FedEx fuel surcharge jumps to 39.75% for July 20-26 week

The Analysis

A customer of mine who ships auto parts, small things, brackets and fittings, nothing that fills a plane, rang me at 16:40 last Monday, twenty minutes before his cutoff, because the quote sitting in front of him was higher than the one he printed on Friday. He wanted me to tell him the carrier had made a mistake. The carrier had not. FedEx published a fuel surcharge of 39.75% for the July 20 to 26 week, up from 38.50% the week before, with the reference at 2.971 dollars a gallon on the U.S. Gulf Coast for kerosene-type jet fuel. One number, moved one notch, in one week.

I get asked about fuel surcharges constantly and almost always for the wrong reason. People want to know which way fuel is going. I cannot tell them, and it would not help much if I could, because this is not a forecast. It is a published number for a specific week, built off a fuel price with a lag, and reset on a Monday. The only question that pays is the boring one. Does your quote cover the week your shipment actually moves, and does your customer's contract say what happens when it does not.

So let me walk it through in hours, because hours are where this lives. What moves when, where the cutoff makes it worse, and the one thing about how the percentage is worked out that almost nobody puts in the quote.

Start with the clock on the shipment itself, because the fuel surcharge is only ever felt at two points on the timeline and both of them have a closing time. The line runs quote, booking, cutoff, pickup, line haul, clearance, delivery. The surcharge bites at the top, where the number in the quote gets built, and again at the bottom, when the invoice lands and the customer compares it to what they expected. Everything in between is a panic if you got the first one wrong. Get the quote right and the invoice is boring. Get it wrong and you find out six hours before the cutoff, when the re-rate comes back, and by then you have already promised somebody a delivery window.

What makes this week different from last week is one and a quarter percentage points. 39.75 against 38.50. That does not sound like much, and on one small parcel it is not. On a pallet and a half of brackets it is a line the customer notices. Noticing is the problem, because a customer who notices a charge after the fact either wants it explained or wants it waived, and both of those conversations cost you time you did not budget for.

Here is how the number is actually made, and this is the bit I want you to take away. FedEx adjusts the fuel surcharge weekly, based on the published U.S. Gulf Coast spot price for a gallon of kerosene-type jet fuel, which is the 2.971 dollars behind this week. The changes are applied every Monday and show up on the invoice. And there is a two-week lag between the fuel price index and the surcharge. Read that again. The percentage you are quoting against on a Tuesday was locked off a fuel reading from a couple of Mondays back. It is not news. It is history with a price tag on it.

That lag does two things to your quoting day, and the first one is friendly. It means the number cannot surprise you if you look it up, because the published table tells you exactly what applies to the week your shipment moves. There is no reason to guess and no reason to carry last week's number forward. The only trick is remembering that the number follows the shipping week, not the hour the enquiry arrived. Price on Monday off the previous table and you are quoting 38.50 while the week is running at 39.75. On any volume at all that is not a rounding error, that is a leak.

The second thing the lag does is nastier, and it is the part nobody puts in the quote. Because the surcharge is set off a price from two weeks back, a headline about fuel falling this morning tells you nothing about the surcharge for the week your parcel actually leaves. Fuel can drop on Tuesday and the surcharge will not move until the reset two Mondays out. So when a customer asks you to hold a quote because they read that fuel is softening, the honest answer is that the softening has not reached the table yet and may not reach it before their goods need to move. You are not being difficult. You are reading the actual table instead of the mood.

Now the part that surprises almost everyone, including people who have been shipping for years. The fuel percentage is not applied to the freight rate alone. FedEx assesses it on the net freight charge plus a list of transportation-related surcharges, and that list is long. Accessible Dangerous Goods. Address Correction. Additional Handling by dimension, by weight, by packaging, by freight. Broker Routing Fee. Demand surcharges in four flavours. Dry Ice. Inaccessible Dangerous Goods. Non-Stackable. Residential Delivery. Saturday Delivery. Saturday Pickup. Signature. Out of Delivery Area. Out of Pickup Area. Oversize. Unauthorized Freight. Unauthorized Package. Every one of those, when it applies, sits inside the base that the fuel percentage multiplies.

Read that slowly, because the implication is not obvious. Two shipments with the same freight rate can carry completely different fuel lines, because one is a residential Saturday delivery with an additional-handling flag and the other is a clean dock-to-dock pallet. The one with the accessorials has a bigger base, and a bigger base at 39.75% is a bigger fuel charge. Those accessorials are not just an add-on. They are an add-on that carries the fuel percentage on top of itself. When a customer tells you their fuel charge looks wrong, nine times in ten this is why. They are measuring their accessorial-heavy parcel against a clean one, or against a quote that was built on the clean assumption.

