As expected, UPS and FedEx will increase their fuel surcharges to customers shipping boxes beginning on April 4, 2022. These additional charges are in direct response to the rising crude oil prices over the past year.
According to a statement given to NewsNation, “FedEx regularly reviews its fuel surcharge. This change will allow FedEx to provide customers the best service possible as rising fuel costs add to the cost to serve.”
In reaction to FedEx increasing their fuel surcharge, UPS quickly announced they will follow suit.
“UPS updates its fuel surcharge periodically to reflect the changes in the cost we incur for fuel to serve our customers,” a UPS spokesperson told NewsNation.
How Will These Price Increases Affect Your Order?
Fuel surcharges fluctuate from week to week depending on the Weekly National Gasoline and Diesel Fuel update, released every Monday from the U.S. Department of Energy.
UPS and FedEx base their fuel surcharges on the national diesel cost average, which was $5.13 per gallon on March 21. That amount reflects an increase of $1.94 per gallon on that date in 2021.
UPS and FedEx will add a 15% fuel surcharge to all parcels shipped during the week of March 28, up from 13% just two weeks ago.
Depending on the size of the box, the weight and the destination, fuel surcharge will vary. However, small boxes like those we ship generally see an average of $1.00 for fuel surcharge added to the total cost of shipping.
How Long Will These Fuel Surcharges Remain?
Transportation companies have been adding a fuel surcharge to the total cost of shipping products for 20 years. These increases are getting a lot of attention due to the recent rising cost of oil, but the fact is they only appear dramatic because of how sharply crude oil prices have surged over the past month.
Fuel surcharges are never going away, even if the price of crude oil were only $20 a barrel. These surcharges are generally nothing more than transportation companies getting an increased profit on top of the base shipping rates. And like the FedEx and UPS announcements referenced in this article, their “explanations” amount to nonsense.
What those announcements didn’t mention were the discounts FedEx, UPS and every major trucking company in the U.S. gets at the pump. The listed price for a gallon of diesel can easily be $0.05 to $0.10 less than what those companies actually pay per gallon because of the volume they pump every year. And some transportation companies purchase their fuel based on an average annual forecasted cost which this year we can guarantee will be lower than the prices we’re seeing now.
What is the Bottom Line?
While our contract with UPS affords us discounts on the base shipping rate for every box, it does not give us any discounts for fuel surcharge or accessorials we potentially incur. See the article we wrote in 2019 how UPS shipping costs are calculated for every box, but keep in mind those rates were for two years ago and they have since increased as well.