Air express surcharges show mixed January trend after December drop

Fuel surcharges for international air express shipments have showed a mixed trend in Januarywith falls in some markets in compensation for rates increases but several increases in other

This mixed development follows a downward trend in surcharge levels in December as the result offalling oil prices over the last few months after an increase that started in late June 2012 andcontinued through July and August into September.

In Europe, both UPS and FedEx reduced their surcharges. The UPS surcharge fell to 15.5% thismonth from 17% last month while FedEx reduced its surcharge slightly from 17.5% in December 2012 to17% in January. DHL maintained its January surcharge at the December level with 17%. TNT reducedits surcharge level in Europe from 20.5% in December to 20% in January but its UK surcharge roseconsiderably to 19.5% from 14% in December.

In the USA, surcharges fell across the board. FedEx and DHL both put down their surcharges to10% from 13.5% in December while UPS reduced its surcharge to 11% in January from 13.5% lastmonth.

However, these falls were largely a result of the three companies’ respective rates increasesfor US-based customers. UPS hiked domestic air and international rates by 6.5% as of December 31,2012, but reduced the surcharge level by two percentage points, resulting in a net increase of4.5%. Similarly, FedEx raised US rates by 5.9% on January 7, 2013, but also reduced surcharges bytwo points, leaving a net rise of 3.9%. DHL followed suit with identical changes to FedEx, but asof January 2, 2013.

In Asia Pacific, DHL reduced its surcharge from 24% in December last year to 22.5% this month.The UPS surcharge dropped quite heavily to 17.5% from 21% last month. FedEx, on contrary, increasedits Asia-Pacific surcharge to 18.5% in January from 17.5% while TNT Express’s surcharge for AsiaPacific, Middle East and Africa remained at the December level with 20%.

The air express fuel surcharges for January reflect the oil price level two months ago. The fourintegrators calculate their surcharges based on indices showing the previous month’s oil pricelevel and announce them in advance for the following month. This results in a two-month time lagbetween the fuel price and surcharge change.

Brent crude oil futures in London stood at $108.86 a barrel this morning while WTI crude oil onthe New York Mercantile Exchange traded at $93.44. Oil prices experienced some ups and downs overthe last month following a similar mixed trend in the last few months of 2012.