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GAIN CONSULTING

Fuel Surcharges Hit U.S. Shippers Hard: What the Latest TD Cowen/AFS Index Means for Your Parcel Strategy


U.S. shippers are feeling the squeeze. According to the latest TD Cowen/AFS Freight Index, Q2 2026 brought record-high ground parcel rates driven by hefty fuel surcharges from FedEx and UPS, reduced discounts, and broader market pressures. For many businesses, delivery costs are climbing faster than expected — and the pain may not ease quickly.


Record-High Parcel Costs in Q2

The ground parcel rate per package hit 42.4% above its January 2018 baseline in Q2 — a 6.9% increase year-over-year. While seasonal trends are expected to bring a dip to 38.7% in Q3, that still represents a 5.2% YoY rise, putting 2026 on track to be the highest-cost year on record for parcel shipping.


Key drivers:

  • Fuel surcharges spiked due to geopolitical tensions, particularly disruptions in the Strait of Hormuz. The average net fuel surcharge per package rose 40% year-over-year.

  • At $4.50 per gallon diesel, Ground fuel surcharges now run 24.5–25%, up from 22.5% a year ago.

  • FedEx and UPS frequently adjust fuel fee calculations, meaning elevated surcharges are likely to persist even as diesel prices moderate.


Shippers also faced a slight decline in discount levels in Q2. While smaller and medium-sized businesses may still find favorable incentives, larger clients are seeing tighter terms.


Express Parcel Rates Also Climbing

Express shipments aren’t immune. The express parcel rate index reached 15.5% above baseline in Q2 and is projected to edge higher to 15.8% in Q3, fueled by elevated fuel costs, higher billed weights, and increased use of premium services.


Amazon Shipping: A Growing Competitive Threat

As costs from traditional carriers rise, Amazon Supply Chain Services (including Amazon Shipping) is emerging as a viable alternative. Amazon has been aggressively offering competitive rates and surcharge waivers to gain market share, particularly in residential and small-to-medium business segments where it has strong network density.


While the near-term impact may be limited, the long-term implications for FedEx and UPS pricing power are significant. Shippers with the right volume and mix could benefit from negotiating leverage or diversifying their carrier mix.


Strategic Implications for U.S. Shippers

In this environment, passive budgeting is no longer enough. Fuel volatility, carrier pricing strategies, and new market entrants demand proactive supply chain optimization. Here’s what smart shippers are doing:

  • Audit and Negotiate: Review current contracts for hidden fuel surcharge mechanics and discount erosion.

  • Diversify Carriers: Explore Amazon Shipping and regional/regional partners for cost relief on certain lanes.

  • Optimize Shipments: Right-size packaging, consolidate volumes, and shift where possible to ground vs. express.

  • Scenario Planning: Model tariff, fuel, and geopolitical risks to build resilience.


At Gain Consulting, we specialize in helping U.S. shippers navigate these challenges.


Our team provides:

  • Parcel spend analysis and carrier negotiation support

  • Multi-carrier strategy development

  • Fuel surcharge modeling and cost forecasting

  • Supply chain optimization to reduce overall delivery expenses


Don’t let rising parcel costs erode your margins. Contact Gain Consulting today for a no-obligation parcel cost assessment and tailored recommendations to strengthen your shipping strategy in 2026 and beyond.


Gain Consulting delivers actionable supply chain and logistics expertise to help businesses reduce costs, mitigate risks, and stay competitive in a volatile global market.


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