Starting January 6, 2025, FedEx will implement a 5.9% General Rate Increase (GRI), matching last year’s rise. However, this average figure hides a wide range of increases depending on the service, package size, and distance traveled. As UPS’s own GRI announcement is expected soon, shippers should brace themselves for similar changes. Here’s an in-depth look at what this means for your shipping costs and how to prepare for what’s ahead.
While the headline figure of 5.9% might seem familiar, it’s essential to understand that this number represents an average. Depending on your shipping habits—such as whether you primarily ship Ground or Air, the zones you cover, and the weight of your packages—you could see increases that significantly exceed the average rate hike. For instance, shipments in higher zones or those requiring 2nd Day Air services are seeing some of the steepest increases.
As is customary, FedEx is the first to announce its rate hike, setting the tone for what is likely to come from UPS. If you rely on FedEx as your primary carrier, this announcement is especially pertinent. If UPS is your main provider or you split your shipments between the two, you should still take note—UPS usually matches these moves closely. Preparing now will allow you to adapt more effectively once UPS makes its announcement.
One of the most impactful changes for shippers will be the surge in Additional Handling and Oversize fees, which have jumped by more than 26%. Unlike in previous years, these fees now also vary by the distance your package travels, meaning that larger shipments to farther zones will be even more costly. FedEx’s strategy is clear: they see oversized shipments as a premium service and are pricing accordingly, leaving shippers with few options but to absorb these costs or seek alternatives.
Air shipping costs are set to rise significantly, particularly for 2nd Day Air services, which show rate hikes well above the average. With FedEx banking on continued demand for faster shipping commitments, shippers using air services to meet two- or three-day delivery targets will face steeper costs. Ground services remain a more economical choice where feasible, but even these are seeing increases, especially for heavier weights and longer-distance shipments.
Beyond percentage increases, FedEx’s minimum rates are another key factor to consider. Even if you’ve negotiated steep discounts, you won’t be able to pay less than FedEx’s set floor price for each service. For instance, a Priority Overnight Letter will cost a minimum of $34.71 in 2025, even with the best possible discounts. This pricing structure underscores the need to look beyond discount percentages and consider the total cost implications of your shipping strategy.
While the general rate increase garners much attention, many surcharges are rising even faster. For example, Residential Delivery and Delivery Area Surcharges are climbing between 6% and 9%, adding extra costs to many shipments. Meanwhile, Oversize and Additional Handling fees are nearing 30% increases, which can significantly erode margins, especially for businesses that frequently deal with large or heavy items.
With UPS expected to announce similar rate changes soon, it’s critical for shippers to assess their shipping profiles now. Start by examining the specifics of what you ship, where your packages go, and how these new rates could impact your overall costs. A proactive approach will help you better navigate the upcoming changes and find opportunities to mitigate their effects.
Don’t let FedEx’s rate hikes catch you off guard. ShipSigma is here to help you navigate the complexities of these changes. Our team of experts can provide a detailed analysis of your shipping profile, identify cost-saving opportunities, and craft strategies tailored to your needs.
Ready to mitigate the impact of the 2025 rate increase? Contact ShipSigma today for a personalized assessment, and let us help you take control of your shipping expenses.