United Parcel Service Inc. (UPS) has announced it will lower its current fuel surcharge for customers worldwide by 40% as it shifts to an index-based surcharge. The shift is intended to help UPS respond to fuel price fluctuations.

The current fuel surcharge rate, implemented in August 2000, is the lowest in the industry at 1.25%, according to Atlanta-based UPS. The reduction to 0.75% will take effect December 10 and will remain in place at least until February 3. After February 3, adjustments will take effect on the first Monday of each month and will be based on the U.S. Energy Department's On-Highway Diesel Fuel Prices.

"The index provides a prudent way for us to significantly reduce the current surcharge for customers as we continue to deal with fluctuations in fuel prices," said John Beystehner, UPS senior vp of marketing and worldwide sales.

FedEx Express implemented a similar fuel surcharge scale on Monday. Its surcharge percentage will be subject to adjustment monthly using a rounded average of the U.S. Gulf Coast spot price for a gallon of kerosene-type jet fuel.

Changes to the UPS fuel surcharge will reflect prices from two months prior. The surcharge will continue to apply to all small package transportation charges in all regions of the globe served by UPS.