Nobody is absorbing it this year

The EIA's national on-highway diesel average landed at $5.652 a gallon this week. That is up 19.8 cents from the week before, up 39.5 cents over two weeks, and up $1.944 from a year ago. Diesel costs nearly two dollars more per gallon than it did last August.

The regional spread is ugly in the places you would expect. West Coast is at $6.407. The Gulf Coast posted the largest weekly jump, up 24 cents to $5.481. Midwest is $5.636, East Coast $5.498.

None of this started as a freight story. It started in Hormuz. On August 24, the U.S. announced sanctions targeting nearly 60 Iranian trade and shipping entities. Iran promised retaliation the next day, more tankers were reportedly hit, and crude has been parked around $80 through all of it. AAA says this August is shaping up to be the highest on record for gasoline.

Underneath the price is a supply number that deserves more attention than it gets. U.S. distillate inventories came in at 103.4 million barrels for the week ending August 21, the lowest seasonal level on record. Diesel is not expensive because the market got spooked. It is expensive because there is not much of it, heading into the quarter when heating oil starts competing for the same barrels.

Now, the part that will bite later. Back in April, UPS quietly restructured its ground fuel surcharge index, moving the point at which the price ranges begin to widen from $3.55 per gallon to $4.45. At today's prices, you would never notice, which is precisely why it went through without much noise. The difference only shows up on the way down. Below roughly $4.35, the new table declines more slowly than the old one, and at $3.72, a perfectly ordinary price for most of 2025, shippers pay up to 1.50% more on Ground than they would have under the previous schedule.

That is the shape of the whole thing. The increase is automatic and immediate. The relief is discretionary and slow.

What this means for you: Go pull the fuel language out of your contracts and find out what it is actually indexed to, because a surcharge pegged to the DOE weekly average behaves nothing like a fixed schedule you negotiated when diesel was $3.70. If you are eating the gap, you now know roughly what that costs per week. Run a September invoice for one of your larger parcel clients before peak surcharges stack on top, because two increases landing in the same billing cycle are how a client decides you are the one who got expensive. And intermodal reads differently at these numbers: it carries roughly a 70% fuel-efficiency advantage over truckload, which is a hard sell at $3.70 per gallon of diesel and a much easier conversation at $5.65 per gallon.

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USPS moved first. A 6% average increase across package services, running October 4 through January 17. It covers Ground Advantage retail and commercial, Priority Mail, Priority Mail Express, and Parcel Select. The Postal Service described it as bringing prices in line with competitive practices, which is a diplomatic way of saying everybody else is doing it. Last year's peak surcharges averaged 4.9% to 5.8%, so this is a real step up. It also sits on top of the temporary 8% increase from April, which expires on January 17. Two increases, same end date, stacked.

UPS filed the larger, more complex one. Surcharges begin September 27, a second wave lands October 25, and peak pricing runs through January 16, with the most expensive stretch falling between November 22 and December 26. The menu: additional handling at $8.75 to $11.90 a package, large package surcharge at $96.25 to $117.50, over maximum limits at $530 to $590, a demand surcharge of $0.50 to $2.50 that climbs to $9.35 for high-volume shippers, and a $0.50 surge emergency fee.

The year-over-year comparison is where the strategy shows its value. Handling and size-based demand charges rose by roughly 6% to 10%, while flat service-level charges jumped by 22% to 25%. Carriers are not broadly raising the price of a normal package. They are raising the price of an awkward one. And UPS expects U.S. volume to climb about 24% from Q3 to Q4, roughly in line with last year, so this is not a capacity scare. It is a margin.

FedEx's additional fees start on September 21, making it the earliest of the three. OnTrac's demand surcharges took effect on September 26 and October 24. GOFO, meanwhile, is expanding to more than 12,000 U.S. zip codes and better than 80% of the population, which is the regional carriers doing exactly what they do in a year like this: showing up with a quote in October.

What this means for you: Build the surcharge calendar this week instead of in October. September 21, September 26, September 27, October 4, October 24, and October 25 are six separate cost events, and any client blindsided by the third one will assume you knew about the first two. The 22% to 25% jump in flat service-level charges makes cartonization the highest-return project on your floor right now, so pull your DIM data to see how many outbound boxes are one size away from a cheaper tier. Get to your brands before they set Q4 free-shipping thresholds, because a threshold set in August will feel awful by Thanksgiving. And if adding a regional carrier has been on the someday list, this is the quarter the pitch writes itself.

Different companies, different problems, zero connection between them. But Amazon and Gatik both pointed serious capital this week at the parts of the network people have spent a decade calling too variable to bother with.

Start with Amazon. Business Insider obtained internal planning documents describing Project Tetromino, an effort to build fully automated delivery stations. A delivery station is the last building a package sees before a driver picks it up, and today that work is people sorting parcels by hand, filling bags, and staging them in route order. The documents describe a pilot facility in 2028, throughput around 2.5 times current rates, and roughly $530 million in planned spending through 2029. The named technology partner is Boxbot, an Alameda startup that runs conveyors and AI-driven storage trays to sequence packages for loading, reportedly about 10 times faster than doing it by hand. Boxbot has raised $29.5 million, with Toyota Ventures and Maersk Growth on the cap table.

Amazon's response is worth reading closely. Spokesperson Brad Glasser said the details cited are inaccurate and do not reflect current plans, and that this is one of many initiatives the company regularly evaluates. That is a denial of the specifics, not of the project. Treat the 2028 date and the $530 million as directional. Amazon already runs more than a million robots, so nobody should be surprised it is sketching the next building.

