UPS Announces Changes to Domestic and International Fuel Surcharge Calculations

UPS has announced that effective April 2, 2018, they will institute separate fuel surcharge levels for Domestic Air shipments and International Air Export shipments (they were formerly linked). These surcharges will continue to be adjusted weekly and the specific levels will be published here: https://www.ups.com/us/en/shipping/surcharges/fuel-surcharges.page, beginning on March 30, 2018 to reflect the change.

As of 3/26/18 the Domestic Air/International Export Fuel were identical at 6.5%. The International Import Fuel is 9.25%. It is not yet known whether the impending split will cause the International Export Fuel to increase to the level of the Import Fuel, which is 2.75% higher, or if there is some other methodology rationalization behind the change. It is also currently unclear how this will affect the Domestic Air Fuel calculation, though this decoupling may allow Domestic Air Fuel surcharges to decrease while International Fuel surcharges increase.

FedEx has yet to make an announcement as to whether or not they will follow UPS in this new fuel application. A comparison summary below shows the UPS vs FedEx rates before the fuel split:

· UPS Domestic Air = 6.5% and FedEx Domestic Air = 5.25%

· UPS Intl Air Export = 6.5% and FedEx Intl Air Export = 5.25%

· UPS Intl Air Import = 9.25% and FedEx Intl Air Import = 5.25%

This change may affect the current competitive balance with regards to fuel surcharges. Check back later for future updates