A fuel charge of 20% now applies to your total shipping cost. When you ship a small package, you’re not just paying for transportation; you’re also covering a long list of surcharges. One of the most significant (and often misunderstood) is the fuel surcharge. In your shipping invoices, you notice “fuel surcharges” labeled, which might look small, but this will add up to a significant cost later on.
In the realm of small parcel shipping, carriers including FedEx, UPS, and DHL balance changes in fuel prices and transportation expenses with fuel surcharges. In this article, we will talk about how fuel surcharges are calculated with some real-world examples
A fuel charge of 20% now applies to your total shipping cost. When you ship a small package, you’re not just paying for transportation; you’re also covering a long list of surcharges. One of the most significant (and often misunderstood) is the fuel surcharge. In your shipping invoices, you notice “fuel surcharges” labeled, which might look small, but this will add up to a significant cost later on.
In the realm of small parcel shipping, carriers including FedEx, UPS, and DHL balance changes in fuel prices and transportation expenses with fuel surcharges. In this article, we will talk about how fuel surcharges are calculated with some real-world examples
What is a Fuel Surcharge?
Regardless of destination, weight, or size, the fuel surcharge is a required cost for almost all shipments, whether they are made by air or by ground. Fuel surcharges are ubiquitous for small parcel shipments, unlike residential or handling fees.
It’s calculated as a percentage of your transportation cost plus applicable surcharges like:
- Residential delivery surcharge
- Delivery area surcharge
- Additional handling fees
Real-World Example
Let’s say your shipping charges include:
| Description | Cost |
| Transportation Cost | $14.59 |
| Delivery Area Surcharge | $5.25 |
| Residential Delivery Surcharge | $5.95 |
| Subtotal | $25.79 |
| Fuel @ 19.75% | $5.09 |
| Actual Total Cost | $30.88 |
How Carriers Calculate Fuel Surcharges?
Ground Shipments
- Based on the U.S. On-Highway Average Diesel Price.
- Weekly rates published by the U.S. Energy Information Administration (EIA).
- Carriers (UPS, FedEx) use this rate to determine your surcharge using their weekly fuel surcharge tables.
Express (Air) Shipments
- Based on the U.S. Gulf Coast spot price for jet fuel.
- Also tracked weekly and used in similar fuel tables for Express service levels.
Fuel surcharge percentages are updated weekly
This dynamic pricing means your shipping costs can change frequently, even if your shipping volume doesn’t.
Why it Matters for Your Bottom Line?
Fuel surcharges are applied on top of:
- Base transportation charges.
- Accessorial fees (like delivery area or residential surcharges).
As a result, even small changes in fuel rates can lead to major swings in your parcel spend.
How nVision Global Helps?
Our parcel experts can help you:
- Break down shipping costs
- Model fuel surcharge impacts
- Negotiate smarter contracts
- Implement cost-saving shipping strategies
Let us help you make sense of your parcel spending and reduce it.