UPS Implements Temporary Surcharges on Chinese Exports

Recently, UPS announced the implementation of a temporary surcharge on shipments originating from China, Hong Kong, and Macau. This weight-based surcharge applies to exports headed to destinations in the United States, South America, Europe, Africa, the Indian Subcontinent, and the Middle East.

Effective March 16, UPS began imposing these “peak surcharges” on shipments to the above regions, stating that the measure will remain in place until March 29. The surcharge is in addition to the existing fuel surcharge. UPS clarified that this step is intended to maintain a stable level of service during periods of high demand while offsetting the additional costs incurred by increased shipment volumes.

According to UPS’s fee schedule, U.S. businesses will need to pay an additional $0.66 per kilogram ($0.29 per pound) for packages shipped from mainland China, Hong Kong, and Macau. The company emphasized that these fees are not related to the U.S. government’s 20% tariff on Chinese imports. Instead, the surcharge is based on UPS’s market analysis and serves to protect its logistics network from surging peak-season demand.

UPS first introduced this surcharge six months ago and adjusts it based on shipping volumes, available capacity, and other market factors. During peak shipping periods, the company may implement one or more surcharges on parcels. Over the past several months, UPS has repeatedly imposed additional fees on shipments from China. In September last year, the company levied a $0.50 per pound surcharge on Chinese shipments to the U.S., citing high shipment volumes from major e-commerce platforms Shein and Temu. These platforms heavily relied on air freight in 2024, driving up U.S. air cargo demand. However, because these shipments were mostly low-value, direct-to-consumer packages, UPS found it difficult to generate high margins, prompting the introduction of additional fees.

In addition to the current surcharge adjustment, UPS also raised the fuel surcharges on U.S. ground, SurePost, and domestic air shipments by 0.5 percentage points. UPS’s fuel surcharges are based on the U.S. Energy Information Administration’s (EIA) highway diesel fuel prices and U.S. Gulf Coast jet fuel prices, and they are adjusted weekly. For instance, when the national diesel fuel price index hits $3.83 per gallon, UPS’s fuel surcharge on ground or SurePost packages increases from 18.5% to 19%. Rising fuel surcharges further elevate overall shipping costs. According to the TD Cowen/AFS Freight Index released in January, UPS and FedEx’s fuel surcharges in the fourth quarter of last year drove average fuel costs for ground parcels up by 4.7% quarter-over-quarter. This resulted in a 3% increase in overall costs for ground shipments compared to the previous quarter, although year-over-year costs remained relatively stable.

Both UPS and FedEx also introduced a 5.9% general rate increase (GRI) for 2025, raising logistics costs for sellers. However, given the weak overall demand in the parcel market and intense competition in the last-mile delivery space, major carriers have been offering discounts to attract customers. While GRI-related increases are expected to bring seasonal cost hikes in the first quarter, the TD Cowen/AFS Express Freight Index predicts a 4.1% increase in per-parcel shipping costs for Q1 2025, a 0.4% drop compared to the same period last year. The report attributes this trend to heightened competitive discounting over the past year.

So far, FedEx has not announced similar surcharges on imports from China. However, UPS’s move may indicate that further pricing adjustments could be on the horizon in the logistics industry. In particular, with U.S. duty exemptions on low-value Chinese packages still uncertain, pricing strategies in the express delivery sector may continue to evolve.