The Maze: US online retailers should not assume cheaper diesel will restore old delivery bills. A new TD Cowen/AFS Logistics benchmark shows how parcel carriers' fuel-fee formulas can keep charges elevated. It forecasts a fourth-quarter record, although measured ground parcel costs actually fell in the third quarter.
Source: AFS Logistics via FreightWaves. The report separates changes to fuel tables from the effect of rising diesel prices.
The Details:
The formula moved as well as the fuel price. A fuel surcharge is an extra percentage added to the transportation charge. Carriers use tables to connect fuel prices to that percentage. Changing the table can therefore increase the fee even at the same diesel price. The new analysis puts the surcharge at 7.75% in early 2021 and 30% in September 2026. Diesel cost US$2.91 and US$6.53 per US gallon respectively. TD Cowen, an investment bank, and AFS Logistics, a freight-cost adviser, attribute 72% of the 22.25-percentage-point increase to table changes. Under today's tables, returning diesel to the earlier price would still leave a 23.75% surcharge. That is a hypothetical comparison, not a fuel-price forecast.
Actual bills still respond to discounts and shipment mix. In the measured third quarter, US ground parcel cost per package fell 2% from the previous quarter. Lower fuel fees, other extra charges and deeper discounts helped offset rate pressure. The effective fuel surcharge paid fell 4.7%. Express parcel cost per package moved the other way, rising 1.1% as billed package weight, premium-service usage and extra fees increased. These results matter because an advertised fee table does not describe every negotiated bill. What a retailer sends, which service it buys and its discounts can change the amount it actually pays.
The holiday record remains a forecast. The report projects the fourth-quarter ground parcel rate-per-package index at 43.3% above its January 2018 comparison level. That means 5.8% higher than a year earlier and 3.2% higher than the third quarter. It does not mean a 43.3% quarterly price increase. The index combines past shipping data and predictive models; net charges include extra fees. The forecast anticipates holiday demand and seasonal charges adding pressure. It cannot yet establish a completed fourth-quarter result, and it is not a promise that every merchant's cost will rise by the same percentage.
MarketMaze Take: A fuel surcharge can carry a pricing decision as well as a fuel-cost adjustment. The revealing evidence is the same-price comparison: today's table would charge substantially more than the 2021 table at identical diesel prices. Waiting for cheaper oil therefore leaves an important part of the delivery bill outside a retailer's control.
Compare the rule and the resulting invoice. For retailers outside the US, the useful lesson is to check how a contract converts fuel prices into fees, then compare total charges for their actual parcels. The US percentages do not establish prices elsewhere. A lower transport quote can be outweighed by a less favourable surcharge formula.
Leave room for offsets. The observed 2% ground-cost decline is the strongest objection to a simple “shipping only gets dearer” story. Discounts and shipment mix still matter. AFS also sells cost-management services, and its attribution is a benchmark analysis, not an independent audit of every carrier or proof of a particular merchant's savings.
Sources: FreightWaves, AFS Logistics, TD Cowen/AFS Freight Index
