FedEx and UPS General Rate Increase for 2025

Key Changes and How to Manage Them

Attention shippers: Get ready for a shake-up in 2025! FedEx and UPS have announced a general rate increase averaging 5.9%, signaling a significant shift in shipping costs that could reshape your logistics strategy. But it’s not just about higher rates—understanding the full impact of these changes, from service-specific adjustments to new surcharge policies, is crucial for smart shipping decisions. This guide unpacks all the details of the 2025 rate increases and gives you strategic insights to handle these shipping changes.

Detailed Breakdown of Rate Increases

General Rate Increase (GRI):

Both UPS and FedEx have announced a general rate increase of 5.9%, set to take effect on December 23, 2024, for UPS and January 6, 2025, for FedEx. It’s important to note that this rate does not uniformly apply to all services. For instance, services like two-day air are expected to see increases potentially exceeding 7%, reflecting the growing demand and cost associated with faster delivery options.

UPS Specific Changes in 2025

2025 GRI Changes for UPS:

Starting December 23, 2024, UPS is implementing a 5.9% rate increase across all ground, air, and international services. Alongside the general rate increase, UPS will adjust shipping surcharges and modify ZIP codes, effective October 21, 2024. These changes include a new 2% surcharge for payments made by credit card starting October 26, 2024, and redefined Area Surcharges with adjusted shipping zones, which could alter the cost of your usual shipping routes.

Surcharges and Strategic Adjustments:

UPS is revising its surcharge approach significantly. Key changes include adjustments to the Additional Handling Surcharge and the Oversize Package Surcharge. The realignment of ZIP codes and area surcharges starting October 21, 2024, may lead to notable shifts in costs for shipments to specific locations. Additionally, beginning January 27, 2025, UPS is introducing a new method for calculating Large Package Surcharges based on the mix of length, weight, or cubic volume, and a new 40-pound minimum billable weight for some packages will apply. This overhaul in surcharge calculations means that businesses, especially those shipping larger items, will need to reassess how they manage packaging and shipping logistics to keep costs manageable. For more details on the UPS shipping surcharge changes for 2025, check out our guide to UPS Surcharges and Value-Added Services for 2025.

FedEx Specific Changes in 2025

2025 GRI Changes for FedEx:

Starting January 6, 2025, FedEx is also instituting a 5.9% general rate increase across all its shipping services, including ground, air, and international. Similar to UPS, FedEx is making adjustments that extend beyond simple rate increases.

Surcharges and Strategic Adjustments:

FedEx is enhancing its additional handling surcharges, significantly impacting residential deliveries, large or bulky packages, and shipments to certain ZIP codes. Starting October 7, 2024, the new international fuel surcharge table will come into effect, tying surcharges to jet fuel prices. This can mean a 21% surcharge for exports and 24.75% for imports when jet fuel prices range between $1.83 and $1.87 per gallon, with potential increases if fuel prices rise further.

Impact Analysis

Service-Specific Effects:

Longer route ground services and expedited air services will face the highest increases, which could reshape how and when businesses choose to ship. Both carriers are adjusting rates and surcharges that may extend the distance for some shipments, potentially moving them into higher-cost zones. This could significantly affect overall shipping costs, especially for businesses that rely heavily on specific shipping routes or regional distribution strategies.

Dimensional Weight Pricing:

The cost for larger, bulkier packages will climb, penalizing inefficient shipping practices more harshly than before. From January 27, 2025, UPS will introduce significant changes for handling large or heavy items, adopting a cubic volume calculation for Additional Handling Charges (AHC) and revamping the Large Package Surcharge. FedEx continues to refine its dimensional weight pricing, impacting how businesses package and ship large or bulky items.

Adaptive Strategies for Businesses

Optimize Packaging: Streamline packaging to reduce costs associated with dimensional weight. This not only lowers shipping costs but is also an environmentally responsible practice.

Reassess Distribution Networks: Placing distribution centers closer to major customer bases can reduce long-haul shipping costs significantly.

How 3PL Center Can Help

3PL Center offers tailored solutions to help mitigate the impacts of these rate increases. With our industry expertise, we can provide significant savings and efficiencies:

Advanced Analytics and Freight Audits: Utilize our cutting-edge technology and services to perform comprehensive freight and parcel invoice audits. These audits help identify any overcharges, incorrect surcharges, or opportunities for cost savings. Our team ensures that you’re not paying more than necessary, which is crucial in managing increased rates and surcharges effectively.

Warehouse Management System (WMS): Our advanced WMS provides complete visibility and control over your inventory. With features like real-time tracking, rate shopping across carriers, and box optimization, we ensure you’re shipping the most cost-effective way possible.

Nationwide Warehouses for Strategic Shipping: With warehouses strategically located across the country, 3PL Center helps you determine the best shipping location based on your customers’ destinations. This reduces transit times and shipping costs while improving overall efficiency.

Check our guide for choosing the best carrier for oversized shipping. 

Navigate 2025 General Rate Increases with Expert Insights from 3PL Center

The 2025 rate increases by FedEx and UPS highlights the need for strategic planning and proactive logistics management. By understanding the specifics of these changes and collaborating with a skilled logistics partner like 3PL Center, you can effectively manage these challenges and turn potential setbacks into opportunities for optimization and growth. Contact us today to see how we can help your business prepare for a more efficient and cost-effective future.

FedEx and UPS General Rate Increase FAQS

How do the 2025 rate increases compare to previous years? The 2025 general rate increase of 5.9% by both FedEx and UPS is consistent with the trend seen in recent years where rate increases have generally hovered around this percentage. This contrasts with earlier decades where annual increases were often lower. These changes reflect evolving market conditions, including increased operating costs and investments in technology and infrastructure by the carriers. What specific steps can I take to mitigate the impact of these rate increases on my business? To mitigate the impact of the rate increases, consider auditing your shipping patterns to identify potential savings, such as consolidating shipments, optimizing packaging to reduce dimensional weight, or switching to different service levels where feasible. Additionally, engaging in carrier negotiations to secure better discounts or exploring alternative carriers for certain routes can also help manage costs. Are there any particular times of the year when the impact of these rate increases could be more significant? The impact of rate increases may be more significant during peak shipping seasons, such as the holidays, when shipping volumes are higher. Planning your inventory needs in advance and shipping during off-peak times can help reduce costs. Additionally, being aware of and planning for surcharge changes, especially those that apply seasonally, can help manage expenses more effectively during these busy periods.