Canada Post fuel surcharge rates increase ahead of the holidays

The cost of sending a parcel by Canada Post during this gift giving season is increasing.

Rising fuel prices mean higher surcharge rates on package and package shipping charges in the run-up to Christmas.

This week, customers will pay an additional 39.5% surcharge to send a domestic package. Last week it was 39% and the previous week 38%.

Canada Post has considered fuel surcharges for nearly 20 years to be “standard industry practice,” due to fluctuating fuel prices and their changing impact on operating costs, the spokesperson said. Canada Post, Phil Rogers, at the Star.

He said the surcharge adjustments are based on the average price of diesel in Canada.

“We apply a fuel surcharge to all parcel services, in addition to the base parcel shipping rate,” Rogers said. “We are directly affected by fuel price fluctuations and strive to ensure that the surcharge reflects current fuel prices and market dynamics.”

A message on the website states that Canada Post “adjusts fuel surcharges weekly, up or down, as fuel prices change. Changes are applied on the first Monday of each week and are reflected on your invoice. »

Weekly updates of new supplements will be posted on the site a few days in advance.

Canada Post says domestic surcharges are based on the average price of diesel as measured by Kalibrate Technologies Ltd., a company that monitors fuel prices in the country.

Domestic services include Priority, Xpresspost, Expedited Parcel and Regular Parcel. The surcharge also applies to packages sent to the United States and worldwide.

For domestic packages, if the price of a liter of diesel is between $1.51 and $1.53, the surcharge will be 20%. If diesel costs between $2.51 and $2.53, the surcharge will reach 45%, Canada Post said.

For US and international shipments, the surcharges are lower, at 11.25% and 23.75%, respectively. Canada Post did not respond to a request for information on why the surcharge is lower for international shipments.

That’s why Genevieve Smith, founder and owner of Gifts of Thrift, a small online retailer of nomadic and vintage fabrics, had to turn more to selling in pop-ups.

Rising shipping costs “was a major factor in my abandoning online sales, which is hurting my bottom line,” she said. “Fuel surcharges prevent us from offering competitive rates to potential customers: as small businesses, we cannot guarantee flat rate shipping as large retailers often can.”

Shippers or retailers are likely to be hit harder by fuel surcharges than individual consumers, who can qualify for free shipping if they buy enough online, said David Macdonald, senior economist at the Canadian Center for Policy Alternatives.

The surcharge “affects shipping costs and how they handle possible higher costs might affect consumers through higher overall prices, but they might also absorb it on the profit side to maintain market share. “, said Macdonald.

The Retail Council of Canada says fuel surcharges are baked into contracts and it’s hard to escape these costs and that increasing minimum free delivery thresholds or adding surcharges directly to consumers ” would be a last resort for many retailers,” said Michelle Wasylyshen, spokesperson for Retail. Council of Canada.

“Instead, they work hard to find savings elsewhere and may even look to other delivery options from smaller, local or regional delivery providers. If available, free in-store pickup is a great option for customers,” she adds. “Retail is one of the most competitive industries in Canada.

The question is complex. It’s not a simple situation, said Kenneth Wong, a marketing professor at Queen’s University.

People see Canada Post as a government service and expect the government to absorb the extra costs, Wong said.

The reality is that Canada Post is a crown corporation, and if it absorbs higher prices, “you and I pay the price through higher taxes,” he said.


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