OPEN LETTER TO FRED SMITH - FEDEX

Sparta, N.J.  June 5, 2008

Dear Mr. Smith,

On behalf of our clients and others we must register our disapproval with your recently adopted changes to the way you apply your fuel surcharge.  We understand and empathize with the dramatic impact that skyrocketing oil prices have on FedEx’s business.  We understand that you have and will continue to pass these on to the shipping public. We feel strongly, however, that your new approach is simply a bad business practice.  Our attention was recently brought to the “fine print” in your 2008 Service Guide.  On page 125 under the Header “Fees and Other Shipping Information” and the sub header “Fuel Surcharge” you state:

We reserve the right to assess fuel and other surcharges on shipments, without notice.  We will determine the amount and duration of any such surcharge at our sole discretion.  By tendering your shipments to FedEx, you agree to pay the surcharges, as determined by FedEx.

 We understand that such language has long existed for your protection.  What we object to is the recent change in the way FedEx has chosen to apply it.  Per an email from your people “The Express fuel surcharge is assessed at time of shipment and Ground is assessed at the time of invoice.” 

Since your shippers cannot control when you choose to invoice them this means that they are unaware of the total charges for the shipment until after they receive the bill.  Fuel has become so volatile that you recently increased your ground surcharge by 25% on a single day, May 1st!  As you are well aware an ever-growing segment of business is B to C.  A large number of these companies are small businesses for whom cash flow is a huge concern.  Typically they are including the shipping costs on the same invoice in which they are billing for the product.  They will now be forced to wait until they receive your invoice to insure that they are recouping the transportation charges. Recent changes in your invoicing policy mean that there is no certainty about the date the invoice will be forthcoming.  In other words your customers now don’t know what their costs are or when they will find out.  This is “flying blind” to an unacceptable degree.  As the owner of a large fleet of aircraft you, if anyone, know how much one tries to avoid flying blind. 

In closing, we want to express our admiration for your company and the critical role it plays in the American economy.  We also realize that your recent changes in policy are well within your legal rights.  We only ask that you consider the needs of your customers, and ours, before you implement changes that may be very detrimental to them.  We would appreciate the opportunity to discuss this further.  We are confident that we can come up with an approach that works for all parties.

Best regards,

Scott

Scott Shearer - CEO

TOTALogistix, Inc.

191 Woodport Road

Sparta, NJ   07871

PH:  973-729-0699  ext 108

email:  sshearer@totalogistix.com

visit us at www.TOTALogistix.com