UPS and FedEx have announced adjustments to their fuel surcharge calculations for U.S. domestic delivery services, adding further cost pressure on shippers during the peak year-end shopping season. The changes reflect ongoing volatility in fuel prices and are expected to impact transportation budgets across multiple industries.
New Fuel Surcharge Adjustments Take Effect
Starting December 1, FedEx implemented revised fuel surcharge rates across several domestic services, including express delivery, freight transportation, ground shipping, and residential delivery. UPS has confirmed that similar adjustments will take effect on January 5, 2026, covering UPS Ground domestic, Ground Saver, and domestic air services.
Industry analysts estimate that FedEx’s adjustment represents an average increase of approximately 1.5%, while UPS has raised its fuel surcharge by around 1%. These surcharges are reviewed and updated weekly, based on changes in diesel and jet fuel prices.
Under the new UPS calculation method, when diesel fuel reaches USD 3.85 per gallon, a shipment sent via UPS Ground will incur a fuel surcharge of 21.75%, compared to the previous rate of 20.75%.
Fuel Surcharges Become a Major Cost Driver in 2025
Fuel surcharges have emerged as a key contributor to rising ground shipping costs throughout 2025. As carriers continue to adjust their pricing formulas, logistics consultants and shippers are closely monitoring how UPS and FedEx surcharge increases compare with actual fuel price movements.
According to Brian Byrd, Chief Operating Officer at TransImpact, base ground fuel prices have risen by 8.62% since January. As a result, UPS’s domestic ground fuel surcharge has increased by a cumulative 24.3%. For air transportation, a 2.95% increase in jet fuel prices has driven a 23.5% rise in UPS’s air fuel surcharge over the same period.
These figures highlight how fuel surcharge mechanisms can amplify cost increases beyond underlying fuel price changes.
Impact on Carrier Performance and Revenue
For major parcel carriers, fuel surcharge adjustments have played a significant role in improving financial performance. During FedEx’s first-quarter earnings call on September 18, Executive Vice President and Chief Customer Officer Brie Carere stated that higher fuel surcharge indices contributed positively to revenue per package.
Despite an increasingly competitive market environment, FedEx emphasized that its pricing remains “reasonable” while allowing the company to offset rising operational costs. Carere noted that fuel surcharges provided meaningful support to first-quarter results and are expected to continue contributing throughout the year.
What This Means for Shippers
As UPS and FedEx continue to revise fuel surcharge formulas, businesses shipping within the U.S. face higher transportation costs, particularly during periods of high demand. These changes underscore the importance of proactive cost management strategies, such as reviewing carrier contracts, optimizing shipping profiles, and exploring alternative delivery solutions.
With fuel surcharges now accounting for a larger share of total shipping expenses, shippers must factor weekly surcharge fluctuations into budgeting and pricing decisions to protect margins in a volatile logistics environment.
