By Liz Young
Steven Mazur has spent the past year figuring out how to absorb about half a million dollars in additional tariffs without dramatically raising prices at his men's clothing brand, Ash & Erie.
Now, Mazur is getting hit with another unexpected cost in the form of higher shipping rates due to skyrocketing fuel prices.
"These fuel surcharges really feel like tariffs 2.0," said Mazur, referring to the fees parcel carriers charge to offset transportation costs. "It feels like one of those things that, again, you can't plan for but is very important and makes a big impact on the business and the bottom line."
Ash & Erie is one of the small businesses across the U.S. starting to feel the indirect effects of the Iran war as parcel carriers including FedEx, United Parcel Service and the U.S. Postal Service increase prices to help cover rising fuel costs.
Mazur and other small-business owners say the additional costs could hardly come at a worse time. Many are still struggling to adjust to the high cost of new tariffs levied by the Trump administration beginning last year. They now are grappling with absorbing higher fuel surcharges while trying to avoid steep price increases for customers.
On-highway diesel fuel prices climbed to $5.401 as of March 30, up 39% from the beginning of March and 50% higher than a year earlier, according to the U.S. Energy Information Administration.
The U.S. Postal Service last week announced its first-ever temporary price increase specifically to help cover rising fuel, insurance, vehicle maintenance and other costs. The carrier plans to raise prices 8% starting April 26 and ending next January.
FedEx and United Parcel Service are adjusting their fuel surcharges weekly based on diesel prices. As of March 30 for domestic ground shipments, FedEx is charging an additional 26.5% of the shipping cost and UPS is charging 27%.
Amazon.com told customers of its fulfillment services Thursday that it will apply a 3.5% surcharge to fulfillment fees beginning April 17 to help offset increased fuel and logistics costs. Amazon noted the surcharge will come out to about 17 cents on average for U.S. shipments.
Fuel surcharges are a tool long used by parcel delivery companies to control their exposure to volatile fuel prices. The surcharges fluctuate based on the cost of diesel.
Companies that ship a large number of packages per year often negotiate lower fuel surcharges into their contracts with parcel carriers. Smaller merchants generally lack the size and scale to lock in the lowest rates, said Satish Jindel, president of ShipMatrix, which tracks parcel shipping data.
Jindel said the rise in fuel prices over the past month has led to particularly sudden and steep increases in fuel surcharges.
"There have been times when the fuel price was $80, $90 per barrel, but that was many years ago, and it didn't spike as rapidly," Jindel said. On Thursday, oil was trading above $110 a barrel.
For an e-commerce shipment weighing 2 pounds, the fuel surcharges amount to about $2 out of an average $9.50 total shipping cost, according to ShipMatrix. That is up about 40 cents from a month ago.
For merchants like Amberjack, even a seemingly small increase in the cost per shipment can add up to thousands of dollars each month. The seller of men's dress shoes mails roughly 15,000 packages a month.
John Peters, the founder and chief executive of Amberjack, said he is also getting hit with higher fuel surcharges from ocean and air carriers and trucking companies. He said he is reluctant to pass along cost increases to his customers, who include working professionals like teachers and pilots.
"We have a price-sensitive customer," Peters said. "So we're a little bit stuck right now."
Peters said he raised some prices by $5 to $7 last year to help offset the cost of tariffs and received a lot of pushback from customers. "We got a lot of nasty replies to that," he said.
Caraway Home, which sells kitchen goods such as pots and pans, raised some prices and dropped others last year to pass along some tariff costs while trying to keep customers happy.
Rob Snowden, the company's senior director of supply chain, said he is now evaluating increasing the thresholds of what shoppers have to spend to qualify for free shipping among other possible ways to absorb higher shipping costs.
"As a business, we've got to put options on the table and say, 'OK, the unit economics are now strained. How are we going to make this work?'" Snowden said. "That was a huge question with tariffs, and now this just compounds on top of that."
Write to Liz Young at liz.young@wsj.com
(END) Dow Jones Newswires
April 03, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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