There is an exception worth memorising too, because applying the wrong number is its own kind of mistake. This fuel surcharge applies to all FedEx services except FedEx International Express Freight and FedEx International Airport-to-Airport, which are assessed a different fuel surcharge. So if a lane in your book runs on either of those, do not carry 39.75% over to it. Check it separately. Getting that wrong on an invoice is exactly how a routine charge becomes an argument.

One more mechanical detail, and then I will get to the clock, because this one turns a tiny fuel move into real money. The surcharge table steps in bands of three cents on the Gulf Coast price, and each three-cent band is a quarter of a percentage point. This week's 39.75% covers a fuel price from 2.96 dollars up to just under 2.99. The reference is 2.971. Do the subtraction and the gap between where we are and the next step up, 40.00%, is a little under two cents a gallon. Two cents of jet fuel is the entire distance between this week's number and the next notch. I use that as a planning figure rather than a forecast. It tells me the surcharge is not drifting, it is stepping, and the steps are close together around this price level. It also tells me that a customer watching a two-cent move and expecting their express cost to sit still is expecting the wrong thing.

Back to the clock, and to the cutoff, which is where the money actually gets spent. The last two or three hours before cutoff are the most expensive hours in the day. I would rather have thirty clear hours earlier than ninety crowded minutes at the end, and I mean that literally. Put hours on the two-hour rule and it stops being abstract. If the fuel line moves and you learn it at 16:00 for an 18:00 cutoff, you have two hours and you have choices. Re-rate it and tell the customer, or move the pickup to the next window and keep the service level. If you learn it at 17:45, you have fifteen minutes and no choices. You will push the parcel to the later pickup anyway, or you will switch it to another service under a clock, or you will eat the difference, and eating the difference is fine once, twice, and then it is a line in the month that nobody can explain to the finance team.

The cutoff is not where the money gets lost. It is where you find out you lost it. Which is why the rule I run by is simple: if a shipment needs its service level or its channel changed, that call happens before the two-hour mark, not inside it. Inside the two-hour mark you are not deciding anything, you are picking between penalties. And the customer, who can see none of this, experiences all three of those options as you being disorganised, when what actually happened is that the fuel table stepped on a Monday and nobody looked.

This is where I would change one habit in most express operations, and it is a small habit with a large effect. Stop quoting express in days. Quote to the week the surcharge applies to. The carrier resets the fuel percentage every Monday. Your quote says valid for a week. A validity window that starts on a Thursday therefore runs past a Monday, so it covers either one surcharge number or two, depending on when the customer actually books. On some bookings the number in your quote is the number that lands. On others it is not, and not because the carrier did anything odd, but because the calendar crossed a reset. The fix is not clever. You put the surcharge week on the quote the same way you would put an expiry, so a customer booking on Friday against a number set for the week ending Sunday knows their parcel may price at the new week's figure.

That single change kills most of the argument, because nobody ends up comparing a Thursday quote to a Tuesday invoice without knowing why the two differ. It does something for you as well. It forces whoever builds the quote to actually look up the current week's table, which is where the 38.50 against 39.75 mistake gets caught, instead of whoever is fastest at the keyboard remembering last week's figure and typing it in.

Then there is the question that only shows up when something has already gone wrong, which is the worst possible time to discover nobody ever decided it. When a shipment misses its promise and a credit is due, what is the base the credit is calculated on. If your contract says a percentage of freight, is the fuel line inside freight or outside it. Because the fuel line is itself a percentage of freight, this is not a rounding question. A base that includes fuel and accessorials can be meaningfully bigger than one that does not, and the difference lands on whoever signed the clause.

I will flag this as your contract rather than the carrier's. The published carrier terms say it reserves the right to assess fuel and other surcharges, with the amount and duration at its discretion. That is the carrier's half. Your half is what you promise your customer, and if that promise is vague about whether fuel sits inside the settlement base, you will be negotiating it at the invoice, with the customer already annoyed about the late delivery. Write it down once, in one line, and you never have that conversation again.

The same term has a second consequence worth putting in your planning rather than in your complaints. If the amount and duration of the surcharge sit at the carrier's discretion, then a promise of a fixed all-in total for a window that crosses a Monday is a promise you cannot fully control. Make it without a clause and you have quietly written yourself a small option. The clause does not need to be clever. It needs to say that the fuel component follows the published table for the shipping week, and that the total moves if the table moves.

