Surcharges or overcharges?

Update 2: Air Canada is feeling defensive about surcharges. The thing that doesn't ring true to me is that because the airline is hedging fuel prices (and their hedge price is now higher than market price) they want to maintain a higher fuel surcharge. So, I guess when their hedge price is lower than the market, they won't increase the surcharge and cite the rising market price as justification. Right

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This week's Economist has a report on the falling price of oil. Oil has declined from a high of just over $75 in the summer to just over $55 this week. Call it a 25% decline in 6 months. This might be a good time to have a hard look at any fuel surcharges built into your supplier contracts. You'll find suppliers of parcel and overnight express, travel providers, 3PL (third party logistics) often have contractual rights to add fuel surcharges to your negotiated prices. Less obvious will be suppliers of other goods that add fuel surcharges to their freight/delivery charges, depending on how those are negotiated. Having had a look in recent weeks at some corporate invoices, those surcharges don't seem to be declining as quickly as they rose.

Cheers,

David Rotor



Update 1: It seems that Michael O'Leary, CEO of Ireland's Ryanair agrees with me. Quoted today saying. "There is a fuel surcharge scam going on all over Europe. These aren't discretionary, you can't avoid them. They all said they would review them as oil prices fall. We said it would be a cold day in hell by the time they'd be reducing these fuel surcharges. We've been proven correct."