Tuesday, October 27, 2026
The news that moves freight
Ocean Oct 27, 2026 · 7 min read

Parcel fuel surcharges near 30% as truck spot rates soften

Parcel surcharges hit 29.5% while truck spot rates dip. UPS’s fuel surcharge is 29.5% and FedEx’s is 29%, Reuters reported on 26 October. The TD Cowen/AFS Freight Index sees fourth-quarter ground parcel pricing up 5.8% year on year and express up 13.8%. Our view: the surcharge tables, not diesel alone, are driving the increase. At Q1 2021 diesel of $2.91, the surcharge was 7.75%. The same diesel price would now produce 23.75%. Truck spot rates slipped 2–3 cents a mile last week (DAT). Our prediction: UPS and FedEx ground fuel surcharges stay above 25% every week to 31 December 2026.

The surcharge table, not the pump, is setting this year’s parcel bill

US parcel shippers are heading into peak season with fuel surcharges of almost 30%. Reuters reported on 26 October that, with the US average diesel price at $6.28 a gallon on 19 October (US Energy Information Administration, EIA), UPS’s fuel surcharge is 29.5% and FedEx’s is 29%. OnTrac’s West Coast surcharge was also 29.5% for the week ending 25 October.

A fuel surcharge is a percentage added to the base shipping rate. Carriers set it each week from a published table that links it to the diesel price. Change the table and the surcharge changes, even if diesel does not.

The TD Cowen/AFS Freight Index, a quarterly parcel and freight pricing tracker, expects fourth-quarter ground parcel pricing to be 5.8% higher than a year earlier. It expects express pricing to be 13.8% higher. Reuters says that puts this year’s holiday delivery prices on track for a record.

Our view: most of this is about pricing power, not fuel. Diesel is the story everyone sees. The surcharge tables are the story that sticks. When diesel falls, those tables will keep surcharges far higher than they were a few years ago. Forwarders and shippers should treat the parcel surcharge as part of the base rate, and negotiate it that way.

What the numbers show

The clearest evidence comes from the TD Cowen/AFS index, as reported by Reuters. In Q1 2021, diesel was $2.91 a gallon and the index fuel surcharge was 7.75% of the base rate. If diesel went back to $2.91 today, the surcharge would be 23.75%. That is roughly three times higher, at the same pump price.

Mingshu Bates, chief analytics officer at AFS Logistics, put a number on it. She said diesel price increases account for just under 30% of the fuel surcharge cost. The rest comes from how the carriers calculate the charge.

Our own arithmetic makes the gap plain. Diesel at $6.28 is a little over twice the 2021 level of $2.91. UPS’s current surcharge of 29.5% is about 3.8 times the index’s 2021 figure of 7.75%. On that rough comparison, surcharges have risen much faster than the fuel they are meant to cover.

Diesel itself is high. Reuters says the EIA figure of $6.28 is up 65% since 28 February, when the US and Israel attacked Iran. For scale, the 2022 peak on AAA’s national measure was $5.816 a gallon, set on 19 June 2022, according to FleetOwner. But fuel alone does not explain a near-30% surcharge.

“Fuel is front and center in everybody’s consideration and, again, no real good news there,” Bates told Reuters.

Everyone has added a fuel charge

This is not only UPS and FedEx. Reuters reports that the US Postal Service added its first fuel surcharge, at 8%, in April. Amazon began charging a 3.5% fuel and logistics surcharge on seller fulfilment fees the same month.

Fast-growing delivery firms are gaining ground as cheaper alternatives. Reuters names OnTrac, GoFo, UniUni, Jitsu and Veho. “They are getting adoption from many shippers looking to lower their transportation spend,” said Satish Jindel, president of ShipMatrix, a delivery tracking firm. But some of those firms have adopted high surcharges too. OnTrac’s 29.5% matches UPS.

Switching is not simple. Analysts told Reuters that splitting deliveries across carriers can wipe out volume-based savings. Holiday plans are also set months ahead. JPMorgan analysts said it is unlikely Amazon will soon break UPS and FedEx’s grip on the market. UPS told Reuters its pricing reflects its premium service and infrastructure investments. FedEx did not immediately comment.

The next round of base rate rises is already set. FedEx’s standard US list rates rise an average of 5.9% from 4 January 2027, Supply Chain Dive reported in September. That is the fourth straight year at 5.9%. Logistics Management reported that five of FedEx’s seven major services rise by more than 5.9%. Additional handling charges rise about 7.5%, according to Paul Yaussy, head of parcel contract intelligence at Loop, a logistics data platform. “The gap between the announced 5.9% and what lands on the invoice is wider this year than last,” Yaussy said.

