How Prices at the Pump Impact Logistics


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With the drastic drop in pricing for oil and oil-delivered products, many of our clients and GPO partners are inquiring how this will affect the pricing of freight management services.

While this is top of mind now, TRIOSE and our partners actually monitor and adjust for fluctuations in fuel costs all year long to ensure clients receive fair pricing. In fact, UPS®, as well as other carriers, automatically adjust fuel surcharges each month according to prices reported by the U.S. Energy Information Administration (EIA). Below is a description from UPS on how fuel surcharges are calculated, as well as a chart graphing the month-by-month changes.

 

Ground Fuel Surcharge
UPS uses an index-based surcharge that is adjusted monthly. Changes to the surcharge will be effective the first Monday of each month, and posted approximately two weeks prior to the effective date. The surcharge will be based on the National U.S. Average On Highway Diesel Fuel Price as reported by the U.S. EIA for the month that is two months prior to the adjustment, rounded to the nearest cent. For example, the surcharge for May is based on the March U.S. Average On Highway Diesel Fuel Price.

Air and International Fuel Surcharge
UPS uses an index-based surcharge that is adjusted monthly. Changes to the surcharge will be effective the first Monday of each month, and posted approximately two weeks prior to the effective date. The surcharge will be based on the U.S. Gulf Coast (USGC) prices for kerosene-type jet fuel as reported by the U.S. EIA for the month that is two months prior to the adjustment, rounded to the nearest cent. For example, the surcharge for May is based on the March U.S. Gulf Coast (USGC) Jet Fuel Price.  

Currently as of May 4, 2015, the Ground Fuel Surcharge is at 5.50% and the Air and International Fuel Surcharge is at 4.25%.

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What Does This All Mean?
This means lower fuel costs are already factored into the invoices that we send our clients – and that our clients have received an immediate benefit from the recent reduction of oil prices.

Ensuring our clients receive the fuel savings they justly deserve is one of the many ways we deliver on our primary goal to meet all of our clients’ supply chain requirements and manage all of the detail components at the lowest possible cost. We know these cost reductions can make a significant impact on our clients’ businesses and we are committed to continue implementing solutions that enable them to realize cost efficiencies while improving patient care.

For more information on UPS fuel surcharges, visit http://www.ups.com/bridge/fuelsurcharge.html