UPS Increases Fuel Surcharges, Costs for Sellers Increase

UPS domestic air freight surcharges are also on the rise. On March 28, UPS announced that it would increase the surcharge level by 1.75%. Since April 4, it has surged to 20%, reaching 21.75% on Monday.

It's just as bad for the company's international customers traveling to and from the U.S. As of Monday, a 23.5% fuel surcharge was imposed on exported goods and a 27.25% fuel surcharge on imported goods. The newly imposed fee is 450 basis points higher than on March 28.

On March 17, FedEx increased its surcharge by 1.75%. Starting Monday, the company will impose a 17.75% surcharge on every U.S. package handled by FedEx Ground, a 21.75% surcharge on U.S. domestic air and ground packages shipped by FedEx Express, and on all U.S. exports A 24.5% surcharge is imposed, and a 28.25% surcharge is imposed on US imports. The surcharge for FedEx ground service was actually down 25 basis points from the previous week's data.

UPS and FedEx adjust their surcharges weekly based on diesel and jet fuel prices published by the U.S. Energy Information Administration (EIA). Road diesel prices are published every Monday, while the jet fuel index can be published on different days but updated weekly. The latest U.S. national average diesel prices were just over $5.14 a gallon, and jet fuel averaged $3.81 a gallon.

Both companies tie the fuel surcharges they impose to a range of prices set by the EIA. For every 12 cents increase in EIA diesel prices, UPS will adjust its ground fuel surcharge by 25 basis points. FedEx Ground, FedEx's ground unit, adjusted its surcharge by 25 basis points for every 9 cents/gallon increase in EIA diesel prices.