For small parcel shippers who watch closely, there are several contradictions in the marketplace right now. The national carriers’ parcel rates are up, yet they face declining volumes and more competition than ever.
So, what gives? TransImpact has written a 3-part series to explain the complete story and offer some ideas on what to do.
With the 2025 GRIs in place and the peak shipping season over, it’s time for parcel shippers to avoid any short-term thinking and focus on getting ready for what 2025 brings. A lot is going on in the parcel markets.
In this report, we help by addressing three specific areas that are important to parcel shippers right now:
- 2024 was a year filled with mid-year changes to rates and service rules. We’ll bring you up to speed, in detail, on the current state of rates, fees, and surcharges from UPS and FedEx.
- We’ll explain the many apparent contradictions in the carriers’ actions in 2024 and why it all matters in 2025.
- Shippers need to take action, too, because it’s the only way to deal with the increasing costs. We’ll provide four effective solutions, including some opportunities you’re probably overlooking.
The bottom line is this. It is a buyer’s market for parcel shippers. But many companies are still missing out.
Shippers that are savvy enough to improve their carrier contacts and ship more intelligently excel in the current environment. The companies that continue to operate the way they always have, hoping for the best, are falling behind. The one thing all companies need to recognize is that shipping costs and delivery performance are too important for profitability, and the customer experience shouldn’t be overlooked.
This is what’s important to know right now regarding rates (and also where the contradictions begin).
Here is Part 1:
1 – Despite being a shipper’s market, costs are going up. Next year’s GRI came in at 5.9% for both carriers (the same as last year). Yet, the real impact of last year’s GRIs was closer to 7.3% for UPS customers on average and 7.5% for FedEx based on TransImpact’s customer data! The high GRIs and even higher impact in real terms are reminders of the leverage the carriers have.
The real story of the GRI is surcharges. The 2025 increases in base rates are relatively modest, but the carriers are looking to drive more revenue from many of the most used surcharges.
The most extreme examples are the big increases in the Large Package Surcharge (LPS)/ Oversize (OS) and Additional Handling Surcharge (AHS). Both carriers are implementing increases in the neighborhood of 27% to these surcharges. The extreme increases are likely part of the carriers’ plans to eliminate non-holiday Peak charges.
But the big increases are not specific to those surcharges. The average increase across the most used surcharges is 13.6% with UPS and 12.4% with FedEx. These amounts are far above the 5.9% average GRI.
Here is a table comparing UPS’s 2024 and 2025 increases in the most used surcharges.
Here is a table comparing FedEx’s 2024 and 2025 increases in the most used surcharges.
We’re just getting started. Look for PART 2 of this 3-PART series for three more of our top things shippers need to be watching in 2025.
Check back at www.transimpact.com/nextsights for more.