The Effect of Fuel Prices on Shipping Costs

The fluctuating price of gasoline may affect your company’s bottom line more than you’ve considered. While business owners frequently lament the effect of gasoline prices on the disposable income of consumers, they often overlook the impact it has on their company’s own logistics. Rising gasoline costs can increase costs at every point on the supply chain and lead to increased raw material prices and lower profit margins.

The recent dramatic decreases in gas prices throughout the U.S., however, may bring some relief to many companies. Many large shipping carriers such as UPS and FedEx include a fuel surcharge on all invoices based on the current average price of on-highway diesel fuel. UPS, for example, charges an 8.5% fuel surcharge when the average gas price is between $4.37 and $4.59 but only a 5.5% when the average fuel price is between $3.05 and $3.27. These declining surcharges have made shipments significantly less expensive and will help businesses offset the increased shipping rates set to take effect in 2015.

Contact us for more information about the effect of fuel prices on shipping costs.

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