2025 Shipping Rate Hikes: What to Expect and How U-PIC Can Help Manage the Costs

Posted on November 6, 2024, by Matt Morelli

Every year, shippers brace for the General Rate Increase (GRI) from UPS and FedEx, anticipating how it will reshape shipping budgets. In 2025, both carriers are rolling out a 5.9% average rate hike, but as usual, this “average” tells only part of the story. Variations by service, weight, and destination mean some shipments will feel the increase more than others.

Here’s what to expect—and how U-PIC Shipping Insurance can help you handle these cost increases effectively.

Image: Packages sitting on a desk in front of a computer with shipping statistics and graphs on the screen.

Key Changes from UPS in 2025

UPS will roll out its GRI early this year, with rates effective December 23, 2024, right after peak season ends. Here are the most important changes you need to know:

  • ZIP Code Shuffle: Starting October 21, UPS will add new ZIP codes to its surcharge list. Check to see if your shipping areas are impacted, as this change could increase costs in certain regions.
  • Surcharge Overhaul: Beginning January 27, 2025, UPS will calculate large package surcharges based on cubic volume instead of “length plus girth.” Bulky but lightweight packages will incur a minimum charge based on a 40-pound weight, making it essential to revisit packaging strategies.
  • Credit Card Fee: A 2% fee for credit card payments starts on October 26, 2024. If you regularly pay UPS by card, consider switching payment methods to avoid this fee.
FedEx’s 2025 Rate Hike Breakdown

FedEx’s rate increase, effective January 6, 2025, includes similar changes but with additional considerations that might affect shippers with specific needs:

  • Weight and Zone Sensitivity: FedEx is targeting heavier packages for Ground and Home Delivery, with an average increase of 6.6% for long-distance, high-weight shipments.
  • Two-Day and Overnight Express: Priority and Standard Overnight services will see larger increases for long-distance shipments, impacting shippers relying on fast delivery options.
  • Surcharges and Fuel Costs: FedEx is increasing surcharges for bulky and residential deliveries and introducing new adjustments based on fluctuating jet fuel prices. This may add volatility, especially for international shipments.
Five Tips to Tackle the 2025 GRI

While annual GRIs can be frustrating, here are a few steps you can take to control costs effectively:

  1. Audit Your Shipping Profile: Review your shipping data to see where rate increases will hit hardest. Auditing may reveal unused services or avoidable fees. Companies like Shipware can help you with parcel auditing if you need professional support.
  2. Expand Your Carrier Options: Regional carriers or alternative parcel solutions may offer savings. For example, shippers like OnTrac provide competitive options for certain routes, which could lower costs and diversify your shipping strategy.
  3. Negotiate Discounts: Use your shipping data to negotiate discounts with carriers. The more you understand your shipping needs, the better you can leverage discounts or custom terms.
  4. Stay Updated on ZIP Code Changes: Both UPS and FedEx are adjusting surcharge zones. Stay updated on ZIP code changes to ensure cost-effective routing and, where possible, avoid heavily surcharged areas.
  5. Revisit Packaging Choices: With UPS moving to cubic volume-based surcharges, reducing package size can help control costs, especially for oversized items. Optimizing packaging could keep you within lower rate brackets.
  6. Insure Shipments with U-PIC: Insuring packages with U-PIC can save 50%–90% compared to carrier insurance. If you’re unable to reduce shipping costs with UPS or FedEx, using U-PIC is a simple way to cut expenses. We offer competitive rates and a quick, hassle-free claims process, so you don’t just save money—you gain peace of mind. Beyond cost savings, insuring with U-PIC provides a hassle-free experience, allowing you to focus more on your business and less on managing claims.
Moving Forward in 2025

Annual rate increases are a chance to refine your shipping strategy. UPS and FedEx are adjusting their networks to prioritize specific shipment types, so staying flexible with your approach is key. By analyzing your data, exploring new carrier options, and taking advantage of U-PIC Shipping Insurance, you can manage the impact of rising rates on your business without breaking the bank.

As you navigate these changes in 2025, remember that with the right strategies—and the savings from U-PIC Shipping Insurance—rising shipping rates don’t have to weigh down your business. Take control, stay informed, and make every shipment a smart one.