No one knows how the conflict will evolve, but we know how much it has impacted domestic shipping costs to date, how per-gallon increases impact total costs, and why some increases won’t go away any time soon.
Oil prices are on everyone’s mind.The conflict in Iran, the issues surrounding the straights of Hormuz, and the resulting volatility of energy markets have dominated business headlines since the conflict began on February 28, 2026.
Although it’s anyone’s guess where oil prices will land, we know how the surcharge increases introduced since the start of the conflict have impacted shippers’ costs.Before I delve into what those extra costs have amounted to – and what shippers can do about them – it’s important to put fuel surcharges in context.
Most supply chain professionals know that carriers’ fuel charges are based on the average price-per-gallon of diesel fuel and jet fuel as published weekly by the U.S. Energy Information Administration.In turn, carriers have created public-facing tables that dictate what they will charge for fuel as those average per-gallon costs increase or decrease. This means the impact of fuel surcharges is dependent both on the price of fuel and carrier fuel tables.
But as shippers know, carriers can change their tables at will to protect revenue. In recent years, leaders like FedEx and UPS have done so on a near quarterly basis – often with little warning. That is one of the reasons that fuel surcharges which look small on paper – typically in increments of .5% to 1.0% – have already begun to add up and translate into significant, unexpected shipping cost increases even before the conflict thrust them into the headlines. In fact, every 1% increase carriers make to the fuel tables increases shipping costs by about ~0.64% (ground) / ~0.59% (air).
In our analysis of the domestic market, we also isolated the impact of fuel price fluctuations. We found that every $0.09 increase per-gallon in diesel increases the total cost of a ground shipment by ~0.16% and every $0.05 increase per-gallon in jet fuel increases the total cost of an air shipment by ~0.15%.This means that since February 28, 2026 (start of the Iran conflict):
●Total ground shipping costs increased by 2.88%, a rise that if annualized would cost a $20 million ground shipper $576k as a result of the uptick in the per-gallon price of diesel;
●Total air shipping costs increased by 4.5%, a rise that if annualized would cost a $20 million air shipper $900k as a result of the uptick in the per-gallon price of jet fuel.
In simpler terms:
Those are not insignificant increases when viewed as one of many accessorial charges impacting overall landed costs or the increased impact of fuel surcharges in recent years. But there’s more. The update to UPS’ fuel surcharge table that went effective on April 13 accounted for where fuel prices could go – ground reaching $6.16 per gallon and air hitting $4.41 per gallon. No surprise there.
But a more significant change can be seen on the floor of the table, where surcharges are calculated for diesel across the $3.64 to $4.18 per-gallon range with increases from .50% to 1.5% percent.What that means is that when fuel prices eventually decline, shippers won’t see a return to the surcharge levels they had before the conflict in Iran. What we are seeing is a forward-looking price increase embedded in a structural update.
What can shippers’ do? First, it is imperative to gain visibility over parcel spend and the ability to proactively manage it. Monitoring fuel surcharge tables is also no longer optional. Fuel-cost dynamics should also be included in forecasting and ironically, it’s also time to ask, “What does my blended fuel cost look like when diesel drops back to $3.50?” As always, the shipping landscape is full of surprises.
Quinn Nelson is a Transportation and Business Intelligence professional at Reveel with over a decade of experience helping organizations optimize parcel spend strategies and leverage data-driven insights. He specializes in customized parcel analytics, transportation business intelligence design, and serving as a subject matter expert on parcel spend. Quinn holds a degree in Logistics and Supply Chain Management from Ball State University. Prior to joining Reveel, he held senior analytics and business intelligence roles at Körber Supply Chain, enVista, and Discover Financial Services.
