Friday, July 31, 2009

Riding the Fuel Surcharge Roller Coaster

As oil prices dropped, the carrier's fuel surcharges for air and ground shipments also dropped. This was great for everyone - that is while it lasted. The two major US package carriers have posted their fuel surcharges starting August 3, 2009. Looks like the ride has started again. How much are they going up? Ground is increasing about 27% over the surcharge from July 1st. Air shipments are much more - a 550% increase over the surcharge from July 1st. That's a price increase you need to keep track of.

The fuel surcharge is calculated on fuel prices going two months back, so the rates for August are up even though we see lower gas prices recently. But how does this affect your shipping? After all, you still need to ship your packages. And how can your shipping system help?

First, make sure your shipping system can account for the fuel surcharge so it's included in rate calculations and rate comparisons. Next, check to see if the fuel surcharge amount is included in reports or data you use from your shipping system. This makes sure you can check your bills and charge your customers correctly. Here is how our CPS™ shipping software helps its users cope with these changing monthly figures.

The fuel surcharge is included with every rate calculation and rate comparison. That means the shipper always sees the correct shipping rate. Next, CPS provides a critical report that can be run quickly and at anytime. This report shows the average cost per box and per pound so you can quickly determine your "break even" shipping costs so you can decide how much you should be charging for shipping. We call it the "Flat Rate Calculator" since its shipping cost averages tell you the flat rate you need to charge so you do not lose dollars when charging customers for shipping.

A shipping system that handles the fuel surcharges so you have the best information keeps you in control of your shipping. And isn't that the idea?

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