FedEx Freight cuts fuel surcharge
Will other LTL carriers follow?
By Dave Hannon -- Purchasing, 7/23/2007 2:27:00 PM
Less-than-truckload carrier FedEx Freight has cut its fuel standard LTL fuel surcharge by 25% effective immediately.
In a company statement, Douglas G. Duncan, president and CEO of FedEx Freight said, “By significantly reducing our fuel surcharges, we offer immediate and long-term assistance to shippers who are facing both a challenging economy and volatile fuel prices.”
The company’s FedEx National longhaul LTL division will reduce its surcharges to levels commensurate with FedEx Freight’s.
According to the company’s web site, on July 18, the fuel surcharge stood at 19.7% based on average diesel prices of $2.89. That surcharge would drop to 14.8% under the new structures. By comparison, most other LTL carriers’ fuel surcharges are also at 19.7% this week. (see listing below)
Market watchers say the move is a direct result of declining demand for LTL services and increasing competition among a consolidating carrier base. In a note today, Bear Stearns analysts said: “Our LTL thesis for the past year has been that the competitive dynamic has been heating up. We view FedEx’s action as the most overt sign of price competition in the LTL market since the mid 1990s. FedEx, as the largest regional provider and a industry leader in service levels and innovation, will without a doubt pressure the other providers. We suspect others will follow.”
Reuters is reporting that UPS' CFO has said UPS' freight division will review its fuel surcharge policy in light of FedEx's move.
Other LTL carriers’ fuel surcharges (click the link for more info)
Con-way Freight 19.7%
UPS 19.7%
ABF 19.7%
Yellow Freight 19.7%
Roadway Express 19.7%
Saia 19.7%
Estes Express 19%
Old Dominion 19%
FedEx Freight raises rates 5.59%
03/18/2007FedEx Cuts Surcharge
08/15/2007
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