Retailers in the United States are facing record-high holiday delivery prices as rising fuel costs and changes to carrier calculations increase shipping expenses. According to the TD Cowen/AFS Freight Index, pricing for ground deliveries is expected to rise 5.8% in the fourth quarter of 2026 compared to the same period in 2025. Express parcel delivery costs are forecast to increase by 13.8%.
The price increases are largely attributed to diesel fuel surcharges. As of October 19, 2026, the Energy Information Administration (EIA) reported the average U.S. on-highway diesel price reached $6.28 per gallon. This represents a 65% increase since February 28, 2026, when the U.S. and Israel attacked Iran. Based on current EIA averages, UPS has set its fuel surcharge at 29.5%, while FedEx has established a 29% surcharge.
Mingshu Bates, chief analytics officer at AFS Logistics, noted that fuel surcharges are rising faster than actual fuel prices due to changes in how carriers calculate these fees. The AFS Freight Index shows that when diesel was $2.91 per gallon in 2021, the surcharge was 7.75%. Under current calculation methods, that same fuel price would result in a 23.75% surcharge. UPS stated its pricing reflects service quality and infrastructure investments, while FedEx did not provide an immediate comment.
For an average household or small business, these percentages translate to significant shifts in monthly logistics spending. For example, a surcharge that was once 7.75% of a base shipping rate has tripled to over 23% for the same amount of fuel, effectively adding several dollars to the cost of every parcel sent or received. The impact is widespread, as private regional carriers like OnTrac have also adopted surcharges as high as 29.5%, and even the U.S. Postal Service (USPS) introduced an 8% fuel surcharge in April 2026. Amazon sellers are also affected by a 3.5% logistics surcharge introduced the same month.
The knock-on effects include a potential shift in market share toward regional carriers and the USPS, though analysts from JPMorgan noted that switching carriers during the holiday peak is difficult because delivery plans are often set months in advance. To mitigate costs, members of the Retail Industry Leaders Association are increasingly offering consumer incentives to return online purchases at physical store locations. The next major milestone for the industry will occur this week, as UPS and FedEx are scheduled to report quarterly earnings, which will indicate if retail customers are successfully pushing back on these record-level surcharges.