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FedEx Cuts Fuel Surcharge 25% Amid Soaring Energy Prices

July 27, 2007

MEMPHIS, TN - FedEx Freight and FedEx National LTL, two units of FedEx Corp. have cut their standard less-than-truckload fuel surcharge by 25 percent , according to the Web site, The drop in surcharge rates is an unexpected move during the summer. According to the Department of Energy (DOE), the average U.S. retail price for diesel fuel hit its highest point last week since September 2006.

Logic suggests that FedEx would lose money on this announcement. However, management believes the move will provide FedEx an advantage in the market. Douglas G. Duncan, president and CEO of FedEx Freight, said, "By significantly reducing our fuel surcharges, we offer immediate and long-term assistance to shippers who are facing both a challenging economy and volatile fuel prices." Both units update fuel surcharges on a weekly basis based on prices published by the DOE.

While the cuts mean FedEx Freight will assume more of the fuel costs, Duncan hopes that additional volume would make up for "a great deal of that." This additional volume Duncan talks of has to come from somewhere. FedEx has some serious competition in the LTL market, including United Parcel Services' Overnite Corp, Con-way and the largest of the truckers, YRC International Inc., according to the Web site,

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