What: Fourth-quarter US ground delivery pricing is forecast to rise 5.8% year on year and express pricing 13.8%, driven by carrier fuel surcharges that are climbing faster than diesel prices.

Why it is important: Carrier surcharges now rise faster than diesel prices, which makes US retailers' delivery costs structurally higher and less predictable, adding to the cost pressures the Iran conflict has put on retail since March 2026.

The most expensive parcel shipping year on record is on track to end with the highest-ever US holiday delivery prices, as soaring diesel prices push UPS and FedEx fuel surcharges higher. According to the TD Cowen/AFS Freight Index, fourth-quarter ground delivery pricing is forecast to be 5.8% above last year, while express pricing is expected to jump 13.8%.

US on-highway diesel averaged $6.28 per gallon as of October 19, up 65% since the US and Israel attacked Iran on February 28. At that price, UPS's fuel surcharge is 29.5% and FedEx's is 29%. Diesel increases account for just under 30% of surcharge costs, according to AFS Logistics, as changes to carriers' calculations raise surcharges even when fuel prices do not. At $2.91 diesel in early 2021, the index surcharge was 7.75%; the same price would now mean 23.75%.

USPS charges an 8% fuel surcharge and Amazon adds a 3.5% surcharge to seller fulfilment fees, but OnTrac's West Coast surcharge is 29.5%. Analysts say splitting deliveries can nullify savings and holiday plans are set months ahead, while JPMorgan analysts consider it unlikely Amazon will soon break UPS and FedEx's grip on the market.

IADS Notes: Carriers' move from static to real-time, demand-driven pricing was already forcing retailers to rework logistics and cost management, as Harvard Business Review reported in February 2026. The Iran conflict then compounded these pressures. Inside Retail in March 2026 described supply chains thrown into disarray and a growing need for scenario planning, while Forbes that same month framed the conflict as a compounding cost crisis driven by energy prices and inflation. By April, Reuters showed these cost increases reaching packaging and transportation, with retailers responding through price hikes and higher advertising spend. Meanwhile, Reuters in March 2026 reported that Amazon's one-hour shipping in US cities was raising consumer expectations for rapid fulfilment and pressuring other retailers to adapt.

US retailers face record holiday delivery prices from surcharges tied to costlier diesel