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Amazon Adds Fuel, Inflation Surcharge to Fulfillment Services

Amazon is adding a 5 percent surcharge on top of its existing fulfillment rates in response to surging fuel costs and inflation, marking a first for the e-commerce behemoth.

The fee is effective April 28 for sellers who use the company’s Fulfillment by Amazon logistics services and is in addition to rates the company already charges on a per product unit basis. The surcharge, which was first reported by Bloomberg, does not apply to sellers that do not use Amazon’s fulfillment services.

“In 2022, we expected a return to normalcy as Covid-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” sellers were told in an email provided to Sourcing Journal by the company. “It is still unclear if these inflationary costs will go up or down, or for how long they will persist, so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers.”

Fulfillment by Amazon offers sellers in the company’s marketplace access to a network of more than 200 million square feet of warehouse space that allows for delivery and package tracking among other services to fill an online order.

Amazon said its fulfillment capacity is roughly double where it was pre-Covid and that it hired more than 750,000 part- and full-time workers since the start of the pandemic.

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“Like many, we have experienced significant cost increases and absorbed them, wherever possible, to reduce the impact on our selling partners. When we did increase fees, we were focused on addressing permanent costs and ensuring our fees were competitive with those charged by other service providers,” the email to sellers said.

The surcharge equates to 24 cents per unit. That compares to 42 cents per unit for UPS and 49 cents for FedEx.

Fulfillment by Amazon rates will total $2.52 per unit, with the fuel and inflation surcharge factored in.

“We know that changing fees impacts your business, and our teams are working each and every day to ensure FBA remains a great value for the premium fulfillment and delivery service it provides. Since 2020 and inclusive of this change, Amazon has increased fulfillment rates less than other carriers, and continues to cost significantly less than alternatives,” the email said.

Fuel surcharges have become more common amid rising transportation costs and continued online ordering.

On-demand ride and delivery apps, such as Instacart, Lyft and Uber, have also implemented fuel surcharges to offset rising costs for drivers.

Uber CEO Dara Khosrowshahi, when asked at the Shoptalk conference in Las Vegas last month how much higher the company’s prepared for gas prices to go, said, “ I do think that we’re certainly hoping the worst of gas prices is behind us and we will look to be a partner with drivers with couriers and with merchants.”

Uber’s temporary surcharge goes entirely to its network of drivers and amounts to a 35-cent or 45-cent charge for Uber Eats deliveries, calculated on the basis of location. The surcharge went into effect March 16 and runs for 60 days before the company said it will reassess the charge.