NewsFedEx and UPS delivery prices set for record-high Q4 according to TD Cowen
Ground shipping costs dropped two percent in the third quarter. Fuel surcharges and discounts helped ease prices for shippers. Holiday surcharges will push rates to record highs soon. Large volume customers are getting the best carrier discounts. Smaller businesses will keep paying higher rates on p
Check your shipping invoices this week. FedEx and UPS ground parcel rates are projected to jump to an all-time high of 43.3% above 2018 levels in the fourth quarter, according to the TD Cowen/AFS Freight Index released Wednesday. Mingshu Bates, who serves as chief analytics officer at AFS Logistics, tracks every package moving through the country's biggest delivery networks. The surprise is that even when diesel prices drop, shipping bills keep climbing because of how the carriers calculate their fees. Between 2021 and 2026, 72% of the ground fuel surcharge increase came from carrier formula adjustments rather than the price of fuel itself. That means if diesel prices went back to 2021 levels, shippers would still pay roughly triple what they paid back then. Both FedEx and UPS are focusing their best delivery discounts on massive enterprise shippers who can easily switch to rival carriers, leaving smaller businesses to absorb the top-line rates. "I think one thing we all know for sure is even when we see relief on diesel fuel price, we are not going to see material relief on fuel surcharge," Bates said. For your business, that means holiday shipping budgets need an extra cushion this season whether you are moving boxes across town or across the country. At least the cardboard box shortage is over, which is small comfort when the bill arrives.