Fuel Surcharge Updates In Parcel Shipping
Three years ago, in the early months of the war in Ukraine, our CEO Josh Dunham was quoted in an article in The Wall Street Journal that looked at the impact of surging fuel prices. In it, Josh noted that the price of fuel is not only going up naturally, but also artificially.
The artificial increases Josh was referring to are of course the very tables carriers like FedEx and UPS use to calculate fuel surcharges. Prior to 2002, the formulas used within them, while still dynamic, changed infrequently, and when they did the resulting cost increases were typically incremental. That began to change as one of our blog posts at the time noted.
Today, fuel surcharge increases are far more frequent, and perhaps most importantly, there is often a significant disconnect between them and the real-world price of jet fuel and diesel. Importantly, even small fluctuations can have a significant impact on fuel surcharges as carriers move to institute dynamic pricing strategies and revenue-generating cost increases that extend far beyond the usual suspects, from delivery area surcharges to the annual general rate increases.
Unlike many other surcharges, fuel surcharges are a multiplier charge that impacts every parcel. That fact alone, and their increasing frequency – UPS announced four fuel surcharges in 2024 and FedEx announced three – make it imperative for shippers not only to stay on top of their fuel surcharges, but also to remember that they often change without warning.
So regardless of what’s happening in the energy markets, make sure to keep an eye on them. And while you are it, take a look at Jack McCrum’s recent video on this very topic on Reveel’s YouTube channel. We guarantee you’ll take away a few actionable insights.
