UPS and FedEx Are Raising Shipping Fees. Here's Why Amazon Stands to Benefit

Parcel shipping keeps online shopping running, but getting a package from one place to another has never been more expensive. Major carriers have spent years changing how they charge for fuel, handling, and delivery, with extra fees becoming a bigger part of the bill. Fourth-quarter projections put 2026 on track to become the most expensive year on record for parcel shipping.

Fuel fees aren't following diesel prices

Fuel surcharges have climbed considerably since Q1 2021, when carriers charged 7.75% and diesel averaged $2.91 per gallon. By September 2026, the surcharge had reached 30%, while diesel peaked at $6.53 per gallon.

Higher fuel costs explain only part of that increase. AFS Logistics found that carrier adjustments to surcharge tables accounted for 72% of the 22.25-percentage-point jump.

That means cheaper diesel wouldn't necessarily bring much relief. Even at its 2021 price of $2.91 per gallon, diesel would leave carriers charging a 23.75% fuel surcharge, compared with just 7.75% five years earlier.

Fuel prices also rose after disruptions to crude oil and refined fuel shipments through the Strait of Hormuz began in February.

Peak-season charges keep adding up

FedExFDX has already introduced its peak-season surcharges, which run from Sept. 28 through Jan. 17, 2027. Ground Residential and Home Delivery shipments cost an additional $0.50 per package outside the busiest weeks, rising to $0.80 during the peak period.

Ground Economy customers face steeper charges, ranging from $2.55 to $4.05 per package. Businesses shipping more than 20K residential and Ground Economy packages weekly can also face volume-based fees of $1.70 to $8 per ground package.

Delivery location can push the bill higher, too. FedEx has updated its Delivery Area Surcharge and Pickup Area Surcharge ZIP code lists, effective Jan. 4, 2027. Two packages of the same size and weight could end up costing different amounts simply because they're going to different addresses.

Another round of increases is coming

FedEx and DHL Express have announced average rate increases of 5.9% for 2027, with DHL's new rates taking effect Jan. 1 for US account holders. Businesses will have to absorb those increases alongside the seasonal charges already in place.

UPSUPS introduced demand surcharges on Sept. 27, a day after OnTrac. Fuel fees are another expense, currently running at 30.25% for UPS Ground and 29.75% for FedEx Ground.

The difference comes down to how quickly those charges reach customers. Annual rate increases are typically announced months ahead, giving businesses time to adjust. Demand surcharges, however, can appear on invoices as soon as a qualifying package is processed.

Amazon is gaining ground

As shipping bills climb, businesses are increasingly spreading deliveries across multiple carriers rather than relying entirely on UPS or FedEx. That shift is opening the door for smaller competitors, with AmazonAMZN emerging as one of the biggest challengers.

Amazon plans to reduce the packages it sends through the US Postal Service (USPS) by at least two-thirds before their agreement ends later this month. That's a substantial amount of business for USPS to lose, considering it delivered more than 1B Amazon packages last year.

Amazon's own delivery network is already approaching USPS in size. Amazon Logistics handled 6.3B packages last year, compared with 6.9B for USPS, and analysts expect Amazon to become the country's largest parcel carrier within a few years.

The company is also expanding beyond its own deliveries. In October, it introduced less-than-truckload shipping labels through Amazon Buy Shipping, giving outside businesses access to another shipping option.

Competition between the established carriers is changing as well. UPS took over as USPS's primary air cargo provider after FedEx's contract expired on Sept. 29, shifting shipping volume between the two networks.

What investors should watch

For UPS and FedEx, surcharges have become an important source of revenue rather than simply a way to recover higher operating costs. Carriers can continue collecting substantial fuel fees even when diesel prices decline, helping support revenue per package.

But higher charges are also giving businesses more reasons to look elsewhere. Amazon is expanding its delivery network, regional carriers are gaining customers, and USPS faces financial pressure as it prepares to lose a significant portion of Amazon's shipments.

The gap between diesel prices and fuel surcharges is worth watching alongside shipping volumes. It shows how much pricing power carriers have retained, while changes in package volumes reveal whether customers are beginning to push back.