Remember the last time you checked GasBuddy before a road trip, scouring to find the cheapest fuel prices along your route?
That same fuel price volatility that affects your personal travel budget is wreaking havoc on your business shipping costs—except you probably don’t even realize it.
While consumers can easily see gas prices displayed on towering signs at every corner, the fuel costs buried in your shipping invoices are far less transparent. When diesel jumps from $3.20 to $4.10 per gallon, that 28% increase doesn’t just affect truckers—it flows directly to your bottom line through fuel surcharges that can increase costs for every shipment.
For businesses managing high shipping volumes, these charges can significantly impact profit margins; yet, many companies treat them as an unavoidable cost, rather than a manageable expense that requires strategic attention.
Let’s take a look at what fuel surcharges are, how they work, and how you can best manage them.
Key Takeaways
- Fuel surcharges are fees that shipping carriers impose to offset fluctuating fuel prices.
- FedEx and UPS adjust their fuel surcharges weekly, while DHL’s fuel surcharge is adjusted monthly, based on a rounded average from the period two months prior, to calculate the applicable fuel surcharge percentage.
- These fees are unavoidable and often non-negotiable; however, there are contract negotiation techniques that can help lower your overall shipping costs.
What Are Fuel Surcharges?
Fuel surcharges are one of the many additional fees carriers impose beyond standard or base shipping rates to cover fluctuating operational costs. There are several shipping surcharges, but fuel surcharges represent one of the most substantial and unpredictable variable costs in shipping.
Fuel surcharges are variable fees that shipping carriers add to transportation costs to offset fluctuating fuel prices. Unlike fixed shipping rates, these charges adjust regularly based on current fuel market conditions, allowing carriers to maintain profitability despite volatile energy costs.
These surcharges serve as a risk management tool for carriers, transferring fuel price volatility from the carrier to the shipper. When fuel prices rise, surcharges increase accordingly. When prices drop, surcharges typically decrease, though often with less frequency or magnitude than increases.
How Are Fuel Surcharges Calculated?
Now that you know what fuel surcharges are, it’s time to understand how they’re calculated. Carriers use two primary calculation methods:
- Fixed Fee Structure: Most carriers apply flat dollar amounts based on package weight, distance, or service type, regardless of the base rate. For example, a carrier may charge a flat $10 per shipment to account for rising fuel costs.
- Percentage-Based Calculation: Another common method is a percentage-based calculation, where the surcharge is calculated as a percentage of the base shipping rate. For example, if your base rate is $10 and the fuel surcharge is 15%, you’ll pay an additional $1.50. This allows carriers to charge higher fees on items with more expensive shipping costs.
Fuel Price Indexes
Carriers reference established fuel price indexes to determine surcharge rates:
- Ground Services: Typically based on U.S. Department of Energy diesel fuel prices
- Air Services: Usually tied to jet fuel price indexes
- Regional Variations: Some carriers adjust based on local fuel market conditions
How Often Do Fuel Surcharges Change?
Most major carriers update fuel surcharges weekly, usually on Mondays, based on the previous week’s fuel price data. This frequent adjustment ensures surcharges closely track current market conditions.
Fuel Surcharge Calculation Example
Let’s walk through a typical calculation:
- Base shipping rate: $25.00
- Current fuel surcharge rate: 12.5%
- Fuel surcharge fee: $25.00 × 0.125 = $3.13
- Total shipping cost: $25.00 + $3.13 = $28.13
Fuel Surcharges For FedEx, UPS, And DHL
FedEx, UPS, and DHL use similar methodologies for calculating fuel surcharges, but with slight variations:
- FedEx typically applies fuel surcharges to most shipping services. Their fuel surcharge tables for FedEx Ground®, FedEx Home Delivery®, FedEx International Ground®, and FedEx LTL freight services are updated weekly using the national U.S. on-highway average price for a gallon of diesel fuel. Fuel surcharges for all other services are based on the weekly published U.S. Gulf Coast (USGC) spot price for a gallon of kerosene jet fuel.
- UPS also adjusts fuel surcharges weekly. The U.S. Ground Domestic and UPS Ground Saver® Fuel Surcharge is based on the national U.S. average on-highway diesel fuel price. The U.S. Domestic Air Fuel Surcharge is based on the national average U.S. Gulf Coast jet fuel price.
- DHL eCommerce differs from FedEx and UPS in that it uses an indexed fuel surcharge, which is adjusted monthly based on fuel prices published by the U.S. Department of Energy. DHL’s fuel surcharge is applied by using a monthly rounded average from the period two months prior to calculate the applicable fuel surcharge percentage. For example, the July 2025 fuel surcharge would be based on the U.S. on-highway monthly rounded average from May 2025.
For the current fuel surcharges, see the rates for FedEx, UPS, and DHL.
How Are Fuel Surcharges Applied?
Fuel surcharges can be applied to various shipping services, but not every carrier imposes them. Some carriers, like USPS or certain regional carriers, don’t apply fuel surcharges.
However, some fuel surcharges can be added to multiple services. For example, if you use remote area delivery services during peak season, your parcels may be subject to fuel surcharges on both services.
Here is a partial list of shipping services that may be subject to fuel surcharges:
- Ground delivery services
- Remote Area
- Peak Season Surcharges
- Saturday Services
- Oversized, Large, or Heavy Packages
- Air express services (Next Day, 2-Day)
- International shipping
- Freight services
- Most accessorial services (delivery attempts, address corrections)
Carriers may also implement General Rate Increases (GRI) that include fuel surcharge adjustments for extended periods, or apply elevated surcharges during peak seasons when demand and operational costs increase.
Can I Avoid Fuel Surcharges?
No. Fuel surcharges are generally non-negotiable because they’re designed to fluctuate with market conditions.
But that doesn’t mean you’re out of luck. Shippers have several contract negotiation opportunities to help minimize shipping fees:
- Base Rate Negotiations: Focus on securing lower base shipping rates, which reduces the dollar impact of percentage-based fuel surcharges.
- Alternative Calculation Methods: High-volume shippers may negotiate different fuel surcharge calculation methods or caps on maximum charges.
- Service Mix Optimization: Some services have lower fuel surcharge rates than others, enabling businesses to carefully select a strategic shipping method that minimizes high fuel surcharges.
- Contract Terms: Negotiate fuel surcharge disclosure requirements and adjustment notification periods before you sign a contract with your carrier.
Don’t Let Fuel Surcharges Tank Your Bottom Line
Fuel surcharges represent a significant and often underestimated component of shipping costs. With weekly fluctuations and complex calculation methods varying by carrier, these charges require ongoing monitoring and strategic management.
The key to managing fuel surcharges? Comprehensive visibility into your shipping spend and the ability to analyze these variable costs alongside your overall shipping strategy.
The solution? Reveel.
Reveel’s Parcel Spend Management platform provides the visibility and analytics you need to understand, monitor, and optimize fuel surcharges across all your carriers. Schedule a demo with our team today!
