Dive Brief:
- Amazon will soon levy a 3.5% fuel and logistics-related surcharge on fulfillment services for third-party sellers as the e-commerce giant battles elevated operating costs, according to an announcement Thursday.
- Starting April 17, the surcharge will be applied to fulfillment fees for the company's Fulfillment by Amazon service in the U.S. and Canada, in addition to Remote Fulfillment with FBA shipping from the U.S. to Canada, Mexico and Brazil. On May 2, the surcharge will also begin applying to Buy with Prime in the U.S. and Multi-Channel Fulfillment services in the U.S. and Canada.
- The surcharge, which Amazon did not provide an end date for, is calculated based on seller fulfillment fees rather than the sale price of the items, according to Amazon. The 3.5% levy equates to an additional 17 cents per unit for U.S. Fulfillment by Amazon services, although it varies based on item size and dimensions.
Dive Insight:
Amazon is joining the list of major logistics providers that are hitting shippers with price hikes and elevated surcharges as fuel costs rise amid the war in Iran. UPS and FedEx's fuel surcharge rates continue to climb, and the U.S. Postal Service plans to launch an 8% temporary price hike on package shipping services April 26.
"We have absorbed these increased costs so far," Amazon said in its announcement. "However, similar to other major carriers, when costs remain elevated, we implement temporary surcharges on our fulfillment fees to recover a portion of the actual cost increases we are experiencing."
Amazon added that its 3.5% price bump "is meaningfully lower than other major carriers" due to work it has already done to lower costs. In recent years, the company has overhauled its inbound fulfillment processes, pushed for order consolidation into fewer boxes and shifted from a national to a regional network model in the U.S.
Some e-commerce experts are skeptical that the surcharge will be a short-term increase. Noah Wickham, VP of sales and marketing at Amazon seller agency My Amazon Guy, said in a LinkedIn post that he expects the company will "keep it regardless" even if fuel prices fall and stabilize.
It's not the first time Amazon has levied a surcharge to account for rising fuel costs. In 2022, the company implemented a 5% fuel and inflation surcharge on Fulfillment by Amazon services. This year, Amazon increased fees on Fulfillment by Amazon services in January, averaging an additional 8 cents per unit sold.
