When it comes to small parcel shipping using companies like FedEx and UPS, one addition to the bill that you may have noticed is fuel surcharge. The cost of fuel and transportation impact delivery companies greatly. Fuel runs their trucks, vans, and planes, so the surcharge was designed to help protect them during times of high gasoline, diesel, and airplane fuel prices.
However, the price of fuel dropped by almost a third in the past year to levels not seen in several years. Despite the drop in the cost of fuel, the surcharge still exists although the percentage has gone down.
Why Does the Fuel Surcharge Exist?
The simple reason is that it allows for UPS and FedEx to keep its base shipping rate the same while making the necessary changes to cover for any sharp increase in fuel price. In other words, instead of having to make changes to the standard shipping rate every month instead of once a year as the current policy is set, they can instead add or decrease the fuel surcharge rate.
In addition to the fuel surcharge fee, there are a host of other fees as well that UPS and FedEx use to keep their base shipping price the same. From residential, 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
Both UPS and FedEx add a fuel surcharge percentage to import and export shipments which raise the overall price of the delivery service. 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 months, this can add a noticeable charge to your shipments.
The published fuel surcharge is 4.25% for UPS ground services and 2.25% for UPS air services, UPS 3 day select, and international services during April 2016.
For FedEx, the month of April 2016 saw a surcharge of 2.75% on FedEx ground and home delivery yet0% surcharge on Fedex Express and international services. On May 2nd, 2016 shippers will be hit with a 0.5% FedEx Express surcharge and 3.0% FedEx Ground and Home Delivery. DHL now has a 0.5% fuel surcharge across the board.
It is charges like these that creep into your shipping payments and make them less predictable for businesses that rely on FedEx and UPS to handle the majority of their shipping.
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