The recent plunge in gasoline prices has brought big savings for shipping companies that use a lot of fuel.
Then why are they still charging their customers a fuel surcharge? (Tweet This)
This week, this CNBC.com reader is wondering why he still has to pay UPS a little extra to fuel up their trucks and planes—now that the price of diesel and jet fuel has fallen by roughly a third from last year's peak.
I just a paid a fuel surcharge to ship a package UPS to my son in Los Angeles. I guess I could live with it when gas was over $4.00 a gallon, but how can companies justify retaining it when gas is $2.50?
- Peter B., White Plains, NY
Hang in there, Peter. Next time you have to ship your son a package, you'll likely see that surcharge drop a bit. But you won't see it go away.
Shippers like UPS and FedEx began including such surcharges years ago to cope with the volatile price of one of their biggest single costs. By itemizing the cost of fuel, they can keep their "base" rate relatively stable. That base rate typically changes only once a year, according to UPS spokesman Andy McGowan.
Got a question about business or personal finance?
Send it along to Explains@cnbc.com
Every week, the world of business and finance brings news that seems designed to confuse most of us. So CNBC Explains wants to hear from you. Each week, we'll answer as many of your questions as we can. (Like most readers, we'd also like to know your first name and where you're from. We may also edit your questions for space.) Any question is fair game.
But the fuel surcharge changes every month. And there's a two-month lag between changes in the price of fuel and the surcharge you pay—so this month's surcharge reflects the price of fuel in February. If fuel prices keep falling this month, you'll see those savings in June.
The good news is that fuel surcharges have been falling, according to BirdDog Solutions, an Atlanta-based shipping consultant. According to their data, surcharges dropped sharply this year as lower fuel prices worked their way through the system.