Ground parcel rates will hit a record 43.3% above the January 2018 baseline in the fourth quarter, up 5.8% year over year, according to the TD Cowen/AFS Freight Index released Tuesday, putting 2026 on track to be the most expensive year on record for parcel shipping in the United States.

Fuel is doing most of the damage. The average fuel surcharge climbed from 7.75% of the transportation rate in the first quarter of 2021 — when diesel averaged $2.91 a gallon — to 30% in September, when diesel peaked at $6.53 a gallon, the report noted. Nearly three quarters of that increase came from carriers quietly reindexing surcharge tables, not from the pump.

Even if diesel dropped back to the 2021 level, the surcharge would still sit at 23.75%, roughly three times the 2021 figure. That's the lever carriers won't release.

"While diesel and jet fuel are major costs for ground and express parcel, the fuel surcharge has become a revenue lever for carriers in addition to a pass-through mechanism for covering the cost of doing business," Mingshu Bates, chief analytics officer and president of parcel at AFS Logistics, said in a statement promoting the report. "Even if crude oil normalizes and fuel prices recede, the effective fuel surcharge will not show a material decrease."

What is FedEx changing for 2026?

FedEx (NYSE: FDX) announced a 5.9% average general rate increase effective Jan. 4, its fourth consecutive yearly hike at that level. Buried inside the new tariff: the reclassification of 2,533 ZIP codes from extended delivery area surcharge to remote DAS — the priciest tier. That's a far bigger reshuffle than earlier moves that touched a combined 239 ZIP codes across standard, extended and remote tiers.

For residential packages moving from extended to remote, the DAS fee jumps to $17.75 — roughly doubling the residential charge and more than tripling it for commercial deliveries, the report found.

FedEx also lifted its Ground minimum charge to $12.70, a 12% compounded jump in two years. Additional handling fees climbed 7% to 7.6%. New $25 Paper Document and $5 Paper Air Waybill fees reinforce the move away from physical shipping documents.

Lightweight e-commerce parcels absorbed the worst of it. Packages in the one-to-five pound range face increases near 6.5%, with ground pricing now nearly uniform across zones rather than concentrated on long-haul routes.

From January through mid-summer 2025, FedEx pushed through or announced more than 50 pricing changes spanning general rate increases, delivery area surcharges, customs fees and demand surcharges, parcel consultancy LJM previously reported.

How are shippers responding?

The proliferation of surcharges has shippers diversifying their vendor pool, and alternative carriers are picking up share from the legacy duopoly. DHL eCommerce, Amazon Shipping and OnTrac have all announced peak season surcharges, alongside FedEx, UPS (NYSE: UPS) and the U.S. Postal Service. DHL eCommerce's peak window runs in three pricing tiers starting in late October, with the steepest charges between Nov. 22 and Dec. 26 and distance-based add-ons layered on top.

LJM advised DHL customers to model peak charges by week, product, weight and zone, warning that a single average per-package surcharge no longer forecasts accurately.

Josh Dunham, co-founder and CEO of shipping intelligence platform Reveel, framed the shift bluntly: "[Accessorial] charges are now a preferred lever for increasing revenue-per-package. ... Carriers that for years pushed to gain market share now only want the shipments which are most profitable in their networks."

Charles Moore, vice president of parcel solutions at Transportation Insight, warned on LinkedIn that shippers with high residential volume, rural deliveries, lightweight packages or heavy accessorial exposure face increases materially above the headline 5.9%.

What does the Q3 data show?

The express parcel index is projected to set a record for the fifth straight quarter at 20.3%, up 13.8% year over year. Third-quarter express cost per package rose 1.1% from the prior quarter on higher billed weight, more premium service mix and heavier accessorial fees. Average billed weight keeps climbing as lightweight shipments shrink and carrier rating rules inflate billable weight.

Ground parcel cost per package dropped 2% quarter over quarter as lower fuel surcharges, fewer accessorials and deeper discounting offset rate pressure. The average effective fuel surcharge paid by shippers fell 4.7%, with diesel moderating through the first two months of the quarter before hitting a record high in September.

TD Cowen analysts said FedEx and UPS have more room to offer deeper customer discounts this year as network streamlining and efficiency programs lower operating costs. FedEx is skewing discounts heavily toward large accounts; UPS is concentrating increases in the small-and-medium segment, a cohort it has publicly courted as a strategic target.

With diesel now at historic highs, the index predicted carriers will make further fuel-related adjustments to capture the revenue windfall — and likely keep stacking accessorials well into 2026.