UPS Fuel & Payment Surcharges Rise: What Sellers Need to Know

Recently, UPS announced changes to its fuel surcharge calculations and payment-related fees, which could further increase shipping costs for businesses.

Higher Fuel Surcharges Starting March 10

Effective March 10, UPS will increase fuel surcharges for its Ground, Air, and SurePost services in the U.S. by 0.5 percentage points. The surcharge rates, adjusted weekly based on average fuel prices published by the U.S. Energy Information Administration (EIA), will see a rise even if fuel prices remain stable.

For example, when diesel costs $3.20 per gallon, the fuel surcharge for UPS Ground and SurePost shipments will climb from 17.25% to 17.75%. UPS and FedEx both use similar mechanisms for fuel surcharges, and both have frequently raised fees in 2024.

Even with declining diesel prices, the average net fuel cost for ground parcel shipments increased 4.7% from Q3 to Q4 2024. Industry experts warn that these ongoing changes impact each shipper differently, making it crucial for businesses to optimize shipping strategies—such as consolidating shipments and reducing package size and weight—to mitigate cost increases.

New Payment-Related Fees Starting March 31

In addition to fuel surcharges, UPS will implement new payment processing fees beginning March 31:

• Paper invoice copies: $5 per copy
• Check or wire transfer payments: $25 per transaction
• Late payment fees: Increased from 8% to 9.9%
• Credit card fees: Instead of eliminating the 2% surcharge on credit card payments (originally planned for May 18), UPS will now charge a 2% processing fee per invoice

UPS encourages shippers to switch to electronic invoicing and Automated Clearing House (ACH) payments to avoid these extra costs and prevent late fees.

Why Is UPS Increasing Fees?

With a competitive yet sluggish parcel shipping market, both UPS and FedEx are looking for ways to boost per-shipment revenue while vying for customers. Some analysts believe UPS is raising payment-related fees instead of base shipping rates because many shippers overlook these extra costs when comparing carrier rates.

While FedEx has yet to announce similar changes, experts predict it may follow suit, using UPS's adjustments as a reference.

How Sellers Can Respond

These cost increases mean that sellers and businesses need to reassess their shipping strategies to stay profitable. UPS's new surcharge policies will impact current shipping budgets and could push the industry to further refine pricing structures and service optimization. Sellers should proactively explore cost-saving tactics, such as automating payments, consolidating shipments, and negotiating with carriers, to maintain a competitive edge in an evolving logistics landscape.