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UPS hikes ground, SurePost fuel surcharges; FedEx lowers its levy

Can you top this? UPS leapfrogs FedEx with latest hike

UPS, FedEx go back and forth on fuel surcharges (Phone: Jim Allen/FreightWaves)

It seems like you can’t tell parcel-delivery diesel fuel surcharge moves without a scorecard these days.

UPS Inc. (NYSE: UPS) will raise its weekly domestic ground delivery surcharge to 15.75%, effective Monday. This comes after UPS had reduced its weekly levy from 15.5% to 15% the week before. The levy also applies to UPS’ SurePost service managed in conjunction with the U.S. Postal Service, where UPS inducts massive parcel volumes deep into the postal network for last-mile deliveries to residences.

Meanwhile, archrival FedEx Corp. (NYSE: FDX), which had hiked its surcharge 100 basis points to 16% for the week starting Dec. 11, cut its levy on ground deliveries by 50 basis points to 15.5%, effective Monday. Last week, FedEx Ground raised its diesel fuel surcharge by 100 basis points to 16%.

The carriers’ fuel surcharges apply to base rates and to any add-on charges known as accessorials. 

The back-and-forth of surcharge pricing comes amid a continuing decline in diesel pump prices, based on weekly data published by the Department of Energy’s Energy Information Administration (EIA). As of Monday, the nationwide on-highway diesel fuel price stood at $3.987 a gallon, down more than 10 cents a gallon from the prior week and the lowest level since the end of July.

UPS and FedEx (NYSE: FDX) index their diesel levies to a band of prices established the week before by the EIA. FedEx Ground adjusts its surcharges for every 9-cents-a-gallon move in the EIA’s nationwide diesel price. For example, FedEx’s upcoming levy is based on an EIA-established price that is at least $3.91 a gallon but less than $4 a gallon. 

UPS, FedEx and other parcel delivery carriers have wide latitude as to when they adjust diesel and jet fuel surcharges. In recent years, surcharges have remained elevated despite world price fluctuations that have headed south. Analysts who follow the fuel surcharge market have said that surcharge levels stay higher long after prices have dropped, allowing the carriers to reap additional revenue on each transaction.

One Comment

  1. UPS Fuel

    Mark – the carriers have fuel surcharge tables that are tied to the price of diesel. As diesel fluctuates this % will change week to week. This is not notable and happens every week for the history of these businesses. The notable change two weeks ago was that they moved the curve of the entire fuel surcharge table higher.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.