Rising fuel surcharges from FedEx and UPS are making it more expensive to ship packages – a fact that suppliers, distributors and decorators in the promotional products industry will have to account for in their quotes to customers.

A fuel surcharge is a separate, additional fee added to the price to ship packages when the cost of fuel exceeds a defined level.

At FedEx, surcharges already had the potential to change each week, increasing or decreasing depending on the actual cost of fuel.

But on April 4, FedEx implemented new tables for establishing surcharge rates. The upshot is that surcharge amounts are rising in relation to what they would have been under FedEx’s previous system.

For instance, during the week of March 21 to March 27 before the change, FedEx would have assessed a 16.25% surcharge in its Ground Domestic shipping option based on a per-gallon price of $5.17 to $5.26 for diesel. Under the new system, diesel in that same per-gallon cost range triggers an 18% surcharge.

The new FedEx surcharge tables apply to the company’s Express, Ground and Freight services.

Meanwhile, starting in the latter half of March, UPS announced it would be adjusting diesel and jet fuel surcharges based on a one-week lag from the federal government’s prices instead of a two-week lag, a policy FedEx was already following.

63.6%
That’s how much more, on average, diesel cost per gallon in the U.S. during the week of April 4 compared to the same time the year prior.

(Energy Information Administration)

A UPS spokesperson told Freight Waves that the change “allows us to more quickly align the costs we incur for fuel to serve our customers.” 

And those rates are on the rise. A UPS Ground surcharge of 16.75% was on tap for the week of April 11. The week before it was 15.25%. The week of January 17 it was 11.75%. Surcharges on UPS’ Domestic Air, International Air Export and International Air Import have all generally been rising week over week of late. Domestic air, for instance, was set for a 21.75% surcharge the week of April; two weeks prior, the surcharge was 16.5%.

FedEx and UPS are implementing the higher rates as the cost of fuel remains highly elevated.

According to the U.S. Energy Information Administration, the average cost for a gallon of diesel in the United States during the week of April 4 was about $5.14 – up $2, or nearly 64%, from the year prior. The price was down about $0.04 from the previous week.

Similarly, the average per-gallon cost for gas in the U.S. the week of April 4 was $4.17 – up $1.31, or 45%, from the year prior. The price was down about $0.06 from the previous week.