Put the two together. A higher base rate in January, multiplied by a surcharge table that already runs about three times its 2021 level, means fuel charges grow even if diesel stays flat.

Truck spot rates went the other way last week

The truckload spot market softened slightly last week. A spot rate is the one-off price for a single load, as opposed to a contract rate. DAT Freight & Analytics reported on 26 October that, for 17–23 October, the national average broker-to-carrier spot rates were:

  • Van: $3.07 a mile, down 2 cents
  • Reefer (refrigerated): $3.63 a mile, down 3 cents
  • Flatbed: $3.61 a mile, down 3 cents

Those rates include the fuel surcharge. DAT said fuel surcharge amounts were nearly unchanged on the week. Most of the drop came from linehaul, the rate before fuel. Van linehaul was $2.24 a mile, reefer $2.73 and flatbed $2.63, each down 2 cents.

Demand cooled a little. Load posts on DAT One fell 2% to 2.58 million. Equipment posts rose 1% to 185,243. The load-to-truck ratio, the number of loads posted for each truck, eased for van from 9.7 to 9.5. Reefer fell from 15.8 to 14.8 and flatbed from 36.5 to 34.9.

Reefer weakened most. Reefer load posts fell 5%. “Reefer demand turned lower,” said Dean Croke, industry analyst at DAT.

But this is a small dip from a high level. “Trucks remain scarce year over year,” Croke said. DAT says truck posts are 20% to 26% below a year ago. That keeps linehaul 33% above last year for van, 31% for reefer and 28% for flatbed. All three are 23% to 29% above their nine-year seasonal averages for late October.

DAT’s 35-day RateCast forecast has van linehaul holding near $2.24 a mile through late November. It sees reefer edging up to $2.78 and flatbed easing to $2.59.

Fuel now takes 43% of trucking costs

DAT puts numbers on the fuel squeeze for carriers. For a DAT spot dry-van carrier, diesel now costs about 92 cents a mile, or 43% of operating costs. Before the war it was 59 cents a mile, or 32%.

Pilot Flying J diesel averaged $6.47 a gallon on 24 October, up 13 cents on the week. That is about 51% above the $4.30 pre-war baseline DAT uses. The EIA’s $6.276 figure for the week of 19 October was up 9.7 cents. DAT says that will feed next week’s fuel surcharge and add about 2 cents a mile.

So truck fuel surcharges are set to tick up again just as linehaul softens. That is why the all-in spot rate is likely to hold even if linehaul drifts.

The difference with parcel is that truck fuel surcharges still mostly track diesel. Parcel surcharges now track diesel plus a bigger pricing table.

What this means for forwarders and shippers

First, final-mile costs for e-commerce clients will rise through peak. Any forwarder handing cross-border or import parcels to UPS, FedEx, USPS or a regional carrier should expect fuel to add close to 30% to the base rate. Quotes that bundle fuel into a flat delivery price need to be repriced or given short validity.

Second, check the table, not just the discount. Many parcel contracts give a discount off the published fuel surcharge. That discount is worth less if the table underneath has moved. Ask each carrier which table applies, and model what the surcharge would be at $4, $5 and $6 diesel.

Third, use the 2027 contract round. FedEx’s 5.9% headline lands on 4 January. That is the moment to negotiate a capped fuel surcharge or an older table. Shippers with volume to move can use regional carriers as leverage, while watching for the loss of volume discounts.

Fourth, on trucking, the spot dip is not a buying window yet. Drayage and inland trucking quotes into peak should still assume tight capacity. DAT’s own forecast has van linehaul flat through late November, and fuel surcharges are about to rise again. Reefer is the one segment where shippers may see short-term relief, as demand has turned lower.

Fifth, expect the surcharge debate to outlast the fuel shock. If diesel falls in 2027, carriers will point to lower weekly surcharges. Shippers should point to the 2021 comparison: 7.75% then, 23.75% now at the same price.

Our call

Our prediction: UPS and FedEx ground fuel surcharges stay above 25% every week to 31 December 2026, even if diesel eases by 20 or 30 cents. Because of how the tables are built, it would take a very large fall in diesel to push them below that line before year end.

On trucking, we expect DAT’s national van spot rate, including fuel, to stay at or above $3.00 a mile in every weekly report through the end of November. Rising fuel surcharges and scarce trucks should outweigh the softer load posts.

Sources