Amazon Imposes Fuel Surcharge on Sellers as War-Driven Costs Mount


Amazon sellers that use some of the e-commerce giant’s fulfillment services will now have to pay a 3.5 percent fuel and logistics surcharge starting later this month, as the company endures rising oil costs stemming from the war in Iran.

Users of the tech titan’s Fulfillment by Amazon (FBA) service in the U.S. and Canada, as well as U.S. sellers involved in the Remote Fulfillment with FBA program, will begin paying the extra charge on April 17.

Starting May 2, the surcharge will take effect for brands that use Amazon’s Buy with Prime and Multi-Channel Fulfillment (MCF) programs.

The decision trails that of the U.S. Postal Service (USPS), which tacked on its first-ever fuel surcharge in late March to handle the rising transportation costs. Amazon touted that its fee is “meaningfully lower” than other major carriers, like the USPS’ 8 percent surcharge.

“Elevated costs in fuel and logistics have increased the cost of operating across the industry. We have absorbed these increased costs so far,” a company representative said in the online post. “However, similar to other major carriers, when costs remain elevated, we implement temporary surcharges on our fulfillment fees to recover a portion of the actual cost increases we are experiencing.”

Another Amazon representative said the surcharge will be in place “until further notice,” and that the company will reassess as conditions evolve.

The surcharge will be calculated on the sellers’ fulfillment fees, not on an items’ sale price.

On average, the new surcharge equates to 17 cents per unit for U.S. FBA, though this will vary based on the item’s size and dimensions.

FMC set to vote on Maersk’s call to waive 30-day notice for fuel surcharges

Amazon’s announcement followed fellow logistics giant Maersk’s second plea to the Federal Maritime Commission (FMC) to allow the carrier to impose immediate emergency bunker fuel surcharges on U.S. trade lanes amid the crisis.

The container shipping company and some of its competitors contend that the 30-day notice period required before carriers can implement these surcharges should be scrapped.

The FMC is expected to vote soon on Maersk’s request, which was filed March 11.

Maersk’s surcharges for non-U.S. trade lanes went into effect on March 25, nearly a full month after the U.S-Israeli offensive in Iran began. These charges are set to go into effect April 8 for U.S. routes, but Maersk had requested special permission for these fees to also align with the non-U.S. date.

“Maersk cannot absorb the full impact of this dramatic increase,” said company counsel Cozen O’Connor in a March 11 filing. “Moreover, bunker fuel prices are likely to remain elevated and volatile given the uncertainty of the duration of hostilities and their impact on the price of oil and bunker fuel.”

On March 23, the FMC’s four commissioners unanimously voted to reject separate requests from earlier in the month from Maersk, CMA CGM, Hapag-Lloyd and ZIM to waive the 30-day notice for certain surcharges.

FMC chairman Laura DiBella stressed at the time that the companies did not provide data that linked the higher fuel costs and the projected surcharges, and identify the steps to mitigate the cost increases—thus deeming them “insufficient in demonstrating good cause.”

Maersk’s second attempt to sway the commission shared more concrete data from shipandbunker.com, noting that the price for very low sulfur fuel oil was $509 per metric ton on Feb. 6. By March 9, that number increased 82.5 percent to $929 per metric ton.

Container lines have dealt with higher operating costs amid the mass avoidance of the Strait of Hormuz and the ensuing escalation in oil prices. Hapag-Lloyd estimates that it has had $40 million to $50 million in extra costs since the start of the Middle Eastern conflict due to the rising fuel prices, and increased expenses related to insurance, container storage and inland transportation.

In the nearly five weeks since the war in Iran began, ocean spot freight rates have increased more than 20 percent across major trade lanes to $2,287 per 40-ft container, according to Drewry’s World Container Index.

Appeals court upholds FMC authority to scrutinize export rates under OSRA22

As carriers navigate the new wartime environment, they are still dealing with fallout from the Covid-19 era, when shippers began accusing them of intentionally refusing their service.

On Tuesday, a Washington D.C. appeals court denied a challenge to the Ocean Shipping Reform Act of 2022 (OSRA22) that had claimed a final ruling established in July 2024 by the FMC overstepped the boundaries of how the commission can carry out the legislation.

In a September petition, the World Shipping Council (WSC) took issue with the section that determined that the FMC could review export freight rates on the grounds that Congress ended the commission’s regulatory oversight over freight rates in 1984.

The FMC contended that it only examined rates as one factor in whether a carrier is refusing to deal with a shipper.

The appellate court ruled that even if the FMC no longer regulates ocean freight rates, it can still review prices if they seem to dissuade a shipper from booking space to export a container.

According to the ruling, removing the FMC’s authority to review export rates “would permit any ocean carrier to refuse to deal or to negotiate with impunity, simply by quoting an unrealistically high rate.”



Source link

  • Related Posts

    WeWearAustralian Expands Into Physical Retail With SoHo Store

    SYDNEY — WeWearAustralian is putting down roots Stateside.  Cofounded in early 2020 by West Australian entrepreneurs Richard Poulson and Kelly Atkinson as an industry solidarity initiative to help Australian fashion…

    All of Meryl Streep’s Devil Wears Prada 2 Press Tour Outfits

    I haven’t stopped quoting The Devil Wears Prada in the 20 years since it debuted, so I’m obviously excited to see the highly anticipated sequel on May 1. As much…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Federal government sues three states over their regulation of prediction markets

    Federal government sues three states over their regulation of prediction markets

    Apple at 50 quiz: top sellers, turkeys and turtlenecks | Apple

    Apple at 50 quiz: top sellers, turkeys and turtlenecks | Apple

    Oh, to be a kid again! – Writing from the Heart with Brian

    Oh, to be a kid again! – Writing from the Heart with Brian

    Judge dismisses many of the claims in Blake Lively’s lawsuit

    Judge dismisses many of the claims in Blake Lively’s lawsuit

    Iranians hold a nature festival in the shadow of war.

    B.C. property tax expert warns seniors about changes to deferral program

    B.C. property tax expert warns seniors about changes to deferral program