DHL, FedEx, UPS raise fuel surcharges in China
DHL, FedEx, UPS, the global leading express giants, raise their fuel-related surcharges in China as of June, in a move to offset the increasing operational costs resulting form soaring oil prices in the international market since 2005.
DHL-Sinotrans, Brussels-based DHL’s China joint venture, lifted fuel surcharges from 11.5% to 13.5% today, while the two US tycoons FedEx and UPS each announced an increase from 13.5% to a record high of 15%, which will come into effect on June 5.
FedEx, the world’s largest express transportation company, explained that it worked out the new standard in accordance with the fuel prices released monthly by US energy department.
After adjustment, for example, customers of FedEx have to pay an extra CNY 3 for delivering one-kilogram parcel to New York, once priced at CNY 221.3 but now at CNY 224.3, and in DHL- Sinotrans, customers should pay an additional CNY 5.6 in the same case.
In stark contrast, Express Mail Service (EMS), the express service arm of state-run China Post, did not announce any markup on fuel surcharges or any change in service charges.
Surprisingly, the all-time high fuel surcharges exerted little impact on customers’ choice of target partners.
A FedEx official told journalists that the company has stated clearly in its contracts that FedEx has the rights to fix charging standards for fuel surcharges as well as other surcharges and has no need to notice customers beforehand.
Though international express giants compete with each other in China, they still have a dominant role in the market. In addition, most of their customers are those high-end ones who are relatively insensitive to prices, said an insider. Customers of UPS and FedEx are more rational and can understand the markup due to mounting oil prices.
The rise in fuel surcharges, however, means a great challenge to Chinese logistics operators because they have to shoulder the decreasing room for profits.
The aforesaid insider disclosed that their logistics costs have grown by 5% to 6% as the result of oil price spike.
As a matter of fact, most indigenous logistics companies have been pinched by the rising costs for a long time, he said, but it is hard to increase charges for those small players at present, for fear of loss of their customers and market share.
In front of oil price hike worldwide, airlines also feel huge pressure for making a profit. China’s three largest carriers, Air China, China Eastern Airlines and China Southern Airlines, have reached consensus in applying to regulators for a rise in jet fuel surcharges.
The National Development and Reform Commission, the top- level planning agency in the country, unveiled that it will not lift jet fuel surcharges at present as the existing policy has not matured.
At the end of March, NDRC issued a circular on jet fuel adjustment, which prescribes that the surcharge for routes shorter than 800 kilometers is raised to CNY 30 from CNY 20 per passenger and that for routes of 800 kilometers and above to CNY 60 from CNY 40 per flyer, with effect from April 10 to October 10.
China raised prices of jet fuel by CNY 500 on May 24, which has been the sixth markup since October 2004. The ratio of jet fuel costs to the total costs of Chinese airlines has jumped to about 40% presently compared with 20% in 2004.
(USD 1 = CNY 8.0)
