What is the impact of geopolitical events on parcel delivery costs?

The Iran conflict has driven fuel prices significantly higher, with lasting effects on carrier economics. Fuel surcharges for UPS and FedEx have increased from approximately 9% in 2021 to over 23% currently. A FarEye report found that 88% of delivery operators report that delivery costs are growing as fast as revenue or faster, with fuel among the top three cost pressures. For shippers, this translates into higher shipping surcharges, making geopolitical events a material factor in carrier and shipping mode selection decisions.

How is trade policy affecting emerging parcel carriers?

The removal of de minimis exemptions has fundamentally altered the competitive landscape for carriers that grew alongside cross-border e-commerce platforms. Foreign retailers now face steeper tariffs and compliance barriers in the U.S. market. Emerging carriers that built their business serving these platforms are losing volume and facing pressure to find domestic customers in an increasingly crowded market. Additionally, regulatory scrutiny is intensifying on these carriers, including FTC investigations into cross-border retailers like Shein and calls from lawmakers for DOJ investigations into China-backed carriers.

What data security and national security risks are emerging in parcel delivery?

Data security failures and national security concerns are creating new compliance obligations for parcel carriers. SpeedX experienced one of the largest delivery industry data breaches, exposing 840 million customer and driver records. These incidents are prompting increased scrutiny of carrier data management practices. Additionally, there are emerging national security concerns about foreign-backed carriers' access to logistics data and customer information, as reflected in Senator Tom Cotton's call for DOJ investigation into alternative carriers.

How should shippers adjust their carrier strategy in response to these policy changes?

The article suggests that shippers should diversify carrier portfolios and evaluate partners based on a broader set of criteria beyond price and service levels. Shippers should now consider carrier regulatory discipline, labor stability, data security practices, and operational resilience in less predictable policy environments. The most durable partnerships will likely depend on continuity and predictable performance, suggesting a shift away from selecting carriers primarily on cost or speed toward partnerships with carriers demonstrating comprehensive risk management and regulatory compliance.

Labor & Workforce

High Impact

Politics and Policy Reshape Parcel Delivery Competition

Q: How are labor regulations affecting parcel carrier business models?

Multiple labor-related pressures are reshaping carrier operations. Unionized carriers face Teamster negotiations over wages and benefits, while alternative carriers using gig-based models are increasingly challenged through lawsuits over state labor code and Fair Labor Standards Act compliance. New proposed legislation in New York City and Chicago would require direct hiring of core warehouse and delivery workers instead of using delivery service providers, eliminating a cost-shifting mechanism that many carriers have relied upon. The DoorDash and Uber $131.5 million settlement with New York City's Department of Consumer and Worker Protection signals escalating enforcement.

Oct 15, 2026

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The signal

Political and policy forces are increasingly determining the competitive dynamics of the U.S. parcel delivery market, moving beyond traditional operational metrics. Labor regulation is intensifying across multiple fronts: Teamster negotiations affect unionized carriers, while gig-based delivery models face heightened scrutiny and legal challenges over labor compliance. Proposed legislation in New York City and Chicago would require companies to hire core warehouse and delivery workers directly rather than relying on delivery service providers.

Geopolitical tensions, particularly the Iran conflict, have driven fuel prices upward, with fuel surcharges for major carriers nearly tripling from 2021 levels (9% to over 23%). Trade policy shifts, including the removal of de minimis exemptions, are challenging the business models of emerging carriers that grew alongside cross-border e-commerce platforms. Additionally, data security failures and national security concerns about foreign-backed carriers are creating new compliance and reputational risks.

These structural shifts suggest that carrier selection will increasingly depend on regulatory discipline, labor stability, data security, and resilience rather than price and speed alone.

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#supply-chain-risk

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

this month

What if labor regulation forces all DSP-based operations to shift to direct hiring?

Assume that proposed legislation similar to New York City's Delivery Protection Act is enacted nationally, requiring all carriers and logistics providers to hire core warehouse and delivery workers directly instead of using delivery service providers. Model the impact on last-mile delivery capacity, labor costs, operational complexity, and carrier profitability across major metropolitan areas.

Run this scenario

Simulation Suggestion

strategic

What if fuel surcharges increase another 10 percentage points due to escalating conflict?

Model the impact on parcel shipping costs if fuel surcharges increase from current levels (23%+ for major carriers) to 33%+ due to continued Middle East geopolitical instability. Evaluate how this affects shipper mode selection between parcel and less-time-sensitive freight options, and how it influences carrier selection between high-cost premium carriers and emerging low-cost alternatives.

Run this scenario

Simulation Suggestion

this month

What if emerging carriers lose 40% of volume due to de minimis removal and regulatory pressure?

Simulate the capacity and market share impact if emerging alternative carriers lose significant volume as a result of de minimis exemption removal and intensifying regulatory scrutiny. Model how this affects last-mile capacity availability, pricing dynamics for shippers, and the viability of carriers dependent on cross-border e-commerce volume.

Run this scenario

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