two weeks prior to the adjustment. It’s important to note that the Ground Fuel Surcharge applies to all domestic and international transportation charges for UPS Ground Commercial, UPS Ground Residential, UPS Hundredweight Ground Service, UPS Standard, and UPS SurePost®. The surcharge also applies to the following accessorial charges.
- Pickup Charges
- Return Services Charges
- International Extended Area Charges
- Delivery Charges
- Residential Surcharge
- Large Package Surcharge
UPS includes a 90-day fuel surcharge chart online to illustrate the fluctuating fuel surcharge.
FedEx fuel surcharge
Fuel surcharges are calculated differently than every other surcharge. The FedEx fuel surcharge is applied to the net package rate plus applicable transportation surcharges.
FedEx Ground fuel surcharge
For Ground services, FedEx charges from 4.75% when diesel fuel is less than $2.74 per gallon to 7.75% when fuel is above $3.73. This means the fuel surcharge percentage applies to the following transportation-related surcharges: on-call pickup, call tag, oversize, peak — oversize, unauthorized, peak — ground unauthorized, delivery area surcharge, residential delivery, return on-call pickup and Northern Canada surcharge. Heavyweight packages and packages covering more distance will receive a higher fuel surcharge.
FedEx Express fuel surcharge
For Express services, Fedex charges from 5.50% when jet fuel it less than $1.87 per gallon to 8.50% when fuel is above $2.31. For FedEx Express shipments, the related fuel surcharge is assessed on the net package rate plus applicable transportation-related surcharges.
This applies to the following transportation-related surcharges: broker select option fee, courier pickup, delivery area surcharge, delivery reattempt, extended service area delivery, extended service area pickup, metro service area delivery, metro service area pickup, international out-of-delivery-area, international out-of-pickup-area, FedEx International Premium® pickup, oversize, peak — oversize, residential delivery, residential pickup, return on-call pickup, FedEx ExpressTag®, Saturday delivery and Saturday pickup.
The current FedEx fuel surcharge can be found here.
Share A Refund shines a light on surcharges
Surcharges account for a major part of shipping costs. You may not be able to negotiate every surcharge, but you can work to eliminate them. Enlist the help of a shipment audit service to perform a comprehensive, automatic audit of individual accessorial charges to ensure accuracy. Leverage the advanced systems and experienced negotiators Share A Refund uses to analyze and negotiate pricing agreements for some of the largest companies in the world. Surcharges are like quicksand. Share A Refund keeps shippers from sinking.
