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Blog / FedEx leapfrogs UPS in the fuel surcharge race
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FedEx leapfrogs UPS in the fuel surcharge race

The carriers are competing again— and the customers are losing (money). Last month, UPS increased its fuel surcharge by 50 basis points. Not to be outdone, FedEx raised its diesel fuel surcharge by 100 basis points— effective now.

Is there anything customers can do when the formula changes? In today’s blog post, we’ll talk about how fuel surcharges work, the difference between how UPS and FedEx calculate surcharges, and how to save money on shipping — even when the carriers unexpectedly change their rates.

How do fuel surcharges work?

FedEx sets its fuel surcharge each week according to the prior week’s national US on-highway average price for a gallon of diesel fuel, as reported by the Department of Energy’s Energy Information Administration (EIA).

However, despite diesel prices consistently dropping since September, FedEx changed its base formula in order to increase its FedEx Ground fuel surcharge from 15% to 16%, effective December 11.

Ground deliveries aren’t the only ones affected. The FedEx Express Surcharge increased for Domestic and US to Puerto Rico package and freight services. Export and import surcharges each dropped from the prior week.

How do FedEx fuel surcharges compare to UPS fuel surcharges?

Like FedEx, UPS fuel surcharge rates fluctuate with the price of diesel on a weekly basis. Most recently, the carrier decreased its Domestic Ground fuel surcharge from its December 4 rate of 15.25% down to 15% on December 11, according to the national US average for the price of on-highway diesel fuel. UPS’s lowest fuel charge in the past 90 days was 14.75% on November 27.

Why are the surcharges different for UPS and FedEx?

The two carriers have a published list of fuel surcharges based on the national US average for the price of on-highway diesel fuel, as reported by the EIA. However, FedEx and UPS have different surcharges, with FedEx’s surcharges increasing more rapidly than UPS’s.

For example, UPS would impose a 16% surcharge if the average price of on-highway diesel fuel was between $4.46 and $4.58. FedEx levies 16% when the average price of on-highway diesel fuel is between $4.09 and $4.18.

Is it possible to negotiate on fuel surcharges?

FedEx’s US Fuel Surcharge webpage contains an asterisked note claiming, “the customer agreement is the final authority for all matters related to the customer’s fuel surcharge calculation and the frequency of the calculation adjustment.”

Fuel surcharges, handling charges, location-based charges, and oversized charges can add as much as 30% to your negotiated parcel rates. While accessorial fees, or surcharges, are levied across the board, there may be room for concessions.

That’s why ShipRx’s parcel negotiation service is so important. We’ve been in the shipping industry for over three decades—  first, writing contracts for the carriers and now helping shippers save money. You’re guaranteed honesty and expertise when you choose us for a free contract review. If you’re paying the lowest available rates, we’ll tell you. If not, we’ll help you reduce your spending.

Get in touch today to start saving on your parcel rates— no matter what surcharges the carriers impose.

 

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