FedEx Freight and UPS Air React to Rising Fuel Costs

Beginning October 3, UPS will raise the cap on fuel surcharges for UPS Next Day Air, UPS 2nd Day Air and UPS 3 Day Select and U.S. international air services to 12.5%. The surcharge is calculated from an index based on the average price for a gallon of kerosene-type jet fuel.

UPS imposed a 9.5% cap on fuel surcharges for its premium air services last January. The carrier’s ground services fuel surcharges will continue to be based on the U.S. Energy Department’s On-Highway Diesel prices and will fluctuate monthly. For September the figure is 3%.
Like UPS, FedEx Freight uses Energy Department prices for determining surcharges. “In our industry, the fuel surcharge is designed to manage normal supply and demand market forces of fuel, not temporary spikes caused by disaster,” says FedEx Freight president and CEO, Douglas G. Duncan.

As a result, FedEx Freight’s fuel surcharge won’t exceed most current pre-Hurricane Katrina prices for 30 days. Surcharges are updated on a weekly basis. FedEx Freight surcharge limits do not apply to the company’s Express and Ground operations.

According the American Trucking Associations, fuel cost can account for as much as 25% of a trucking company’s total operating expenses, second only to driver wages

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