Dive Brief:
- Export-heavy FedEx shippers could face additional cost pressures stemming from an adjustment to the company's international fuel surcharge calculations taking effect next week.
- Currently, export and import shipments are charged distinct fuel fees, which adjust weekly based on the published price per gallon of jet fuel. Starting Monday, FedEx will eliminate the distinction and apply the same fuel surcharge rate for both export and import shipments, resulting in higher rates for exports and lower rates for imports.
- For example, if the weekly published price per gallon of jet fuel is $3.31, export shipments receive a 34.25% fuel surcharge under the current structure, while imports are levied a 38.5% surcharge. With the new structure, both exports and imports would be charged a 37.75% surcharge.
FedEx fuel surcharge calculations for exports and imports starting June 22
| Per-gallon jet fuel price minimum | Fuel surcharge percentage |
|---|---|
| $3.23 | 37.25% |
| $3.27 | 37.5% |
| $3.31 | 37.75% |
| $3.35 | 38% |
| $3.39 | 38.25% |
| $3.43 | 38.5% |
| $3.47 | 38.75% |
Source: FedEx
Dive Insight:
Subtle tweaks to fuel surcharges through the years have created additional cost pressures for parcel shippers, with FedEx's upcoming import and export changes adding another wrinkle. In recent months, the Iran war and Strait of Hormuz disruptions exacerbated these fuel fee woes by squeezing the global oil supply, resulting in higher jet fuel prices.
While FedEx's export and import fuel surcharges have been falling since late May, they remain elevated. This week, FedEx's fuel surcharges for exports are 34.5%, while imports face a 38.75% rate. For the week starting March 16, export fuel fees were 30.75% and import charges were 34.5%.
The adjustment arriving Monday will result in roughly $35 more per $1,000 in fuel-applicable transportation charges for exports, while imports will see about $7.50 less per $1,000 in charges, according to a ShipScience analysis of the change.
"Export shippers are effectively being moved to a rate that previously applied only to imports, with no mechanism to return to the lower Export-specific treatment," ShipScience said.
FedEx's fuel surcharge change applies to international shipments but not to FedEx International Ground services.
FedEx rival UPS has differing fuel surcharge rates for air exports and imports. As of Thursday morning, UPS' website did not indicate any plans to consolidate them into a single fuel surcharge rate.
