When it comes to small parcel shipping companies like FedEx and UPS, you may have noticed a fuel surcharge. The cost of fuel and transportation impact delivery companies considerably. The surcharge was designed to help protect carriers during times of high gasoline, diesel, and airplane fuel prices. However, the fuel price dropped by almost a third last year to levels not seen in a while. Despite the drop in fuel cost, the surcharge still exists, although the percentage has gone down.
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Why Does the Fuel Surcharge Exist?
Fuel surcharges allow UPS and FedEx to keep their base shipping rate while making the necessary changes to cover any increase in fuel price. In other words, instead of making changes to the standard shipping rate every month instead of once a year as the current policy is set, they can add or decrease the fuel surcharge rate.
In addition to the fuel surcharge, there are other fees that UPS and FedEx use to keep their base shipping price the same. From residential and extended area surcharges to pickup charges, adding fees has become the preferred method for shipping companies to cover their revenue while not changing the base price.
Fuel Surcharge Percentage Increase
UPS and FedEx add a fuel surcharge percentage to import and export shipments, raising the overall price. The percentage is based on the average monthly fuel price increase or decrease over the course of the year. Since fuel prices normally rise in the spring and early summer, it adds a noticeable charge to your shipments.
FedEx Fuel Surcharge: Effective Feb. 1, 2021
The fuel surcharge for U.S. Domestic Express Freight services will be assessed based on the rated weight of the shipment. The charge per pound is subject to weekly adjustment based on the weekly published U.S. Gulf Coast (USGC) spot price for a gallon of kerosene-type jet fuel.
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Charges like these creep into your invoices and make them less predictable for businesses that rely on FedEx and UPS.
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Learn More about FedEx and UPS Fuel Surcharges
