With peak shipping season just around the corner, it’s time for small parcel shippers to get their supply chains ready. This means working with suppliers to ensure you have the inventory you need on hand, your sales forecasts are up-to-date, and your logistics operations are optimized. The best place for many companies to start is with updated rate agreements, including making sure you initiate a fresh FedEx contract negotiation.
The state of parcel in 2025
Why is a new contract with FedEx so high on the list? The main reason is that small parcel shipping represents a significant savings opportunity for many companies. It’s low hanging fruit. Shipping rates have increased consistently since the pandemic, leaving many companies paying not only the largest annual General Rate Increases (GRIs) on record, but lots of new fees and surcharge changes they may not realize exist.
The result is that many companies are paying above market rates compared to what they should be. This needs to be the year your company gets its FedEx contract back under control (and do it before the peak shipping season starts).
How to get the best FedEx rates in 2025?
The process of building a cost-optimized and smarter supply chain always begins with data. So, not surprisingly, negotiating a better FedEx contract requires getting yours organized.
1. Gather and Analyze Your Shipping Data
Preparation for a successful FedEx contract negotiation should begin by gathering shipment volumes and historical data. To get started, you’ll want to provide FedEx with detailed shipping information (a.k.a. your shipping DNA), including average weights, zones, and service levels, to build a case for the largest possible discounts. It’s essential to clearly understand your current shipping costs, including the impact of the 2025 GRI and any new surcharges introduced this year.
As we mentioned, there is probably a lot that’s changed that you haven’t noticed. And don’t forget, consolidating shipping across business units can maximize your volume and give you stronger negotiating power.
2. Benchmark Against the Market and Audit Invoices
Benchmarking your rates against the broader market is another critical step. Benchmarking tools can also help you compare FedEx’s rates against competitors like UPS and regional carriers. During negotiations, having solid data at your fingertips strengthens your position because FedEx knows that informed shippers are harder to push around. This is easier said than done, but we’ll offer a simple suggestion below to help.
Also, regularly audit your parcel invoices to catch billing errors or service failures that qualify for refunds. Many shippers overlook this, but proactive management or hiring a parcel audit firm can yield significant savings while centralizing your data and increasing visibility.
3. Leverage a Multi-Carrier Strategy
Adopting a multi-carrier strategy can also create leverage. Using or evaluating alternatives to FedEx, such as UPS, USPS, Amazon, or regional providers, shows FedEx you have options. This competitive pressure can encourage FedEx to offer more attractive terms to keep your business.
4. Identify and Address Key Cost Drivers
Understanding and addressing cost drivers is equally important. Work with FedEx to analyze factors like DIM weight rules, zone distribution, and surcharge triggers. Identifying these cost pressures allows you to find cost-saving initiatives, such as optimizing packaging, that justify more favorable pricing.
5. Negotiate Beyond Base Rates
Don’t limit negotiations to just base rate discounts. Push for reductions or waivers on common accessorial charges, such as residential surcharges, delivery area fees, and address correction charges. Also, request custom incentives for frequently used services like Ground Economy or Express Saver.
6. Consider Professional Parcel Negotiation Services
Finally, consider partnering with a parcel negotiation service. These specialists can uncover hidden fee patterns, model potential savings, and provide the hard-to-find market rate data information we mentioned earlier. With their expert guidance, your business can both significantly improve its shipping cost structure and gain a stronger position in carrier negotiations. That’s two ways to win, and lower your FedEx shipping costs.
Take control of your next FedEx contract negotiation
Parcel shipping costs continue to climb, especially for businesses heavily reliant on FedEx. Even as competition intensifies and the small package carriers battle for market share, FedEx (and UPS) continue introducing new fees and surcharges throughout the year. It’s the reality of shipping in 2025.
There is good news: renegotiating your FedEx contract with the right strategy can help you regain control over your costs. The way to start is by leveraging data analytics, parcel-focused BI tools, and the right contract negotiation service. Remember, you do not need to wait until your current contract expires to renegotiate.
TransImpact can model your precise shipping costs and tell you, to within 1/10 of 1%, what your FedEx rates COULD be under a new contract. There’s no obligation. Email sales-info@transimpact.com to talk to a parcel rate expert.