Ground parcel rates will run 5.8% higher year over year this peak season, the largest all-in cost to ship a parcel on record, according to a quarterly analysis from cost-audit firm AFS Logistics and TD Cowen. For apparel and soft-goods shippers moving e-commerce volume, the pressure starts with demand surcharges that escalate from late November and doesn't stop at the pump.

The AFS ground rate-per-package index (the all-in cost to ship a ground parcel, benchmarked to January 2018) sits 43.3% above baseline. The express parcel index is up 20.3%, a fifth consecutive quarterly record. The figures draw on data covering more than $11 billion in annual freight spend across 1,800 companies.

What are carriers charging this peak season?

The immediate line items:

• UPS raised its ground residential surcharge 25% to 75 cents per package, with higher handling and large-package fees for the Nov. 22–Dec. 26 window.
• FedEx raised its ground residential fee 23.1% to 80 cents on a matching schedule.
• FedEx's general rate increase (GRI), effective Jan. 4, 2027, averages 5.9% — the fourth straight year at that figure — and reclassifies 2,533 ZIP codes from "extended" to the priciest "remote" delivery tier, lifting that fee to $17.75, roughly doubling residential charges and more than tripling commercial ones.
• UPS has not yet announced its 2027 GRI.

"For shippers, peak season involves a year-long tight-rope act of balancing volume across carriers to maintain access to capacity when orders really need to move and to limit the impact of demand surcharges that incrementally penalize volume that exceeds baselines established earlier in the year," said Mingshu Bates, chief analytics officer and president of parcel at AFS Logistics.

She added that the holiday peak accelerates the shift of share toward alternative carriers as shippers diversify to shield themselves from capacity risk and surcharge exposure.

Why won't fuel surcharges fall with diesel?

The structural story sits underneath the seasonal one. AFS calculates that of a 22.25-point rise in fuel surcharges — from 7.75% when diesel averaged $2.91 a gallon to 30% by September 2026, when diesel hit a record $6.53 — only 6.25 points came from the pump. The other 16 points came from carriers rewriting their surcharge tables. Even if diesel fell back to $2.91, shippers would still pay 23.75% extra.

"The fuel surcharge has become a revenue lever for carriers in addition to a pass-through mechanism for covering the cost of doing business," Bates said. "Even if crude oil normalizes and fuel prices recede, the effective fuel surcharge will not show a material decrease."

U.S. on-highway diesel has since eased for a third straight week to $6.179, down 35 cents from the September record, per the U.S. Energy Information Administration (EIA). Both carriers are also discounting more aggressively, but those discounts skew toward large customers, widening the gap between headline rates and what smaller shippers actually pay — a direct hit for mid-size apparel brands shipping direct-to-consumer.

What is happening in truckload and LTL?

Upstream freight modes show the same pricing power. AFS puts the truckload rate-per-mile index at 23.4% above the January 2018 baseline in Q4, up 14.7% year over year and the highest since Q1 2022 — driven by shrinking capacity, not demand. Less-than-truckload (LTL, consolidated shipments under a full truckload) is projected to set its third straight quarterly record at 82.5% above baseline.

"Underlying LTL demand remained soft in 2026," said Mich Fabriga, vice president of LTL pricing at AFS Logistics. "But through the combination of spiking fuel prices and a sustained commitment by carriers to prioritizing only profitable loads that fit their networks, LTL pricing has remained exceptionally strong."

J.B. Hunt's Q3 results Thursday aligned with the picture. Revenue rose 20% to $3.7 billion; fuel surcharge revenue soared 74% to $670.8 million while fuel and fuel tax expense rose 59% to $260.4 million, and operating margin still compressed to 6.7% from 7.9%. "Fuel surcharge programs recover costs over time, although rapid movements create a timing mismatch and dilute margins," CFO Brad Delco said on the earnings call.

Is modal shift the answer?

Shippers are already voting with their freight. J.B. Hunt's intermodal volumes rose 8% in the quarter, with road-to-rail conversions up 18% in its Eastern network. EVP of sales and marketing Spencer Frazier noted the spread between highway and intermodal rates is more than double the roughly 15% historical norm. "We do know that reliability today is winning over the lowest rate," he said. CEO Shelley Simpson added that cost pressure "typically yields a much better pricing environment for the next bid season."

For sourcing and logistics teams, the decision this cycle is concrete: rebalance parcel volume across carriers before baselines reset, model the Jan. 4 FedEx GRI and remote-ZIP reclassification against your delivery footprint, and price rail conversion into 2027 freight bids while the highway-intermodal spread stays wide.