On September 25, 2009
Why Lower Energy Prices Hurt FedEx
U.S. domestic package revenue fell 22 percent at FedEx in its first-quarter 2010, hurt by a 23 percent drop in revenue per package due to lower fuel surcharges-even though package volume was essentially flat. Is the corollary to this outcome, therefore that rising energy prices will help drive performance at the package-delivery giant? FedEx has an indexed fuel surcharge for U.S. domestic and U.S. outbound shipments, with different trigger points for the type of service used by the customer: The fuel surcharge percentage for FedEx Express services is subject to monthly adjustment based on a rounded average of the U.S. Gulf Coast (USGC) spot price for a gallon of kerosene-type jet fuel; the fuel surcharge percentage for FedEx Ground…
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