Airborne Express said it is increasing its fuel surcharge for both air and ground shipments because the rising price of oil has affected the price of jet fuel, gasoline and diesel fuel.
Seattle-based Airborne said it will increase its fuel surcharge for air shipments from 2.9% to 3.5% effective October 7 for all domestic, Canadian, and international cargo. Airborne also plans to increase its ground delivery fuel surcharge from 1.0% to 1.2% on the same date.
"Our cost of fuel, especially jet fuel, has increased significantly in recent months," said chairman & CEO Carl Donaway. "We will continue to monitor fuel trends carefully, and make additional changes to the fuel surcharge as warranted."
The cost pressure posed by rising fuel prices comes during a tight patch for Airborne. A $2.3 million restructuring charge wiped out much of Airborne's profits in the second quarter, cutting its net earnings to $457,000 on revenues of $810 million. That compares to a net loss of $6.4 million on revenues of $812 million in the same period last year.
However, for the first half of 2002, Airborne's net income rose to $5.7 million compared to a net loss of $23.4 million in the first half of 2001.
Donaway noted that Airborne's year-old ground delivery service has been critical to sustaining the company's profit margins this year. Although ground shipments generate lower yields than air shipments, rising ground volume has helped offset a decline in air cargo volume in 2002, he said.
Ground shipments represent more than 10% of Airborne's total domestic shipments this year, compared to just 1% in 2001, Donaway said.