UPS and FedEx introduced temporary fees for shipments between the U.S. and the Middle East and bumped up their fuel surcharge rates as ripple effects from the Iran war strain logistics networks.
UPS announced that a $0.64 per-pound surge fee took effect Sunday for volume traveling from the U.S. to 15 countries in the Middle East, and vice versa. The fee, which remains in effect until further notice, applies to shipments using UPS Worldwide Express or one of five other services.
Meanwhile, FedEx started applying a $0.50 per-pound demand surcharge for parcel and freight shipments from the U.S. to dozens of countries in the Middle East, South Asia and Africa earlier this month. A $0.70 per-pound fee applies to shipments from those countries to the U.S. The surcharges are in effect until further notice.
FedEx also started applying a $1.50 per-pound surcharge on Monday for parcel and freight shipments traveling from the U.S. to Israel, up from $0.50 per pound previously.
UPS and FedEx's new surcharges appear to be a direct response to the war in Iran, oil price concerns and geopolitical risks, David Sullivan, director of professional services at ShipScience, said in a LinkedIn post. Parcel shippers should "expect more price volatility and targeted lane fees tied to the conflict," he added.
Both carriers acknowledged the effects of conflict in the Middle East in service alerts on their respective websites. UPS said it is tapping into contingency plans and working to limit the impact on customers. FedEx said it has resumed pickup and delivery services in the region where safe to do so, but noted that affected shipments will experience extended transit times.
Extensive air space closures in the Middle East due to the war in Iran are challenging connectivity between the Indian subcontinent and North America and Europe, Flexport said last week. The logistics provider added that the situation has forced carriers to take longer routes and carry heavier fuel loads, straining available air freight capacity.
Going forward, shippers should watch for fuel surcharge pricing swings, longer transit times on affected corridors, capacity pressures and potential variations in month-to-month invoices, ShipScience's Sullivan said. FedEx and UPS' weekly fuel surcharge rates are poised to jump further amid climbing diesel prices, and the Strait of Hormuz bordering Iran is a critical oil chokepoint.
UPS fuel fee rates in March
| Week starting | Ground | Domestic air | Air export | Air import |
|---|---|---|---|---|
| March 2 | 21.5% | 21.25% | 26% | 29.75% |
| March 9 | 22.75% | 23% | 27% | 30.75% |
| March 16 | 25.5% | 26% | 30.75% | 34.5% |
Source: UPS
FedEx fuel surcharge rates in March
| Week starting | Ground | Domestic air | Export | Import |
|---|---|---|---|---|
| March 2 | 22% | 21.75% | 26% | 29.75% |
| March 9 | 22.25% | 22.5% | 26.75% | 30.5% |
| March 16 | 25% | 25.5% | 30.75% | 34.5% |
Source: FedEx
UPS introduced further strain to shippers' 2026 budgets on Monday by increasing its fuel surcharge calculations for U.S. ground, air and Ground Saver services, leapfrogging similar fees from FedEx.
Both carriers set their fuel surcharge rates each week, making adjustments based on average diesel and jet fuel prices. Following Monday's calculation change, if the per-gallon price of diesel fuel is set at $3.85, a UPS Ground domestic shipment will face a 22.75% fuel surcharge rather than the previous 21.75% rate set in January. By comparison, FedEx's surcharge amounts to 22.25% for its comparable service at the same fuel price.
Fuel surcharges have been a thorn in shippers' side in recent quarters, with calculation adjustments driving up delivery prices further, according to parcel shipping experts. In Q4, a 4.7% year-over-year increase in diesel fuel prices corresponded with a 26% increase in carrier fuel surcharge rates, per the TD Cowen/AFS Freight Index.
"Fuel surcharge changes are anticipated to continue upholding carrier yields, despite easing diesel costs and ongoing volume pressures," according to a January presentation of the index.
For carriers, higher fuel surcharges can benefit their bottom lines. UPS' fuel surcharge revenue increased by $282 million in 2025 due to “revenue quality actions” that offset lower volumes, according to the carrier’s annual financial report.
Customers have options to mitigate the impact of fuel surcharges, according to Nate Skiver, parcel analyst and founder of LPF Spend Management. This includes negotiating customized terms for fuel surcharges, reducing spending on shipping charges that the fuel fee applies to, or exploring alternative carrier options, he said on LinkedIn.
