Parcel Shipping Costs continue to rise for parcel shippers, especially those most reliant on UPS and FedEx. Developing a smart parcel shipping strategy is essential in today’s market to manage these increasing fees and surcharges effectively. Despite growing competition, carriers are introducing new charges year-round, making cost control more challenging than ever.
There are parcel shipping strategy that can help, however. Higher costs can be offset with tactics such as using data analytics, advanced parcel-specific BI tools, and carrier diversification.
Here we’ll explain what’s happening in the market and offer a comprehensive list of actionable ideas shippers can use to mitigate the impact they’re facing from the constant (and often low-key) drip of additional costs.
UPS and FedEx used to lean most heavily on their annual General Rate Increases (GRIs) as their time to raise rates. In recent years, however, they’ve added the practice of using smaller, more focused cost increases throughout the year to supplement their drive to create more revenue. These frequent changes require shippers to update their parcel shipping strategy regularly to stay ahead.
A great example is the carriers recently introducing a new Minimum Billable weight for packages that are subject to Additional Handling, regardless of the actual weight.
This change mimics how Large Package Surcharges are calculated and can significantly increase shipping costs, especially for dimensionally large but lightweight boxes. In addition to the new 40 lb. billing floor, another impactful change is that fuel surcharges and zone-based fees now apply to these packages.
As we noted, FedEx and UPS have moved from predictable annual increases to off-cycle pricing changes, often mid-year, to offset declining revenues.
These frequent, unexpected changes are usually announced with little or no fanfare. This makes it harder for shippers to forecast costs and protect margins, much less understand the full cost impact to their specific shipping budgets.
Of course, shippers do not need to accept everything the carriers throw at them. There are several tactics companies can employ to deal with the new and higher fees and surcharges.
Here are some ideas:
There is never a bad time to renegotiate your parcel contracts. And when the rate changes are coming as fast as they are these days you are always within your right to do so. When you see any rate change that concerns you, engage directly with a partner like TransImpact or your carrier reps to discuss relief or renegotiation.
Parcel shipping is a data-rich function, and it can offer a lot of answers. Taking the time to understand your shipment profiles, dimensional weights, zones, and historical spend allows you to make better tactical and strategic decisions in your parcel operations.
Employing a tool, like TransImpact’s Parcel Spend Intelligence platform makes it possible to perform independent cost impact analyses that can offer next-level actionable insights. Word of warning: the carriers offer data tools, too. But their interests contradict yours, so don’t rely solely on their technology to make data-driven decisions for you.
Package weights and dimensions directly impact shipping costs. And as the earlier example shows, subtle changes to weight and dimensions can trigger big surcharges. Tactics like reworking packaging or splitting larger shipments can reduce costs greatly.
UPS and FedEx (and USPS) are not the only options anymore. Shippers should evaluate regional carriers like OnTrac or Amazon to reduce costs and improve delivery speed, but should do so strategically to avoid volume-related penalties in national carrier contracts.
While diversifying carriers can reduce costs, it can also jeopardize discount tiers or trigger penalties in national agreements if minimum volume commitments aren’t met. Effective execution requires technology, internal alignment, and real-time analytics to isolate and route packages properly.
A proactive parcel shipping strategy that blends negotiation, analytics, packaging optimization, and carrier diversification is crucial for managing rising parcel shipping costs in 2025. Being reactive is expensive, but shippers who proactively manage data and carrier relationships will be best positioned to protect their margins and adapt to ongoing market changes.
TransImpact can model your shipping costs based on all the current rate updates so far in 2025. It’s a great, no-obligation way to set a baseline as you move towards peak shipping season and give you time to do something about it. Email sales-info@transimpact.com to learn more.
Watch our on-demand webinar, Beyond Rate Hikes: How Smart Shippers Are Beating Additional Handling Fees, to learn how to analyze your shipping data, mitigate surcharges, and negotiate smarter contracts.