Small parcel shippers take note – FedEx has made the first noteworthy mid-year surcharge update seen from either carrier. The carrier has increased its Fuel Surcharge %.
As of Monday March 18, FedEx substantially increased its Fuel Surcharge % for both domestic Express and domestic Ground services. Below are charts illustrating the effects of this increase from September 2018 to March 2019 for FedEx domestic Express (Illustration 1) and domestic Ground (Illustration 2). A hypothetical year-to-date scenario showing how the increase would have affected FedEx shippers over the last 10 weeks if the new fuel surcharge %s had been in effect (Illustration 3).
Illustration 1:
Illustration 2:
Illustration 3:
Here is a link to the FedEx website where the details of this announcement are located: https://www.fedex.com/en-us/shipping/fuel-surcharge.html
FedEx did not pre-announce this change to the marketplace
As you can see from the below snippet from the carrier’s Service Guide, FedEx explicitly states that it reserves the right to make changes to the fuel surcharge % without notice.
Here is a link to FedEx’s complete service guide: https://www.fedex.com/en-us/service-guide/terms/express-ground-samedaycity.html
The biggest takeaway is that the largest increases are felt when the spot price of diesel and jet fuel are at the cheaper end of the scale. Over the last 6 months, spot prices for fuel have traded at cheaper prices than historical, meaning FedEx shippers could feel 4% increases on the Ground Fuel Surcharge % and over 20% increases on the domestic Express Fuel Surcharge % moving forward. When and if the spot price of fuel begins to increase, the net effect of FedEx’s announcement will be lower.
As always, shippers need to stay vigilant watching for announcements like this from the carriers. The trend is for changes and new fees like this increase in the fuel surcharge % to be quietly rolled out.
One last note: Transportation Impact can study how this change affects your small parcel shipping costs. Contact us today for a no-obligation analysis.
