ATLANTA (AP) — “UPS Inc., the world’s largest shipping carrier, said Tuesday its profit fell nearly 21 percent in the second quarter despite a more than 6 percent increase in sales. …UPS is able to pass higher fuel costs on to customers as a fuel surcharge on shipments. However, the surcharge increases have not kept pace with rapidly rising fuel prices.“
Is this a veiled warning to its customers of a change on the horizon?. On July 7th UPS bumped its fuel surcharge up 1 point, from 8.5% to 9.5%. Remember, the UPS surcharge for ground service is “based on the National U.S. Average On Highway Diesel Fuel Prices reported by the U.S. Department of Energy for the month that is two months prior to the adjustment.” Therefore it is easy to calculate what the fuel surcharge should be in August 08 based on the June 08 average. The June 08 average was $4.677 per gallon for on highway diesel fuel.
At Least – But Less Than, Surcharge:
$4.38 – $4.46, 9.50%
$4.46 – $4.54, 9.75%
$4.54 – $4.62, 10.00%
What! The chart doesn’t go that high! UPS states “Fuel surcharges percentages and thresholds are subject to change without prior notice. If the Fuel Surcharge rises above 10.00% or there are changes to the thresholds, the above table will be updated.” Look for an updated chart in about two weeks. And don’t be surprised if UPS changes the basics of the table, such as faster application of surcharges based on national averages or a fundamental change in the surcharge structure in order to keep “pace with rapidly rising fuel prices.“
Interesting article.
UPS and every other trucking firm have no choice but to continue to raise the fuel surcharges as long as fuel pricing continues to soar.
It’s scary to think where this will head.
We can see the impact already as everything we buy has substantially increased over the last 18-24 months.
Businesses that are not looking at a logistical approach to their shipping will lose their competitive edge. At least logistics is a way to fight back against the fuel surcharges.
Comment by Georgia Logistics Services — July 28, 2008 @ 4:13 pm |
The reality is that diesel fuel is a fundamental element in establishing the consumer price on just about everything throughout the logistics chain. Raw materials in, finished goods out, shipments to consumers … it is a basic building block upon which our economy rests. A friend of mine is doing his catalogs 2008 year end projections and the biggest unknown is “freight in/freight out”.
Comment by TheChronicler — July 28, 2008 @ 5:02 pm |
Hi Chronicler:
I’m a reporter at the Atlanta Journal-Constitution. I’d love to talk to you about the surcharge issue. I’d like to know how it’s affecting you and other folks in Georgia.
Thanks,
Rachel
Comment by Rachel Tobin Ramos — July 31, 2008 @ 5:55 pm |