Guide 1 of 11 · 6 minute read
How a parcel fuel surcharge is built
Four moving parts decide the fuel line on every parcel invoice. Know them and you know where the money can be saved.
The four parts
Every weekly parcel fuel surcharge comes from the same four ingredients:
- An index. Ground services use the U.S. Energy Information Administration (EIA) national average on-highway diesel price. Air and express services use EIA’s U.S. Gulf Coast jet fuel price.
- A table. Each carrier publishes its own table that turns a fuel price into a percentage. Two carriers can read the same diesel price and charge very different surcharges.
- Timing. Most carriers apply the price from one or two weeks earlier, so next Monday’s surcharge is usually knowable days in advance.
- A base. The percentage is applied to your transportation charges and, unless your contract says otherwise, to many accessorial charges too.
The carrier controls the first three. The fourth, and how much of the percentage you actually pay, is set by your contract. That is where optimization happens.
Why we quote fuel per $100
A surcharge of 30.25% means $30.25 of fuel for every $100 of shipping charges it applies to. Thinking in dollars per $100 makes three things easier: comparing carriers side by side, explaining the cost to a finance team, and seeing that a “small” 0.25-point weekly move is $2,500 a year on every $1 million of affected spend.
How the table steps
Ground tables move in quarter-point steps. Above a pivot price, UPS and FedEx Ground move 0.25 percentage points for every 9¢ of diesel. Below the pivot, the steps get coarser, so the surcharge falls more slowly when diesel drops. Carriers have moved that pivot upward more than once, which is why a surcharge can rise even when diesel is flat.
UPS rounds the diesel price to the nearest cent before the lookup; FedEx compares the unrounded price. On a boundary week, that alone can put the two a quarter point apart.
What the carrier does not control
The carrier sets the table, but not your contract. Fuel discounts, caps, excluded accessorials, service mix and carrier mix are all decisions you can make or negotiate. The rest of this playbook takes them one at a time.
Key takeaways
- Surcharge = index + table + timing + base.
- Quote it per $100 to compare carriers and explain it to finance.
- Each 0.25-point step is $2,500 a year per $1 million of affected spend.
- The table is the carrier’s; the terms around it are yours to negotiate.
By the Logistics Contract Optimizer team. Rates cited are from the week of November 2, 2026 unless stated; see the rate board for this week.