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The Impacts of UPS and FedEx’s 2017 Fuel Surcharges

Posted by Rachel Carollo on Jun 9, 2017 9:20:48 AM

As part of UPS and FedEx’s 2017 rate changes, fuel surcharges are now based on the weekly diesel average from the two weeks prior, rather than on the monthly diesel average from the two months prior.

What exactly does this mean for businesses? An April 2017 article written for Parcel Industry by enVista Transportation Project Manager, Mark Taylor breaks it down: “If fuel prices continue to have a steady increase in 2017 as they did in 2016, shippers will have a higher fuel surcharge cost.”

The graphs below show the differences between the monthly and weekly methods of Ground shipping fuel surcharge calculation for UPS and FedEx, respectively.

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As you can see, the new weekly method of calculating costs results in higher fuel surcharges 42% of the time with UPS and 51% of the time with FedEx. The fuel surcharge follows the fuel prices more closely, and the weekly fuel surcharge calculation is higher for approximately half of the year. 

These graphs are further explained in another article by Mark Taylor for the May/June 2017 issue of Parcel Digital Magazine. Taylor states, “It is clear by these graphs that as jet fuel prices trend higher, the weekly calculation raises the fuel surcharge with a faster response.”

The April article continues, “Every (UPS and FedEx) package is subject to fuel surcharge. For this reason, the fuel surcharge change compounds other GRI (General Rate Increase) increases and changes (like the increased cost of the 2017 dimensional weight factor reduction).” 

So how should your business combat this impact? Taylor recommends negotiating better terms on transportation, surcharges, and surcharge incentives; utilizing the least costly service and reducing “the frequency of surcharges on which fuel surcharge is applied.” 

The good news? Dropoff never tacks on fuel surcharges. Use Dropoff same-day delivery service for your local deliveries to avoid these extra fees and to always be sure that the price you see is the price you get. What’s more is that you’ll get your deliveries into the hands of your customers and colleagues faster and more reliably. Take back control of your deliveries and contact Dropoff today.

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Topics: Logistics Industry

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