Calls for fuel surcharges to be axed as the price of oil drops
Consumers' Association of Canada says courier companies should not longer charge the rate
The head of the Consumers' Association of Canada says the dramatic decline in the price of oil should mean an end to fuel surcharges, and he calls it hypocritical that courier companies are still levying the rate.
"When they started putting these [surcharges] on, the price of a wholesale barrel of oil was approaching $140," said Bruce Cran, president of the nonprofit consumer advocacy group. "Now it's under $30 and yet the surcharges remain. There's something completely wrong with this picture."
Cran said no level of government "seems to give a damn about the poor consumer on the other end of this."
Parts for Trucks, an Atlantic Canadian heavy truck and trailer parts distributor, knows first hand the pinch of fuel surcharges. Freight administrator Alleesha Borden said they are a "significant expense" the company must incorporate into its prices.
"It's a price that changes all the time that we can't predict, so it affects our prices," she told CBC News.
Surcharges are going down
CBC News contacted several companies that apply fuel surcharges to ask why they're still in place.
A spokeswoman for Purolator said the company sets its rate monthly, based on the four-week average price of diesel. That's calculated by Purolator using the weekly average diesel prices reported by Natural Resources Canada.
"Purolator's fuel surcharge reflects the most current cost to serve [our customers] amid market fluctuations," Karen White-Boswell said in an email.
Purolator's website shows the fuel surcharge has dropped in recent months. From Dec. 7, 2015, to Jan. 3, 2016, the rate was 8 per cent of the price of sending a package. By next month that will be down to 6.5 per cent.
Smoothes out prices
UPS said its fuel surcharge is not solely based on the price at the pump.
"It is very important to understand that we are talking about the total cost of fuel," said Nikkol Zezza, manager of public relations for UPS Canada.
She said UPS applies the surcharge to recover the total cost of fuel, and adjusts it periodically so the revenue and actual total fuel expense "remain relatively aligned."
Like Purolator, UPS adjusts its surcharge monthly, and it too is dropping.
The UPS website shows the ground surcharge for Dec. 7, 2015, to January 31, 2016, at 5.25 per cent. It will be reduced to five per cent for the period Feb. 1 to March 6.
Canada Post told CBC News its surcharge is calculated on a four-week averaging period, which "smoothes out temporary and exceptional prices, minimizing their impact on customers," according to spokeswoman Anick Losier.
Losier said the company's fuel surcharges have decreased since November.
FedEx's website shows its ground fuel surcharge is dropping from four per cent to 3.75 per cent, effective Feb. 1.
Hard to let go
While fuel surcharges are going down, Cran from the consumers association isn't satisfied.
"This particular charge, this group of charges, go right through the whole economy so we're all paying for something that doesn't exist, that being a necessity for a fuel surcharge," he said.
"We're all being treated with contempt. There's no excuse for these surcharges, they shouldn't be there."
Ed McHugh, who teaches business and marketing at the Nova Scotia Community College, said it's hard for businesses to let go of the surcharge.
"In business, you're always looking for various ways to make revenue into profit, so when that becomes part of how you do business it's pretty hard to take it out, despite the price of the raw material coming into your business going down," he said.