Fuel surcharges wallop FedEx, UPS shippers as Amazon looms

An article from Dive Brief Fuel surcharges wallop FedEx, UPS shippers as Amazon looms With customers facing elevated fees and seeking discounts, Amazon’s delivery services could impact market pricing in the long term, per the TD Cowen/AFS Freight Index.

Published July 20, 2026 Max Garland Lead Reporter Share Copy link Email / Print License Add us on Google A UPS worker delivers packages on July 24, 2023, in New York City. Lower discount levels from UPS and FedEx were among the obstacles parcel shippers had to navigate in Q2.

Spencer Platt via Getty Images Listen to the article 3 min This audio is auto-generated. Please let us know if you have feedback. Dive Brief: Hefty fuel surcharges from FedEx and UPS and reduced ground shipping discounts contributed to elevated delivery prices for shippers in Q2, per the TD Cowen/AFS Freight Index released last week.

The ground parcel rate per package reached a record high of 42. 4% above its January 2018 baseline in Q2, up 6. 9% year over year, according to a news release. The rate is expected to dip to 38. 7% in Q3, an easing in line with seasonal trends. "This Q3 figure still represents a 5.

2% YoY increase, on track to make 2026 the year with the highest cost per package on record," per the release.

Ground shipping costs feel the heat from fuel TD Cowen/AFS Ground Parcel Freight Index versus January 2018 baseline Dive Insight: The index's Q2 results fell in line with expectations as the Iran war and Strait of Hormuz disruptions spurred a spike in fuel prices.

The average net fuel surcharge per package increased 40% year over year in the quarter due to escalating diesel fuel prices, per the release. FedEx and UPS' frequent adjustments to fuel fee calculations mean heightened fuel surcharge revenue will endure even when diesel prices fall, the release said. "At $4.

50 per gallon diesel, Ground fuel surcharges now run 24. 5% to 25%, compared to 22. 5% a year ago," according to a presentation accompanying the release. Adding to the pricing pressures, FedEx and UPS shippers saw "a slight decline in discount levels" in Q2 compared to the previous quarter, per the presentation.

However, there are still opportunities for customers to secure lower prices, particularly those that fall within the carriers' target segments like small businesses, Mingshu Bates, AFS Logistics chief analytics officer and president of parcel, said in an interview with Supply Chain Dive.

"They are wanting to provide incentive for your small, medium customers, and then they are wanting to tighten up discounts for your larger clients," Bates said.

As shippers encounter climbing costs from FedEx and UPS, alternatives like Amazon Supply Chain Services — which features the delivery service Amazon Shipping — could become a more viable option, according to the release.

Amazon Shipping has been offering competitive rates and surcharge waivers this year in a bid to grab market share, parcel pricing experts previously told Supply Chain Dive.

"While the near-term scale of this market entry may be limited, long-term implications for the pricing power of FedEx and UPS are meaningful, particularly in segments like residential and small-to-medium-sized business where Amazon has particularly strong network density," the TD Cowen/AFS Freight Index release said.

As for express parcel shipments, elevated fuel surcharges, higher billed weight and more premium services are driving up rates. The express parcel rate per package index reached a record high of 15. 5% above its January 2018 baseline in Q2, and it's expected to climb to 15. 8% in Q3, according to the release.

Recommended Reading Spiking FedEx, UPS fuel fees are grabbing shippers’ attention By Max Garland • April 17, 2026 Add us on Google Share Copy link Email / Print License Filed Under: Logistics, Last-Mile Delivery