UPS shrinks lag time between fuel surcharges - FreightWaves
UPS Inc. said Monday that changes to its diesel and jet fuel surcharges will now be subject to a one-week lag from the federal government’s prices instead of a two-week lag, a move that matches the surcharge policy of archrival FedEx Corp.
Under UPS’ (NYSE: UPS) new directive, its fuel surcharges for the week starting March 21 will be based on the price that was set this past Monday by the Energy Information Administration. Based on the EIA price and UPS’ revised surcharge formula, the company’s diesel fuel levy will reach about 15.25% as of this Monday. That will match the surcharge now in place on FedEx’s (NYSE: FDX) ground-delivery services.
UPS’ move comes as the national average for a gallon of on-highway diesel fuel spiked on Monday to a record $5.25, a 41 cent week-over-week jump. Over the past two weeks, diesel prices have climbed an astounding $1.15 a gallon. UPS and FedEx (NYSE: FDX) are playing catch-up with soaring fuel prices. UPS, which increasingly relies on fuel surcharges to hit its revenue targets, does not want to miss an opportunity to capture surcharges based on the higher prices.
A UPS spokesman said the change “allows us to more quickly align the costs we incur for fuel to serve our customers.”
