Do Fuel Surcharges Have You Feeling Betrayed?

Oct. 1, 2008
Perhaps the three most famous words uttered in literature, Et tu, Brute? (Even you, Brutus?) This expression has come down in history to mean the ultimate

Perhaps the three most famous words uttered in literature, “Et tu, Brute?” (Even you, Brutus?) This expression has come down in history to mean the ultimate betrayal by one's closest friend. High fuel prices and surcharges have many transport services users feeling betrayed by even their best carriers.

Bowing to high fuel prices; UPS changed its policies on parcel service guarantees and no longer includes the fuel surcharge in its refunds to customers.

The shift, effective Sept. 2, 2008, means UPS will only refund the basic charge and whatever other accessorial charges were included in the bill, including pickup and special service charges.

One company that tracks service guarantees and collects the millions of dollars of potential refunds for packages even one minute late suggests if you use UPS, FedEx, or FedEx Ground, 3% to 8% of packages shipped arrive late. Depending on the type of service you use, that figure can climb as high as 30%.

The fuel surcharge for a five pound Zone 2 to Zone 2 shipment next day air is $10.14. A five pound ground shipment has a total charge including fuel of $8.34. The fact is, most time-definite air shipments should not happen anyway or should be on the ground in Zones 2 and 3 (up to 450 miles). Ask a less-than-truckload carrier about its on-time service up to 450 miles.

When it comes to refunds, UPS reserves the right to assess a shipper an additional charge of $3 per request for each Package Tracking/Tracing and Refund Request initiated by or at the request of the shipper. This charge will not be assessed for the first 50 package tracking requests per calendar week, or for a quantity of package-tracking requests equal to or less than 20% of the shipper's package volume for that week, whichever is greater. This charge will not be assessed for a quantity of package-tracing requests equal to or less than 2% of the shipper's package volume for that week.

So why not experiment with your own policy, no refund for any late shipment, just ask for a better discount, without the carriers' service failure policy? The carrier will see what happens to their shipment volume when they underperform and the phones are all buzzing with complaints. We have learned to understand market forces, after all, we all buy fuel.

This would be a great way to keep shippers and carriers looking for continuous improvement, just as the shippers are held to account to perform for their customers.

The recent addition to the UPS tariff (8-04-2008) increasing late charge fees from 5% to 6% is an understandable charge; not refunding fuel charges is not. (UPS Tariff effective 9-02-2008): UPS terms and conditions effective September 2, 2008 “Transportation charges do not include other fees or charges that may be assessed by UPS, including but not limited to, fuel surcharges.”

Updated UPS Tariffs include 12-31-2007, 07-12-2008, 08-04-2008, 09-02-2008, how many have you read?

Hank Mullen of The Visibility Group has over thirty nine years of experience in the transportation industry. He has substantial expertise within the LTL, TL, and package industry. He is involved with strategic benchmarking, rate comparison analysis, invoice auditing and tariff and accessorial charge evaluations. Hank can be reached at 678-880-8243 or at [email protected].

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