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On January 5, FedEx’s general rate increases went into effect, along with a bevy of other significant changes that are sure to have a major impact on the way companies manage their shipping costs in 2015. (Read my previous articles on FedEx rate increases.) If you thought these were the only shipping rate increases you’d have to consider this year, then think again. Effective February 2, FedEx will change the tables it uses to calculate fuel surcharges for FedEx Express, FedEx Ground and FedEx Freight. As a result, the fuel surcharges for these services will be proportionally higher in 2015 than they were in 2014. (See the modified tables at http://www.fedex.com/us/services/fuelsurcharge-2015.html.)
Right about now you might be thinking, “If fuel prices are dropping, why are my fuel surcharges going up?!” It’s a great question, and really one that only FedEx can answer. In a prepared statement quoted on ParcelIndustry.com, FedEx Executive Vice President and Chief Financial Officer Alan Graf said, “While second quarter results benefited slightly year over year from the net impact of fuel due to lower fuel prices this year versus last, the year-over-year reduction in fuel surcharge revenue largely offset the benefit of the lower fuel prices.” He went on to say, “While a daily spot price of jet fuel declined almost 30% from the end of August to the end of November, the average monthly price we paid for jet fuel under our contractual arrangements did not change by corresponding amount.”
All of which is to say at the end of the day, fuel surcharges are going up for reasons completely beyond your control. Before you begin writing angry letters to your freight carrier, though, you might consider that FedEx still maintains a slight fuel surcharge advantage over UPS. And remember, the experts at LJM Consultants are here to help offset any rate increases, with parcel auditing services that can save you 2-6 percent and contract negotiations that can save you 10-25 percent. Contact us today for a free cost saving analysis.
Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.