Amazon Adds 5% Surcharge For Fuel And Inflation

Amazon is introducing a 5-percent surcharge for third-party sellers using its shipping services, the first such surcharge for the company, as soaring fuel prices and inflation at a 40-year-high are lifting costs for many businesses.

The e-commerce giant will impose as of April 28 an average 5-percent fuel and inflation surcharge for merchants using its Fulfillment by Amazon (FBA) service. The surcharge is temporary, “subject to change”, and will apply to both apparel and non-apparel items, Amazon said in a memo to sellers shared with media organizations.

“In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” Amazon said, as carried by NPR.

“It is still unclear if these inflationary costs will go up or down, or for how long they will persist, so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers,” the e-commerce giant added.

Amazon is not the first business to add surcharges because of rallying gasoline prices, supply chain disruptions, and the highest inflation in many developed economies in 40 years.

U.S. inflation reached 8.5 percent over the past 12 months to March, the U.S. Bureau of Labor Statistics said earlier this week. That’s a fresh four-decade high in the annual inflation rate—the highest since 1981. The gasoline index rose by 18.3 percent in March and accounted for over half of the monthly increase for all items. Other energy component indexes also increased, the bureau said.

The surge in diesel and gasoline prices this year is stoking inflation and eating into the margins of road freight transport operators, while gasoline prices at a seven-year-high are slamming the drivers at rideshare services and adding surcharges for customers. To help their drivers, Uber and Lyft introduced in March temporary fuel surcharges for consumers, while another “bloodbath” for the American trucking market could be on the way as signs have started to emerge that consumer demand for physical goods is softening.  

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com:

• Will We See Another Oil Price Breakout Soon?
  
• Chinese Refiners Cut Output At An Alarming Rate
  
• What’s Keeping China From Buying More Russian Crude?