UPS rolls out fuel surcharge hikes, processing fee changes

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UPS is increasing its fuel surcharge calculations and changing some other fees, the carrier announced on its website. Experts warn the moves will put further pressure on shippers’ delivery costs.

On Monday, the company will bump up its fuel surcharge calculations by 50 basis points for its ground, air and SurePost services in the U.S. 

UPS adjusts its index-based fuel surcharges weekly based on the U.S. Energy Information Administration’s average on-highway diesel fuel price and the U.S. Gulf Coast jet fuel price average. Those averages determine the surcharge rate for fuel on ground and air services. Rival FedEx handles fuel surcharges the same way.

As an example of the increase’s impact, if the diesel fuel index’s price per gallon is $3.20, a UPS Ground or SurePost shipment will see a 17.75% markup rather than a 17.25% fee under previous calculations.

The increase builds upon the frequent fuel surcharge hikes UPS, along with FedEx, levied in 2024. Those adjustments drove the average net fuel cost for ground parcel shipments up 4.7% from Q3 to Q4, even with a decline in on-highway diesel prices, according to the TD Cowen/AFS Freight Index.

“Fuel surcharge increases impact every customer differently,” Kenneth Moyer, partner and VP of supply chain strategies at LJM Group, said in an email to Supply Chain Dive. “Keeping track of what it means for your business allows you to implement mitigating strategies like consolidating shipments and optimizing package dimensions and weight.”

More fee changes from UPS are coming on March 31 “to modernize invoices and payment options for customers,” according to the carrier’s website. Those adjustments are:

• A $5 fee for each printed UPS invoice copy sent to shippers or other payors.
• A $25 charge per payment made by check or wire transfer. The fee won’t apply to Automated Clearing House payments.
• The late payment fee will jump from 8% to 9.9% of the total past due invoice balance.

UPS also plans to end its 2% surcharge for invoices paid by credit card on May 18. In its place, the company will add a 2% payment processing fee for each invoice.

Shippers should automate payments so late fees don’t pile up and switch to e-invoicing and Automated Clearing House payments to avoid added charges, said Bridget Colmenares, Transportation Insight’s senior director of strategic sales, on LinkedIn.

The wave of surcharge changes come amid a highly competitive parcel delivery market that is still battling soft demand. UPS and FedEx are attempting to increase their per-package revenues with added fees while attracting customers with discounted base rates.

“One reason UPS may have earmarked these payment fees for increase versus shipping rates is the blind-spot they generally inhabit for most shippers when comparing carriers,” LJM Group’s Moyer said. “Shippers understandably tend to focus primarily on shipping charges and generally don’t give these ancillary fees the attention they may merit.”

While FedEx hasn’t announced similar fee adjustments yet, Moyer said he wouldn’t be surprised if it happens in the near f…