Fuel charges are rising at FedEx, and you may not know this from your daily shipping reports. As of March 18, the surcharges for FedEx Express and FedEx Ground services rose to 7% or higher, and are the highest they’ve been in all of 2019.
How FedEx Fuel Surcharges Work
The FedEx fuel surcharge rates change depending on the fluctuating price of fuel per gallon (jet fuel for FedEx Express and diesel fuel for FedEx Ground). The FedEx Express surcharges are based on U.S. Gulf Coast (USGC) spot price per gallon of a kerosene-type jet fuel. For FedEx Ground, that rate is tied to the weekly published national U.S. on-highway average diesel fuel price per gallon.
Each week there’s a lag between the fuel price index date and the fuel surcharge posting on the FedEx site. For example, surcharges for the week of April 8-14 are based on weekly fuel prices reported on March 29 for FedEx Express, and April 1 for FedEx Ground. The surcharge changes are effective each Monday, with the surcharge percentage available the previous Friday. FedEx says that the surcharge percentages are subject to change without notice, per their terms and conditions.
Here’s what you can expect for FedEx Express and FedEx Ground surcharges going forward, based on our experience.
The FedEx Express fuel surcharge increase will probably range from 15% to 25% throughout this year, fluctuating by week. FedEx Express service fuel surcharge rates apply to U.S., U.S. export, U.S. import and U.S. to Puerto Rico shipments. Domestic rates for fuel surcharges for the weeks of April 1-7 and April 8-14 were 7.5% for domestic and Puerto Rico shipments, 8.5% for export, and a whopping 10.25% for import. The export and import rates were actually not the highest for this year, with import rates going as high as 9% and export rates topping out at 10.75%.
The Ground fuel surcharge increase will likely stay very close to a 4% increase throughout this year. Surcharge rates for the weeks of April 1-7 and April 8-14 were 7%, up a quarter percent from the previous two weeks.
What Does This Fuel Surcharge Increase Mean for You?
Without knowing it, your shipping rates just went up this year, and there’s no carrier bulletin that will make this announcement to you. For companies with thin margins, these fuel surcharge increases will impact your bottom line in a big way. It’s more serious, of course, for the FedEx Express rates, with a larger increase than Ground rates, but even a 4% increase is a big deal. For companies shipping a high volume of expedited packages, the 15-25% fuel surcharge will really hurt.
Of course, there are ways to stave off carrier increases or at least protect your contracts so you’re not paying more than you need to. Two options to consider are getting expert negotiation help, and auditing your carrier bills automatically.
Parcel and Freight Contract Negotiation: Without access to pricing expertise and inside knowledge of what discounts carriers will negotiate, it’s hard for shipping companies to make a dent in their contract terms. With former carrier executives on staff, Shipware can conduct the actual negotiations or coach your team through them.
Freight Invoice Audit: Your company is likely missing earned discounts and refund credits, that won’t be given to you without filing a claim. Shipware’s AI software scours shipping invoices to find and file for those refunds, without disturbing your company’s process or costing you time. We save clients 10-30% on their shipping invoices, with fees coming out of the savings.