While small parcel freight costs match previous years, most shippers will likely find unannounced and hidden cost increases. Additionally, in 2025, nearly all common surcharges will significantly exceed the average General Rate Increase.
UPS and FedEx announce the General Rate Increase
The General Rate Increase (GRI) for 2025 is set to match the last few years at 5.9% on January 6, 2025, with a few areas susceptible to additional surcharges. Since 2022, the GRI has averaged 5.9%, unlike 3.9 – 4.9% increases observed from pre-pandemic. Longer zone shippers (5+ zones) will see increased surcharges above the 5.9% average. These shippers will also experience an increase in rates if packages travel through zip codes affected by area surcharge increases.
Second-day air and Ground Residential shippers face the most significant increase across weight breaks. According to Shipware, 2025 is the second year in a row for UPS that the rate of these shipments is set to increase above 7% significantly. Meanwhile, lighter-weight Ground Commercial packages are expected to rise much slower than other shipments. Shorter zones will see an increase comparable to the GRI average.
Mitigating Surcharges
While the GRI is similar to the last few years, few will find shipments without additional surcharges. Regardless of weight or dimension, additional handling is set to increase by roughly 26% from last year in all zones. Additional handling (packaging) and Oversize (US Express/Ground) will also increase by up to 28% compared to 2024.
Shippers can choose cheaper ground options for commercial and residential deliveries that can be delivered within two days. Due to lighter-weight Ground commercial shipments increasing below the GRI, companies can provide home delivery of up to 11 lbs without exceeding the average weight.
ERA helps decrease small-package spending despite rising costs
Even in this rising-price environment, there are still ways to reduce costs.
While most companies focus solely on negotiating better discounts, ERA has found that adding operational enhancement to negotiations yields even more significant savings.
Our approach to assessing clients’ operational needs and analyzing pricing options that meet those specific needs has generated substantial savings. Additionally, making informed operational adjustments further reduces accessorial and transportation charges.
By combining these changes with expert rate renegotiations, ERA has helped clients achieve more than an 18% reduction in express and parcel costs.
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About the Author
Dileep Kulkarni is a Senior Consulting Partner with ERA Group. Based in Portland, Dileep focuses on unique freight solutions that deliver savings while improving quality and service. ERA Group is a global expense management consultancy that leverages specialized experts, industry benchmarks, and practical supplier industry knowledge to identify and deliver cost savings to clients.