Blog / Cue the Crazy Fuel Surcharges
2 minutes read

Cue the Crazy Fuel Surcharges

In the nearly one month since Russia launched its unprovoked attack on Ukraine, the entire world has felt its effects. We’re experiencing an increased threat of cyber attacks, an impending wheat shortage, and supply chain disruptions. On a personal level, you’ve likely noticed an increase in prices when you fill up at the pump. You’re not alone. FedEx and UPS have also experienced increases in fuel costs, and now they’re passing those costs on to you.

On March 21, the Energy Information Administration (EIA) reported an average nationwide price of diesel fuel of $5.134 per gallon. Just one month ago, on February 21, the rate was $4.055 per gallon. We’ll look at the fuel surcharges levied by UPS, as well as FedEx’s planned increase which takes effect next month.

FedEx Fuel Surcharges

The Wall Street Journal reported on FedEx’s third-quarter revenues and profits, stating that the carrier’s revenues increased by 10%, while the company experienced a 25% increase in profits from the previous year.  The disparity in revenues and profits comes due to a lower number of packages shipped with higher shipping rates and fuel surcharges. 

FedEx sets their fuel surcharges for their Express services according to the US Gulf Coast spot prices of kerosene-type jet fuel by the EIA. On February 25, the spot price for one gallon of jet fuel was $2.678. The latest report on March 11 reported a spot price of $3.475. According to their current fuel surcharge table, FedEx Express Domestic package service customers should expect a fuel surcharge of 18.50%. When the new rates take effect on April 4, those same customers will be charged 20.25% if the spot price remains unchanged. 

Ground and Freight service rates are priced according to the EIA’s on-highway average for diesel, and will experience similar increases in their fuel surcharges.

UPS fuel surcharges

In the past, UPS fuel surcharges lagged two weeks behind the federal government’s prices. This month, the carrier shortened the lag to one week to match FedEx’s surcharge policy. Across the board, we are seeing surcharge rates rise each week to reflect the rising diesel and jet fuel costs.

The current fuel surcharges by UPS are similar to FedEx’s rates before the April 4 increase. For example, with a  jet fuel spot rate of $3.475, their Domestic Air Surcharge is also 18.50%. History shows us that any changes made by one carrier are likely to bleed over to the other. We expect UPS will announce increased rates any day now. 

The skyrocketing fuel prices and the carrier’s surcharges are out of our control. That doesn’t mean you’re stuck paying the full price of your bill. ShipRx offers parcel audit and parcel rate negotiation services to ensure you’re not paying too much on shipping. ShipRx parcel audits verify over 40 factors to maximize your refunds when the carrier doesn’t fulfill their service guarantee. To save on your base shipping costs, consider a parcel rate negotiation. The team at ShipRx has spent our careers building contracts for the carriers, and our parcel contract negotiation service often lowers rates by 20-30%. You can’t change global fuel prices, but you can take control of your shipping costs. Call ShipRx today and start saving money.

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