A Perspective on UPS’s Recent Surcharge and Processing Fee Adjustments
UPS has announced a series of adjustments to its fuel surcharges and processing fees, effective March 10, 2025. We see these changes not merely as incremental updates but as signals of broader dynamics that reflect the shipping giant’s continued effort to strengthen its financial footing amidst significant market disruption. Below, we offer clarity on what changed, our perspective on these changes, and their implications on shippers looking to navigate this evolving landscape.
What changed? An overview:
0.5% increase in fuel surcharges on US domestic air, ground, and SurePost (Ground Saver), which took effect March 10, 2025
Multiple processing fee adjustments implemented March 31, 2025 which will affect shippers differently depending on how they remit payment to UPS
Late payment fees increasing from 8.0% to 9.9% of total past due invoice balance. As an aside, FedEx has recently followed suit, announcing the same effective change to past due balances effective June 1, 2025,
$25 per-payment-charge for check or wire transfer (fee will not apply to ACH)
$5 fee for each printed UPS invoice copy sent to shipper
UPS will also eliminate the 2% surcharge for invoices paid by credit card and implement a standard 2% “payment processing fee” for each invoice beginning May 19, 2025
The Fuel Surcharge Increase: A Response to Market Realities
UPS is raising its fuel surcharge percentages by 0.5% for ground, air, and SurePost / Ground Saver services. This adjustment, while modest, reflects the carrier’s ongoing effort to align pricing with the volatility of fuel costs—a practice rooted in the industry’s history since the 1970s oil crisis, when surcharges emerged to stabilize operations amid unpredictable energy markets.
These adjustments are not arbitrary; they are calculated weekly, tethered to benchmarks like the U.S. Energy Information Administration’s diesel and jet fuel indices, ensuring a responsive mechanism to market fluctuations. Given the ongoing to volatility, and continued desires to drive downward pressure on oil pricing, we anticipate 2025 will see more of what we saw in 2024 when UPS’s ground fuel surcharge rose by 15% from Q1 2024 to Q1 2025, despite an 8.4% decline in diesel prices over the same period.
This divergence suggests that surcharges may also serve as a tool for profitability in a challenging demand environment, a nuance that shippers must understand. It’s critical to review your shipping contracts, analyze fuel surcharge trends, and engage in strategic dialogue with UPS to explore mitigation strategies, such as negotiating discounts or optimizing shipment consolidation.
Processing Fee Adjustments: Navigating New Costs
Alongside fuel surcharges, UPS is introducing changes to its processing fees, including a higher late payment fee, which will increase from 8.0% to 9.9% of total past due invoice balance and new charges for check and wire transfer payments. These adjustments, while administrative in nature, add layers of complexity to the cost structure for shippers
Lastly, the elimination of 2% surcharge for credit card payments in favor of a 2% processing fee for each invoice creates an opportunity for UPS to earn “processing revenues” on a far greater balance of transactions. Though it can be difficult to gather exact data, synthesizing reports from Clearly Payments, Forbes, WalletHub, and others, evidence suggests that between 20%-30% of B2B invoices are resolved via credit card. Naturally, this increases the volume of transactions that UPS can monetize to reinforce earnings.
The Broader context: A Competitive and Volatile Landscape
All of this hints at a broader industry trend, with FedEx potentially poised to mirror UPS’s surcharge adjustments, as the two carriers often align pricing strategies. This competitive dynamic, coupled with a 5.9% average rate increase already in effect for 2025, places shippers in a position of increased pressure. We advise clients to see this not as a burden but as an invitation to sharpen their strategic acumen. Knowledge of these changes offers leverage for negotiation. Shippers can renegotiate rates and surcharges, explore alternative carriers, or invest in data analytics to optimize shipping decisions.
Tread wisely.