FedEx Express indexing fuel charges to market price on jet fuel

by Canadian Shipper

FedEx Corp. has announced that its subsidiary Federal Express Corp. will lower its current four percent fuel surcharge to three percent beginning Nov. 5, 2001, based on a new index for calculating fuel surcharges on U.S. domestic and U.S. outbound shipments.

The surcharge will be subject to adjustment monthly using a rounded average of the U.S. Gulf Coast spot price for a gallon of kerosene-type jet fuel, as published monthly by the U.S. Department of Energy.

This method more closely links the surcharge to market prices for jet fuel. For example, the surcharge for November 2001 will be based on USGC spot price for jet fuel published for September 2001.

Changes to the FedEx Express fuel surcharge, when calculated according to the USGC index and FedEx trigger points, will be applied effective from the first Monday of the month. These trigger points may change from time to time, but information on the fuel surcharge for each month will be from FedEx two weeks before the surcharge is applicable.

“This approach will provide FedEx Express customers a convenient way to adjust to fluctuations in fuel prices. FedEx is the first company in the express shipping industry to implement an indexed fuel surcharge which should allow FedEx Express and its customers to respond more quickly to changes in fuel prices in the marketplace,” said T. Michael Glenn, President and CEO of FedEx Services.

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