Parcel delivery rates: What 2025 could bring FedEx, UPS shippers

The window remains open for parcel shippers to secure lower rates in 2025, although shifting carrier strategies and growing surcharges could limit the potential for savings, experts told Supply Chain Dive.

FedEx, UPS and other carriers have deployed aggressive shipping discounts for more than a year to secure volume in a soft demand environment. Even recent price increases haven’t fully countered that behavior, with ground delivery costs projected to fall slightly year over year in Q1, according to the TD Cowen/AFS Freight Index.

UPS started the widespread discounting push in 2023 to lure back shippers who, fearing a strike at the delivery giant, had diverted their packages to other carriers, said Thomas Andersen, partner and EVP of supply chain services at LJM Group.

“What we saw was maybe a 15% jump in pricing flexibility a year and a half ago,” Andersen said. “The pullback might only be 2, 3, 4, 5%. It’s definitely not back at the level that it was before then.”

While pricing flexibility for shippers remains strong, Andersen and other experts don’t expect 2025 prices to be as alluring as last year. For one thing, packages on both ends of the weight spectrum are experiencing pricing pressure.

For example, changes to sub-pound rates at the U.S. Postal Service are cascading into higher costs for services that have historically relied on the agency for final-mile delivery. This means the era of generous rates for lightweight e-commerce packages “is coming to an end,” said Steven Bergan, president of parcel carrier GLS US.

“If you’re shipping sub-one pound, or even sub-three pounds…