FedEx® and UPS® Fuel Surcharge Increases Shaking Up the 2015 Holiday Shipping Season

Fuel surcharges for both FedEx and UPS increased for the second time this year. Among the rate hikes, the UPS Ground fuel surcharge index went from 4.75 percent to 5.25 percent, and the FedEx Ground® surcharge rate jumped from 3.5 percent to 4.25 percent. There’s no doubt that these increases are going to impact online retailers during one of the busiest selling periods of the year: the holiday season.

So, what does this mean for small online businesses?

Starting today, fuel surcharge rates will increase for FedEx Ground, FedEx Express®, UPS Ground and UPS Air and International. Here are the new fuel surcharge indexes:

• FedEx Ground: 4.25 percent (vs. 3.5 percent)
• FedEx Express: 2.75 percent (vs. 1 percent)
• UPS Ground: 5.25 percent (vs. 4.75 percent)
• UPS Air and International: 4.5 percent (vs. 3 percent)

So, you will see a small cost increase on most packages, unless you happen to have negotiated fuel surcharge rates with these carriers. For example, previously with a $5 UPS Ground shipment, the fuel surcharge plus shipping would add up to $5.23. Now, it comes out to $5.26.

While that may not seem like a whole lot, be warned it will add up quickly for an online business that ships many parcels per day during the holidays.

How can small online businesses prepare for the FedEx and UPS fuel surcharge increases?

Business owners will want to take a hard look at their shipping mix to determine if they’re still using the best shipping options as the holidays approach. Oftentimes, a good alternative is the U.S. Postal Service®, since USPS® doesn’t have fuel or residential surcharges.

Along with the rate increase announcement, UPS warned online retailers to expect some deliveries to take one day longer during the holiday season. UPS noted that from Nov. 23 to Dec. 30, “a limited number of UPS Ground and UPS Standard” shipments that normally take three or more days will need an extra day. Additionally, UPS 2nd Day Air® and UPS 3 Day Select® packages shipped on Dec. 21 will take another day.

With such high package volume (from 14 million per day on average to 28 million during the holidays), UPS wants to make sure that online retailers know to expect delays during the holiday shipping season.

While the FedEx and UPS shipping rates and delays may be tricky to navigate this time of year, Santa Claus is coming to town whether we like it or not! So now is the time to start planning and preparing your shipping mix.

For more information on carrier fees, check out our FedEx vs. UPS vs. USPS page.