International express fuel surcharges drop as oil prices decline

DHL, FedEx, UPS and TNT have significantly reduced their fuel surcharges for international air express shipments around the world this month against a background of a continued sharp fall in oil prices largely driven by the escalating global financial crisis, CEP-Research analysis shows.

Oil prices have declined sharply from a peak of nearly USD 150 a barrel in July to below USD 85 a barrel this week on the various trading exchanges. In September, the integrator’s fuel surcharges were largely stable and did not fully reflect the downward trend. This is because the four leading express carriers calculate their surcharges based on indexes showing the previous month’s oil price level and announce them in advance for the following month, thus resulting in a two-month time lag between prices and surcharge level.

In October, however, surcharges show a clearly recognisable drop around the globe, with the biggest reductions in the USA, significant falls in Asia and moderate reductions in Europe.

In the USA, FedEx Express cut its fuel surcharge for domestic, import and export shipments by 7.5 percentage points from 34.5pct in September to 27pct for the 6 October-2 November period. Similarly, UPS reduced its surcharge for US domestic and international air express shipments by 7.5 percentage points to 27pct effective 6 October in comparison to 34.5pct in September. DHL Express surcharges for its US air express and international shipments sank by 7.5 percentage points to 29pct for the 1 September – 4 October period compared to 36.5pct last month.

In Europe, DHL has moderately decreased its air express surcharge to 18.5pct in October from 20.5pct in September. TNT Express reduced its European fuel surcharge to 20.5pct for the 29 September-2 November period from the previous 23pct while its separate UK surcharge dropped from 14.5pct in September to 12pct this month. UPS moderately decreased its Europe fuel surcharge for express and expedited shipments to 19.5pct from 6 October onwards from the previous level of 21.5pct in September. FedEx’s surcharge in Europe, Middle East, India and Africa (EMEA) slightly dropped from 20pct in September to 18.5pct this month.

In Asia Pacific, DHL’s fuel surcharge has dropped to 23.5pct from 27pct in September, while UPS’ surcharge dropped slightly more to 23.5pct in October from 27.5pct last month. TNT’s “rest of the world” surcharge (excluding the Americas) dropped 4.5pct to 23pct in October compared to 27.5pct in September.

FedEx, whose surcharges vary by country in Asia, reduced the export fuel surcharge in Singapore to 21.5pct from the previous 25.5pct and the import fuel surcharge fell to 23.5pct from 27.5pct. In Hong Kong, the FedEx fuel surcharge for exports and imports dropped to 21.5pct in October compared to 25.5pct in September.

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