Customers frustrated as Canada Post's fuel surcharge hits 31 per cent

·3 min read
A Canada Post parcel delivery vehicle parks on Wellington Street and Parliament Hill in Ottawa, Thursday, May 5, 2022. (Sean Kilpatrick/The Canadian Press - image credit)
A Canada Post parcel delivery vehicle parks on Wellington Street and Parliament Hill in Ottawa, Thursday, May 5, 2022. (Sean Kilpatrick/The Canadian Press - image credit)

Carl Markwart sent a small parcel from Surrey to Vancouver Island last weekend. When he later sat down to look at the receipt, he was surprised to see an additional $4 fee attached.

"I saw the fuel surcharge there of $4.07 on a $13.12 parcel, a total of $18.05," he told CBC News.

"That's a 31 per cent fuel surcharge. I was shocked to see how high it was ... it's just another example of companies taking more money out of individuals' pockets."

Submitted by Carl Markwart.
Submitted by Carl Markwart.

With spiking global fuel prices spurred by the ongoing Russian invasion of Ukraine, more and more companies have taken to introducing fuel surcharges as a way to combat rising operational costs, including Uber, which has added $0.50 per trip, and B.C. Ferries, which has added a one per cent additional charge.

In the case of Canada Post, its fuel surcharges are far higher, climbing to 31 per cent for domestic services as of May 2, leading customers like Markwart questioning why there's such a discrepancy.

"I just find it hard to swallow," he said.

It turns out the answer dates back to a previous global conflict that also drove up the price of fuel more than 30 years ago.

Andy Clark/Reuters
Andy Clark/Reuters

Industry standard

In 1990, oil prices soared following the Iraqi invasion of Kuwait that led to the eventual American-led military intervention dubbed the Gulf War. Iraq and Kuwait are among the world's major oil-producing countries.

The war produced volatile energy markets that became costly for shipping companies and freight carriers that typically operated under a flat rate.

The answer was to introduce fuel surcharges that fluctuate with the price of fuel, said Dan Duckering, the president of Fuelwise, an Alberta-based fuel surcharge service

"It was right around that time in 1990 when the idea of a fuel surcharge that would work for the benefit of both carriers and shippers was introduced and widely accepted across the industry, and it would move up and down with that volatility, and ensured carriers didn't have to increase their base rates to protect themselves from a cost increase that was likely to come back down," he said.

Ben Nelms/CBC
Ben Nelms/CBC

Peak highs

In a statement, Canada Post said it's been operating with a fuel surcharge for 20 years. It adjusts its surcharges monthly based on the price of diesel. Its rates are similar to other carriers, including FedEx (39.5 per cent for domestic shipping) and UPS (34 per cent).

Duckering says the presence of the surcharge has simply become a lot more noticeable now as gas prices have reached costly highs.

"Businesses need to cover their costs, and unfortunately these are cost realities," he said. "When these prices normalize, you're going to see those costs come down immediately."

"But the consumer, they're paying the ultimate price," he added.

That's why experts say it's more important than ever to exercise your power as a buyer to limit the toll of increased costs.

"At the end of the day, it's us as consumers who decide what we buy, and what we do not buy, and we have to economize and find substitutes," said Werner Antweiler, a professor at UBC's Sauder School of Business.

"As prices are going up, we really have to shop around and look at all of the available options."

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