Just in time for Christmas — new fuel surcharges
Most major shippers boost fuel levies
A $10 package can cost $11.55 by air
If you're sending a gift package across town or across the country this Christmas, be prepared to shell out a lot more in fuel surcharges to cover the rising cost of truck transportation or air freight.
Most major shippers, including Canada Post, Federal Express and United Parcel Service, add a fuel surcharge to the basic cost of delivery whether the package is going regular post or express service. And with gas prices soaring in the wake of Hurricanes Katrina and Rita, the surcharge is making a noticeable difference this fall.
"We've had a lot of calls from customers about it, just because it's so much higher this year," said Karen Cooper, a spokeswoman for Federal Express Canada.
The parcel-delivery business isn't the only industry passing on higher fuel costs to customers, but, like the airlines, is one of the few that spells out the impact on the customer's receipt in the form of a separate line item. Other industries hide the impact in the overall price of their goods and services or, for competitive reasons, have to absorb the cost internally without passing it on.
The rates are based on the price of gas at the pumps or the spot price of jet fuel and are updated monthly to reflect changes in the marketplace. As a result, rates have been rising rapidly in recent months.
At Federal Express, the surcharge for air deliveries is now 15.5 per cent, up from 13 per cent a month ago and 10.5 per cent in July; for ground transportation, 3.5 per cent, up from 3 per cent a month earlier and 2.5 per cent in July.
That means a package that costs $10 to ship based on weight and size now costs an extra $1.55 by air or 35 cents by truck to cover the fuel surcharge.
United Parcel Service follows a similar formula, though the air surcharge is currently capped at 12.5 per cent. The surcharge for ground transportation is 3.5 per cent, according to the company's website.
Canada Post uses one surcharge whether the package is going by air or ground transportation. In either case, it's currently 7.5 per cent, up from 6.75 per cent a month earlier and 5.25 per cent in July.
The charges are based on gas prices at the pumps nearly two months earlier, which means the impact of the hurricanes in the oil-rich U.S. Gulf of Mexico region are just starting to have an impact on parcel delivery.
Canada Post spokesman John Caines said most customers take the surcharge in stride.
"It's nothing new. We've had them since April 2003."
When gas prices slip, the surcharge goes back down, he added. The pump price is based on the national average reported by M.J. Ervine & Associates, an independent monitor, he said.
No surcharge is placed on basic letter mail, Caines added. You could argue that the price of a stamp is indirectly influenced by the cost of fuel, but, by law, any increase in the price of stamps must not exceed two-thirds of the rate of inflation, he explained.
Inflation is a measure of the cost of a basket of goods and services, which of course includes the cost of gas.
The cost of a Canadian stamp is scheduled to rise a penny to 51 cents next January, Caines said.