Single Blog

“A similar discrepancy exists for ground, with the diesel index up 22% since 2021, but the ground fuel surcharge for both carriers is up over 75%.” Fuel price changes decreased UPS’ growth in revenue per package by 90 basis points in Q1, EVP and CFO Brian Newman said on an April earnings call. Heightened surcharges and projections of increased fuel costs are expected to turn that around. Other considerations include fuel efficiency of the fleet and regional fuel price variations. A thorough grasp of these variables allows professionals to set or agree to a reasonable fuel surcharge that reflects actual costs while maintaining competitiveness. Some services also incur another fuel surcharge on top of the base rate and first fuel surcharge.

Get the free newsletter

These services are typically ones that require more fuel to complete the delivery or pickup, for example, the remote area surcharge. To calculate the surcharge cost, based on the chart above, take the percentage listed in line with the current base rate of fuel. For example, if the base rate of fuel is $2.82, the fuel surcharge rate is 10.25%, and the actual cost of the fuel surcharge will be $0.29. Carriers determine a fuel rate based on the average industry prices or the market cost of fuel. This is so that they don’t lose money on shipments when the cost of fuel goes up and they might even profit if the cost of fuel dips.

Choose Cost-Effective Shipping Options

1. Demonstrable knowledge of your shipping patterns will provide you with leverage in discussions.
2. According to the TD Cowen/AFS Freight Index, fuel surcharge hikes and other delivery fee tweaks are expected to drive up the rate per package in Q2.
3. This is a service extended by credit card companies for individual customers who wish to pay for fuel purchases through their credit cards.

Clear communication and a well-prepared case can often pave the way for more favorable terms. Whether it’s negotiating for waivers or reductions, being informed and assertive can yield substantial savings. Consider freight consolidators or hybrid logistics solutions that might offer bulk shipping at lower rates without incorporating fuel surcharge fees. Partnering with local carriers over extensive networks can also reduce dependency on larger carriers that heavily rely on surcharges.

This surcharge helps carriers cover fuel costs since it is subject to constant fluctuation. This means that the shipping company can compensate for the cost of seasonal and regional variation of the fuel ups fuel surcharge india cost while calculating transportation cost. Some smaller regional carriers may not have fuel surcharges, offering potentially lower shipping costs.

However, to do this, it’s important to understand how to manage the surcharges. If you’re able to negotiate with a carrier or logistics company to get minimized or flat-rate shipping, you will be able to protect your bottom line. Of course, any additional charges that carriers impose will be passed onto businesses and affect their bottom lines. And, as a small or medium business owner, you want to do all you can to keep your customers by offering them affordable shipping rates. Because the market value of fuel fluctuates frequently, shipping companies change their fuel rates to match the market rate.

These initiatives aim to reduce fuel consumption and, consequently, the impact of fuel surcharges on shipping costs. However, with the constantly fluctuating surcharge rates, maintaining cheap shipping rates for your customers can take its toll on your bottom line. That’s when you can try to negotiate the rates you’re being charged with your shipping company.

Current Trends in Fuel Surcharge Application

As we navigate toward 2024, UPS fuel surcharges will continue to be a significant factor for businesses managing shipping expenses. Companies can make informed decisions and anticipate adjustments by examining the components that influence these surcharges. Staying informed on UPS’s maneuvers and the broader industry context will arm shippers with the foresight necessary to navigate the complex terrain of logistics costs. In this pursuit, ShipSigma remains a steadfast ally for businesses seeking to strike a balance between cost efficiency and high shipping service quality. Looking toward 2024, several factors loom large over potential UPS fuel surcharge adjustments.

Fuel surcharges are additional fees imposed by carriers to account for the fluctuating prices of fuel. These surcharges are commonly seen in various industries such as shipping, airlines, and logistics. By their nature, fuel prices can be highly volatile, leading companies to introduce these surcharges as a way to stabilize operational costs and ensure business sustainability.

That means the fuel charge you see on your shipping invoice is rarely a fixed fee or flat rate. Fuel surcharge charged in India is unique for every logistics operator. Operators decide the surcharge fee based on several factors like average fuel price and mileage of the vehicle used for transport.

When drafting your case, be clear, concise, and focus on the carrier’s business interests as well as your own. Start by highlighting your shipping volume and frequency, emphasizing how your business can provide steady revenue. Coupled with comparative market data, argue the benefits of waiving the fuel surcharge to ensure sustained collaboration. Demonstrating cost savings and efficiency in your shipping operations can also help persuade providers.