American Shipper

FedEx Freight slashes fuel surcharge 25%

FedEx Freight slashes fuel surcharge 25%

   The FedEx Freight and FedEx National less-than-truckload units said they are cutting their fuel surcharge on shipments by a quarter beginning today.

   The 25 percent fuel surcharge reduction comes as oil prices reached more than $70 per barrel last week and diesel fuel prices are near their highest prices since last September at $2.89 per gallon, according to the Energy Department.

   FedEx Freight’s average fuel surcharge is about 18 percent.

   “FedEx Freight and FedEx National LTL are taking a leadership position in the industry by making changes to benefit our customers and the market as a whole,” said Douglas G. Duncan, president and chief executive officer, FedEx Freight Corp., in a statement.

   “By significantly reducing our fuel surcharges, we offer immediate and long-term assistance to shippers who are facing both a challenging economy and volatile fuel prices.”

      The trucking industry, including piece shipment carriers, has experienced an overall decline in tonnage since last fall when the economy slowed down. Excluding new business from the acquisition of Watkins Motor Freight — now FedEx National — FedEx Freight’s average daily regional shipments were down slightly in the first half of the year.

   FedEx Freight’s revenue per hundred weight, including the fuel surcharge, is about $18.68 and will decline 3.8 percent to $17.97 by backing out part of the surcharge, according to Satish Jindel, a Pittsburgh-based transportation consultant.

   FedEx’s surcharge is in line with most of the LTL industry and the surcharge reduction will take them below fees charged by their competitors.

   “This could put pressure on others to respond with a change in their fuel surcharge or an adjustment in their rate,” said Jindel, who heads SJ Consulting Group.

   He figures FedEx will make up most of the surcharge margin because its average length of haul is increasing with the addition of long-haul carrier Watkins Motor Freight.

The FREIGHTWAVES TOP 500 For-Hire Carriers list includes FedEx (No. 1).