Amazon (AMZN) Stock Dips as 3.5% Fuel Surcharge Hits Third-Party Sellers

TLDR

• Amazon is adding a 3.5% fuel and logistics surcharge for third-party sellers in the U.S. and Canada, effective April 17.
• The move is tied to rising oil prices caused by the ongoing Iran war, now in its fifth week.
• The surcharge is calculated on fulfillment fees, not item sale prices, averaging about 17 cents per unit.
• UPS, FedEx, and the U.S. Postal Service have all rolled out similar surcharges in recent weeks.
• Amazon stock dropped 0.89%, while UPS fell 0.6% and FedEx traded roughly flat.

Amazon announced Thursday it will apply a temporary 3.5% fuel and logistics surcharge to fees charged to third-party sellers using its fulfillment services. The surcharge kicks in on April 17 for sellers in the U.S. and Canada.

Amazon.com, Inc., AMZN

The move comes as the Iran war, now five weeks in, continues to push energy prices higher. Brent crude June futures climbed more than 6% on Thursday to $107.35 per barrel, as investors tracked potential disruptions to oil shipments through the Strait of Hormuz.

Amazon said it had been absorbing the higher costs before deciding to pass a portion on to sellers. “When costs remain elevated, we implement temporary surcharges on our fulfillment fees to recover a portion of the actual cost increases we are experiencing,” the company said in its seller notice.

The surcharge will be based on fulfillment fees, not on the sale price of items. On average, it works out to around 17 cents per unit for Fulfillment by Amazon shipments, though the exact amount varies by item size and dimensions.

Wider Industry Picture

Amazon is far from alone here. UPS and FedEx both introduced higher fuel surcharges since the Iran war began. The U.S. Postal Service is also planning an 8% temporary price increase on shipping services starting April 26.

Amazon hosts around two million sellers on its marketplace, the majority of whom use Fulfillment by Amazon as their shipping method. That makes the surcharge fairly broad in reach across the platform.

Starting May 2, the surcharge will expand to cover “Buy with Prime” in the U.S. and multi-channel fulfillment services in both the U.S. and Canada. Remote fulfillment from the U.S. to Canada, Mexico, and Brazil will also be covered from April 17.

Market Reaction

AMZN stock was down 0.89% on the day. UPS slipped 0.6% to $97.35. FedEx held relatively steady at $359.30, up 0.41%.

The S&P 500 and Dow Jones Industrial Average were also in the red, falling 0.2% and 0.4%, respectively.

Oil prices continued to put pressure on logistics stocks broadly, with no clear end to the Middle East conflict in sight as of Thursday.

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