Increases to fuel fee calculations have been a key contributor to escalating shipping costs in 2025.

UPS and FedEx announced increases to their fuel surcharge calculations in the midst of the holiday shipping rush, building upon continued pricing pressures for customers.

On Monday, FedEx implemented an increase to its fuel surcharge calculations for domestic package and express freight services, along with ground and home delivery offerings. Starting Jan. 5, UPS’ fuel surcharge calculations will increase for similar services such as UPS Ground domestic, Ground Saver and domestic air offerings.

The increases amount to a 1.5% fuel surcharge hike for FedEx and a 1% jump for UPS, according to experts.

The carriers set their fuel fee prices weekly, adjusting it based on average diesel and jet fuel costs. With the calculation changes, if the per-gallon price of diesel fuel is set at $3.85, a UPS Ground domestic shipment will incur a 21.75% fuel surcharge instead of the current 20.75% fee.

Fuel surcharges are a notable driver of the elevated ground shipping costs FedEx and UPS shippers have seen throughout 2025. With more fuel increases to that category en route, parcel pricing consultants are scrutinizing how much FedEx and UPS’ calculations have increased compared to actual fuel prices in recent months.

“Since the first reference prices were published in January 2025, the basis cost of ground fuel has increased 8.62% year-to-date, resulting in a 24.3% overall increase in the UPS Domestic Ground fuel surcharge,” experts said. “Over the same period, the basis cost of air fuel has increased 2.95% year-to-date, leading to a 23.5% overall increase in the UPS Domestic Air fuel surcharge.”

For parcel carriers, such adjustments can benefit their financial performance. FedEx EVP and Chief Customer Officer Brie Carere said during a Q1 earnings call on Sept 18 that fuel surcharge index increases have benefited the company’s per-package revenues within a “competitive but rational” pricing environment.

“Fuel was very helpful in the first quarter, and that will continue through the year,” Carere said.

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