Dive Brief:
- DHL Express is lowering its import and export fuel surcharge calculations by two percentage points starting Aug. 3, bucking a trend of parcel carriers ratcheting up fuel fees, according to an update on the company's website.
- The logistics provider's fuel surcharges are tied to daily average spot prices for U.S. Gulf Coast kerosene-type jet fuel, with its rates adjusting weekly depending on where prices land. The surcharge applies to transportation charges, along with various services and added fees.
- For example, if the per-gallon price of jet fuel was $3.51, the carrier would currently levy a 33.75% fuel surcharge rate for exports and a 37.5% rate for imports. After the change next week, the rate drops to 31.75% for exports and 35.5% for imports at that fuel price point.
Dive Insight:
Shippers have become accustomed to parcel carriers increasing their fuel surcharge calculations, rather than reducing them as DHL Express plans to do. As of publication time, DHL Express did not provide comment as to why it's lowering the rates.
"While a 2.00 percentage point reduction may appear modest on an individual shipment, the total savings can become significant for companies with consistent international parcel volume," supply chain consultancy Ebb Logistics said on its website.
However, DHL Express shippers should verify how the adjustments affect their negotiated agreement, as a lower published fuel surcharge doesn't always result in the expected invoice reduction, Ebb Logistics added.
Fuel surcharges have weighed heavily on shippers in recent months as disruptions in the Strait of Hormuz persist. DHL Express began updating its fuel surcharges weekly in April due to volatility in the market.
While both express and ground delivery prices have been impacted by the Iran war, express shippers have been particularly vulnerable as jet fuel price increases are outpacing diesel fuel, Mingshu Bates, AFS Logistics chief analytics officer and president of parcel, said in an interview with Supply Chain Dive.
In Q2, express fuel surcharges rose 65.4% year over year, driven by both a surge in jet fuel prices and fee adjustments from FedEx and UPS, according to the TD Cowen/AFS Freight Index. Meanwhile, the average net fuel surcharge for ground shipments increased 40% YoY.