There is a wrinkle on inbound lanes that catches people who only read the headline percentage. The published terms say the percentage applies to Export, ImportOne and Global Third-Party shipments, and that for importers who are not registered for ImportOne, an export fuel surcharge based on the originating country or territory applies on inbound shipments. So an inbound lane can carry a different fuel number from the one you just pulled off the table, and quoting the headline figure on that lane is a quiet error that only shows up later, on an invoice, in front of a customer. Check the lane, not just the week.

Let me put numbers on all of this, and I will mark them as assumptions because that is what they are. Say a shipment's chargeable base for the fuel percentage is 1,500 dollars, net freight plus the accessorials that actually apply. At 39.75% the fuel line is 596.25 dollars. At last week's 38.50% it was 577.50. The step is 18.75 dollars on that one shipment. Now scale it. Assume 400 shipments a month on a book like that. 18.75 dollars across 400 shipments is 7,500 dollars a month, and every cent of it came from one notch, one Monday, one and a quarter percentage points. Nobody budgets 7,500 dollars a month for a number that moves a quarter of a point at a time, because nobody sees it as a step. They see it as noise.

Then do the comparison that makes it sting. Assume a service-guarantee credit on a shipment like that comes out at the freight base, 1,500 dollars. Divide 1,500 by 18.75 and you get 80. Eighty shipments of fuel step is one full credit. So for every eighty parcels on that book, this week's move alone has already paid for one service failure. If your miss rate is anywhere near one in eighty, the fuel step and your service credits are costing you roughly the same money, and there is no version of that where you are happy about where the cash went.

One more cut on the same numbers, because this is the one that changes behaviour. Take a shipment where the base is 1,500 dollars, including 300 dollars of accessorials. Priced purely on freight the base would be 1,200, and the 1.25-point step would cost 15 dollars. Priced on the real base it costs 18.75. The extra 3.75 is the fuel percentage riding on the accessorials. Across 400 shipments that is 1,500 dollars a month that has nothing to do with the parcels moving differently and everything to do with what is inside the base. That is the number I take into a rate review the next time somebody asks why fuel looks high.

Where would I be wrong. If fuel falls off a cliff next week, one of my rules gets uncomfortable, because a quote pinned to this week's surcharge week would have been cheaper next week. But note the lag again. A fall in fuel takes two weeks to reach the table, so the drop you are anticipating is not the drop that applies, and the reset that would help you has not happened yet. Looking up the week is still safer than betting on the direction. Betting on the direction is where people lose money, and the loss is invisible because it shows up as a quote that was slightly high and got undercut.

The other place I would be wrong is a customer whose whole book runs on negotiated all-in rates with fuel already baked in. Nothing here touches them at the line-item level. It touches them at the renewal, when the number gets repriced to reflect where the table has been sitting, and a book that was built when the table was at 38.50 looks different once it has been parked at 39.75 for a stretch. Same exposure, arriving slower, and much harder to point at when it arrives, which is exactly why the per-shipment accounts feel it first.

One habit costs nothing and saves the most: say the number before the customer finds it. If you know a shipment straddles a Monday, put it in the same message as the quote. This week is 39.75, the table resets Monday, here is what your window means for the price. A customer who heard it from you at quoting time does not become a dispute at invoicing time. A customer who finds it on the invoice and has to ring you to ask what it is has already spent some trust, and you cannot buy that back with an explanation, however correct it is. I would take ninety seconds at the quote over ninety minutes at the invoice, and I have spent both, and the ninety seconds is cheaper every single time.

For the accounts moving real volume, the surcharge is a renewal conversation rather than a per-shipment one. If you are moving a few hundred parcels a month, a quarter point here and there is a line you can actually see, and the time to raise it is when you are discussing the rate, not when you are arguing about one invoice. Take the accessorial audit with you. If a meaningful share of your parcels carry additional handling or a residential flag, the fuel percentage is already sitting on a bigger base than the headline rate implies, and that is a fact you can put in front of a customer in one paragraph. It is also the shortest route to a small adjustment that sticks, because it is arithmetic rather than opinion.

So here is what I would do before the next cutoff, in hours rather than in intentions. Pull this week's published table and check the week your shipments actually move, because the 20 to 26 July week is 39.75 against a 2.971 dollar reference and last week was 38.50. Put the surcharge week on every quote instead of a day count, so nobody is comparing a Thursday number to a Tuesday invoice. Move any service or channel change to before the two-hour mark. And if you have never written down whether fuel sits inside the base for a service credit, write that line today, because it costs nothing now and a great deal later. The parcel is the thing I care about getting back on the road, but the fuel line is what decides whether the customer rings you next month. 39.75 this week. Check again Monday.

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— By Nadia Pryce