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Along with recent changes to dimensional weight based shipping rates, FedEx is also revising another aspect of shipping rates beginning in February 2015 –– fuel surcharge.
What is fuel surcharge?
Fuel prices are constantly in flux. Oftentimes the cost of fuel that shippers use to come up with shipping rates increase beyond those for which they planned and budgeted. Shippers use fuel surcharge rates, then, to prevent losses due to sudden increases in fuel prices.
Why is it changing?
Typically, if fuel prices go up or down too fast, shippers are exposed to increased risk based on the fluctuating and often unpredictable price points. That said, even though we have seen fuel prices falling, volatility has increased.
Historically, FedEx fuel surcharge rates have been lower than those of UPS. These new changes place FedEx on par with UPS’s surcharge rates.
How does this affect me?
Fuel surcharge rates for FedEx will increase effective Feb. 2, 2015.
Because these changes are driven by fuel prices, it makes sense the change in rates would depend on the type of fuel used for delivery. Here’s a quick breakdown:
- FedEx Ground rates are based on the U.S. average price of a gallon of diesel and could go up as much as 3.5% from 2014 rates.
- FedEx Express rates are based on the average U.S. spot price for a gallon of jet fuel and could go up as much as 4% from 2014 rates.
What can you do to prepare for the change?
- Expect an increase in your FedEx shipping bills and plan accordingly
- Use a shipping app that lets you look up and compare rates before creating a label
- Make sure your dimensions are accurate and that your factoring dimensions are properly set, in order to account for this year’s earlier increases in shipping rates for both UPS and FedEx
- Contact your FedEx representative to understand how it will affect your business
If you have any additional questions or concerns, leave them in the comment section and we’ll get back to you ASAP.
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