As we close the book on April — and the Iran war enters its ninth week — rising fuel costs continue to significantly impact parcel shippers. With diesel prices skyrocketing, it’s not surprising that carriers are passing these cost increases on to their customers.
Since the beginning of 2026, UPS fuel surcharges for domestic ground shipments have increased by over 6%, and by 11% for domestic air services. But the effects of these price increases will linger even after the Strait of Hormuz re-opens, because UPS has also increased the “floor” on its fuel surcharge table. Once fuel prices normalize, UPS customers will still be paying more, because the minimum fuel charge has increased.
While FedEx hasn’t announced any specific cost increase related to fuel, the carrier’s fuel surcharge on ground services for the week of April 20 is 27%, comparable to UPS’s 27.50% for the same services that week.
And it doesn’t stop there. Amazon has added a 3.5% fuel and logistics-related surcharge, with no stated end date. OnTrac increased its fuel surcharge by 1.5% on April 6, for a total surcharge of 24.25%. USPS has also announced a first-ever limited-time price change, an 8% increase linked to rising fuel costs. This new fee took effect on April 26 and will continue through at least January 16, 2027.
Another big hit for parcel shippers? UPS and USPS are adding new fees and upward pricing changes for UPS Ground Saver and all USPS services. Effective May 4, UPS is introducing a “Non-Compliant Label Fee” for UPS Ground Saver (formerly UPS SurePost). UPS will charge a $5.00 per package noncompliance fee if customers fail to meet published labeling requirements, or don’t use an approved shipping system for Ground Saver shipments.
Carriers Are Picking Their Lanes. Follow Their Lead.
Fuel cost increases, and related surcharges, can’t be avoided in the short term. But the long-term outlook for parcel shippers is much brighter.
While the parcel market is still growing, it’s now entering a more mature phase where volume growth is steady rather than explosive. Global revenues are projected to keep rising through the end of the decade as e-commerce demand persists, but not at the unprecedented rates we saw following the online shopping explosion of 2020 and 2021.
Volume growth is flattening, while at the same time competition is increasing in the parcel shipping market. Regional and specialty carriers are becoming more of a force. Consolidation is creating new, more powerful businesses. That means the big carriers can’t continue to blindly institute big price increases and surcharges, while still counting on demand growth. Instead, the major carriers are focusing on efficiency and cost-cutting to improve their margins — as well as strategically carving out a lane in which they can still operate profitably as the market settles.
Carriers are actively reshaping their networks — diversifying partners, closing facilities, cutting their work forces, reducing reliance on major customers like Amazon, and even opening access to bidding platforms to improve their utilization and margins. There’s also a clear strategic shift toward higher-margin packages in parcel carrier networks — specifically, larger packages with more surcharges tacked on.
As carriers rethink their value proposition and narrow their business focus, that creates a huge opportunity for smart, strategic shippers. If you can gain an understanding of your own unique shipping lane, today it’s easier than ever to create a carrier mix that’s the best match for your unique shipping profile.
Take Redwood Along for the Ride — and Save Millions
If you’re like most shippers, you lack the specialized internal expertise, technology solutions, data, analytics, and reports to fully optimize your parcel spend. That’s where the experienced team at Redwood Parcel Advisory can help. As former employees of UPS, FedEx, and other carriers, they know exactly how to make the most of your annual parcel spend.
Consider this. In 2024, customers achieved an average of $1.1 million in annual cost savings by partnering with Redwood — for an average reduction of 16% in their yearly parcel spend.
By partnering with Redwood, you can focus on your core business while trusting us to:
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Analyze critical characteristics of your shipping behaviors, including parcel size and weight, shipping frequency, most common delivery destinations, and customer urgency
- Match these patterns to optimal carriers that combine the lowest cost with the services you need — and will value your business
- Coach your team through the carrier negotiation process, so you can exert more control, seize better rates, and sign contracts that maximize your profits — not the carrier’s
- Optimize your internal network, including key nodes and shipping routes, to shorten travel distances and avoid expensive regional surcharges
- Maximize your internal efficiency and accuracy to drive out costs, optimize packaging practices, and avoid surcharges and non-compliance fees
- Audit your historic invoices and payments, to identify both savings opportunities and errors that result in carrier refunds
- Create dashboards, business intelligence tools, and best practices that stay with your business — helping your team see and capture future savings opportunities
Get on the Road to a More Profitable 2026, Now
It’s hard to believe we’re almost at the mid-point of 2026. It’s already been a tough year for shippers. What actions have you taken to optimize your parcel spend, in light of both challenges and opportunities?
Don’t wait another day, week, or month to capitalize on what’s happening in the global parcel market. Reach out to Redwood and become one of our 2026 customer success stories before it’s too late.