Gatik is the opposite kind of story, in that it is already happening. The autonomous middle-mile company raised $200 million in a Series D led by the Qatar Investment Authority and Koch Disruptive Technologies, with Millennium, ARK Invest, and Intact Private Capital also in. Total raised is now around $470 million. The operating numbers are the interesting part: 85,000 driverless orders completed, more than $600 million in contracted revenue, a 99% on-time rate, and live routes across Texas, Arizona, Arkansas, and Canada. PepsiCo has Gatik moving freight to roughly 250 retail locations. The plan is to go from dozens of trucks to thousands, mass-produced with Isuzu at a South Carolina plant slated for late 2027.

Here is why they belong on the same page despite having nothing to do with each other. Gatik does not run long-haul. It runs fixed, repeatable, high-frequency lanes up to 400 miles, the unglamorous out-and-back between a DC and a cluster of stores. That is the same kind of work as sorting a delivery station at three in the morning: predictable, repetitive, brutal to staff, and, until recently, not worth the engineering. Two completely unrelated sets of investors just decided it is worth the engineering.

We noted in Edition 60 that dock automation had gone from concept to bid-able. This is the same move, one layer further out from the building.

What this means for you: If you run dedicated shuttle lanes for clients, find out what Gatik is actually charging for a 400-mile out-and-back, because you will get asked about it in an RFP long before the technology is everywhere. The middle mile is where this lands first, not the long haul, and it is the piece of your network with the most predictable route structure. Regarding labor, the planning question is not whether sortation will be automated. It is what happens to your wage scale when the local delivery station needs half the seasonal headcount it needed last year, because that labor pool loosens before anything else in your market moves. And be careful how you talk about any of this with clients. Gatik has 85,000 completed driverless orders. Tetromino has a leaked document that its own company is disputing. Those are not in the same tense.

M&A
Pike Street Capital is shopping QuickBox, the e-commerce fulfillment and 3PL provider, per Axios Pro on August 26. The details are thin behind the paywall: no revenue, no EBITDA, no banker, no valuation guidance. The direction is the interesting part. The last two editions covered strategic buyers picking up regional operations, and this is a private equity sponsor testing the exit side of the same market. If you own a fulfillment business and have been wondering what a sales process looks like right now, this is the one to watch for where it prices. We also help with 3PL M&A, so feel free to get in touch by replying to this email.

FULFILLMENT
Amazon is now letting FBA sellers pay to get more inventory into Sub Same-Day. SSD offers two- to five-hour delivery from dedicated fulfillment centers near roughly 2,300 metro areas, and Amazon has always placed some products there on its own based on demand and supply signals. The new part is essentially an auction: sellers bid a per-unit price for additional products and pay only for the units that actually ship through SSD. Amazon says products in the network see about a 12% sales lift versus standard FBA in the same areas. Sellers are not delighted. One summed it up as Amazon already charging the customer for fast delivery and now asking the seller to chip in too. If you do FBA prep or advise Amazon sellers, you will get this question within two weeks, and the honest answer is that a 12% average lift means nothing until the client's own margin clears their bid.

WAREHOUSING
Walmart is investing $1.3 billion in a 1.5-million-square-foot fulfillment center in Carnesville, Georgia, breaking ground later this year and expected to create around 1,000 jobs. It is the company's sixth next-generation facility, all of which are positioned to widen same-day and next-day coverage. Walmart is also retrofitting 23 of its 42 regional distribution centers with automation and intends to reach all of them eventually. More than half of its e-commerce fulfillment volume already moves through automated systems. Company guidance places peak supply chain spending in 2026 and 2027, so this is the crest of the wave rather than its start. If you operate anywhere in the Northeast Georgia labor shed, price your wages against what Walmart posts when hiring opens, not against what your neighbors pay today.

TRADE POLICY
Canada published its retaliation list: $27.6 billion in counter-tariffs on U.S. imports effective September 8, at rates of 15%, 25%, and 50%, covering seafood, dairy, paper, furniture, apparel, cosmetics, tools, motorcycles, steel, and aluminum. That follows the 50% U.S. levies on roughly $20 billion of Canadian goods that took effect on August 24 after talks collapsed. Read that category list with a warehouse in mind, and paper turns up again, this time from the other direction, next to furniture and apparel. Corrugated input prices are already spiking back toward 2022 levels. If you have clients shipping north, September 8 is a hard date, and you have a week and a half before the phone starts.

TECHNOLOGY
Descartes bought Tai for $100 million in cash, announced August 24. Tai is a California-based TMS broker covering quoting, sourcing, execution, and invoicing across truckload, LTL, drayage, and cross-border. It is Descartes' third deal of 2026, after Drivin at $30 million in July and Idelic at $28 million in April, and its 34th since 2017. CEO Ed Ryan framed the fit around carrier onboarding, compliance, fraud prevention, and visibility, a sentence that would have sounded like filler two years ago and reads as a strategy now that broker liability looks the way it does. The pattern worth watching: the money in freight tech is moving toward proving exactly who touched your load.

CARRIER FAILURES
At least 21 transportation and logistics companies filed for bankruptcy protection between July 27 and August 25. The biggest is BFG Supply, an Indianapolis distributor operating 15 warehouses, which filed for Chapter 11 on August 18, with assets and liabilities between $100 million and $500 million and more than 100,000 creditors. Most of the rest are small and grim: PLR Transport of Pembroke Pines filed Chapter 7 on August 21, listing $21,520 in assets against $5.33 million in liabilities. It is not only trucking, either. Freight forwarders, cold storage operators, and distributors are on the list, including Royal Cold Storage and Jet-Speed Logistics. Firming rates do not save a company that ran out of cash two years ago. If there is a subcontractor or a partner you have not checked on since spring, check.

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