UPS Increases Fuel Surcharges and Implements Fee Changes
UPS recently announced that it will be increasing its fuel surcharge calculations and implementing various fee changes, which experts warn will further impact shippers’ delivery costs. These changes are part of UPS’s ongoing efforts to adjust its pricing and fees in response to market trends and operational costs.
Effective Monday, UPS will be raising its fuel surcharge calculations by 50 basis points for its ground, air, and SurePost services in the U.S. This adjustment is based on index-based fuel surcharges that are updated weekly according to the U.S. Energy Information Administration’s average on-highway diesel fuel price and the U.S. Gulf Coast jet fuel price average. This move aligns UPS with its competitor FedEx, which also adjusts fuel surcharges in a similar manner.
For example, if the diesel fuel index price per gallon is $3.20, a UPS Ground or SurePost shipment will see a 17.75% markup instead of the previous 17.25% fee. These changes come on the heels of previous fuel surcharge increases in 2024, which resulted in a 4.7% increase in average net fuel costs for ground parcel shipments from Q3 to Q4, despite a decline in on-highway diesel prices.
Kenneth Moyer, partner and VP of supply chain strategies at LJM Group, emphasized the importance of understanding how fuel surcharge increases impact individual customers and recommended implementing strategies such as consolidating shipments and optimizing package dimensions and weight to mitigate cost impacts.
In addition to the fuel surcharge adjustments, UPS will be implementing fee changes on March 31 to modernize invoices and payment options for customers. These changes include a $5 fee for each printed UPS invoice copy, a $25 charge per payment made by check or wire transfer (excluding Automated Clearing House payments), and an increase in the late payment fee from 8% to 9.9% of the total past due invoice balance.
Furthermore, UPS plans to eliminate its 2% surcharge for invoices paid by credit card and replace it with a 2% payment processing fee for each invoice. To avoid additional charges, shippers are encouraged to automate payments, switch to e-invoicing, and utilize Automated Clearing House payments.
These fee adjustments come at a time when the parcel delivery market is facing soft demand, prompting UPS and FedEx to focus on increasing per-package revenues through added fees while offering discounted base rates to attract customers. Moyer noted that while FedEx has not announced similar fee adjustments yet, it may follow suit in the future to remain competitive in the market.
Overall, the fee changes announced by UPS reflect the company’s strategy to adapt to changing market conditions and optimize its revenue streams. Shippers are advised to stay informed about these changes and proactively adjust their shipping and payment strategies to minimize cost impacts and maintain operational efficiency in the evolving logistics landscape.
