New fuel surcharges for fedex and ups International Express

FedEx Corp. ‘s Ground delivery unit, FedEx Ground, has raised its diesel surcharge by 100 basis points to 16 percent, exceeding the fuel tax assessed by rival UPS Corp earlier this month.The increase takes effect on Monday. Fedex’s fuel surcharge applies to its base rate and any additional charges called surcharges.UPS had already raised the levy by 50 basis points to 15.25 percent, but will reduce it to 15 percent effective Monday. The levy for operators is based on the price of on-road diesel set weekly by the Energy Department’s Energy Information Administration.UPS and fedex adjusted their diesel taxes to the price range set by the EIA the previous week. For every 9 cents per gallon change in EIA diesel prices, FedEx Ground adjusts its surcharge. For example, fedex’s upcoming tax is based on a price set by the EIA, which is at least $4.09 per gallon but less than $4.18 per gallon. As of last Monday, the national price for diesel was $4.092 a gallon.Federal ExpressFedex’s recent moves come against the backdrop of a continued decline in diesel pump prices. Highway diesel prices for the latest week were up more than 11 cents per gallon nearly three weeks ago and more than 87 cents per gallon from a year ago.In addition, fedex will increase the fuel tax on U.S. domestic shipments shipped by its fedex Air and international divisions from 16.25 percent to 16.75 percent. The increase also applies to fedex shipments from the United States to Puerto Rico. U.S. air import and export taxes will fall by 50 basis points each from the previous week.UPS, fedex and other package delivery carriers have wide latitude in adjusting diesel and jet fuel surcharges. In recent years, surcharges have remained high despite increasing world price volatility.Analysts watching the fuel surcharge market say that surcharge levels remain high long after prices have fallen, allowing airlines to generate extra revenue from each transaction.

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