OIL PRICES ARE UP — HOW CAN I OFFSET MY SHIPPING FUEL SURCHARGES?
Chances are, you winced a bit the last time you filled your car up with gas. Fuel prices have risen sharply this year and, unfortunately, there’s no telling how long these elevated costs are going to be with us.
Just like the rest of us, carriers are feeling the sting of rising fuel costs. Shipping companies have to purchase fuel like everyone else and are being forced to pass along these increased operating costs to their customers in the form of fuel surcharges.
But what has caused the increase in the cost of fuel? More importantly, what can you do to keep shipping costs low offset rising fuel surcharges and preserve your bottom line?
Why are fuel surcharges higher right now?
The cost of fuel rises and falls with the cost of crude oil, which is refined into the various types of fuels used by different equipment. When crude oil is more expensive, like it is currently, fuel costs (and the surcharges carriers have to pass along to customers) go up.
Why are crude oil prices higher? Chalk it up to a combination of factors, including inflation levels that haven’t been seen in decades and ongoing global conflict that can threaten oil supplies, slow transit, and generally cause fear and uncertainty.
When carriers are forced to pay higher prices for fuel, these increases are felt by customers through fuel surcharges for both parcel and freight shipping. The surcharge rate is updated weekly by carriers as fuel prices fluctuate. Unfortunately, there is no way to avoid paying a surcharge when fuel prices are elevated.
What can I do to offset high small package and freight fuel surcharges?
Your shipping partners at Worldwide Express (WWEX) are always behind you, and we want to help you manage and predict your overall costs as much as possible.
- Add in a buffer. If your business tends to get quotes weeks or months in advance, it’s a good idea to take the current volatility into account and build a pricing buffer into your budget, as prices may change in the intervening time.
- Share shipping costs with your customers. You can offset freight or parcel fuel surcharge rates by including the extra cost in your shipping rates for your customers. Just make sure you’re clear about shipping at checkout so your customers aren’t surprised by any additional costs.
- Be open-minded about carrier options. It might make sense to broaden your options beyond your usual carrier(s) in order to find the most direct, cost-effective routes possible. For example, you could consider a regional freight carrier instead of a national one.
- Consider alternative transportation modes. If you have any flexibility in your timeline, it could make sense to look at rail or ground modes, which are less expensive than air transportation. If you ship larger items or higher quantities, it might pay to consider volume shipments or full-truckload shipping (FTL).
- Consolidate your orders. If you ship to certain customers on a regular basis, you may be able to shave some shipping costs by sending multiple packages or pallets in the same shipment versus spreading them out over time.
- Refine your processes. It’s a great time to take a look at your shipping processes and eliminate any redundancies or excess steps. If you use distribution centers, consider setting them up closer to the destinations you ship to most regularly.
- Be clear in your bill of lading (BOL). If you mostly ship less-than-truckload (LTL), make sure you’re being upfront with any accessorials you may need, such as a liftgate, delivery to a residential address, limited-access area, etc. Any surprises on the carrier’s end in this area will lead to higher, less-predictable costs.
- Be accurate all around. Take a few extra seconds to ensure that you’re accurately stating the weight, dimensions, class, etc. of your shipment. As with accessorials, any surprises here can cost you in your final invoice.
Keep the pros in your corner to manage your shipping costs
As you’ve seen, controlling what you can control is the key to offsetting the current fuel surcharge surge as much as possible. One thing you can definitely control is your choice of third-party logistics (3PL) partner. By working with a 3PL like WWEX, you can gain tips, tricks, and strategies to keep your shipping prices reasonable, even when external factors are out of your control.
Education, consultation, and options: they’re all baked into a partnership with Worldwide Express. Schedule your complimentary, custom shipping consultation with our team today!