The 2025 General Rate Increase (GRI) brought an unexpected twist: for the first time in years, the baseline GRI did not go up. FedEx and UPS held steady at a 5.9% increase, matching last year’s rates.

But there’s more to the story. While the base rates may have stayed the same, surcharges and hidden fees are growing at an unprecedented pace. For some shippers, costs could jump by 12–16% depending on shipment characteristics. Carriers are incentivizing efficient, standardized packages while penalizing outliers with significant fees, especially for packages requiring extra handling.

In this blog, we’ll break down the key factors driving the 2025 GRI, explore the trends FedEx and UPS are setting, and how shippers can adapt to these increases.

Factors Behind the GRI

Dimensional Weight Focus

Dimensional weight, which originally started in air freight, has become standard for ground services due to growing e-commerce demand. In 2023, an estimated 356 billion packages were shipped worldwide, with projections indicating an increase of 150 billion by 2028.

This surge has put carriers under pressure to maximize truck space while meeting consumer expectations for faster delivery times and more frequent, smaller orders. To make their networks more efficient, carriers use DIM weight pricing to discourage inefficiencies caused by irregular, oversized, or heavy packages. These types of shipments increase handling complexity and reduce operational efficiency.

By encouraging businesses to use more compact, efficient packaging, carriers can transport more parcels per load, ultimately optimizing network performance.

Alignment with Market Trends

The ongoing rise in e-commerce continues to put pressure on last-mile delivery networks. In response, FedEx and UPS are adjusting fees and surcharge criteria to stay in step with this growth.

Packages with large volume but lower weight are a key target for these surcharges. These shipments take up space without adding much weight, which makes them less efficient to transport. Carriers are using these fees to capture more revenue from this fast-growing segment.

Shipping destination also plays a significant role. Residential deliveries cost carriers more than commercial due to more stops and less route density. As a result, surcharges for home delivery are increasing as carriers look to offset these inefficiencies.

Sustainability Goals and Environmental Regulations

UPS and FedEx are prioritizing sustainability and working to meet carbon emission reduction targets and comply with environmental regulations. FedEx has committed to fully electrifying its parcel pickup and delivery fleet by 2040, while UPS continues to expand its use of alternative fuel vehicles. The infrastructure required for these initiatives, from charging stations to new vehicle acquisitions, is included in base rate increases and delivery surcharges.

Sustainability remains a priority for carriers, and shippers should expect these environmental costs to continue influencing rate structures in the years ahead.

Inflationary Pressures

Ongoing inflation has driven up costs across labor, transportation, and materials, putting financial pressure on shipping carriers. Higher wages and employee benefits increase labor costs, while inflation also raises the price of purchasing and maintaining shipping equipment.

These factors have shaped the 2025 General Rate Increases for UPS and FedEx. While the base rates may have stayed the same, the details tell a different story. Next, we'll take a closer look at the specific changes each carrier announced and how these adjustments will impact shipping costs.

FedEx 2025 General Rate Increase

Effective Date: January 6, 2025

Service-Specific Changes

• Heavier Ground Commercial and Home Delivery packages: 1-2% higher increases in distant zones (5-8)

• 2-Day (including A.M.) and Express Saver services: Increases of up to 8% in middle zones (3-5)

Accessorial Fee Increases

• Additional Handling Charges (AHC): Weight-based fees rising 26.1% to 26.7%, dimension-based fees up 26.7% to 27.3%, and packaging-based fees increasing 26.0% to 28.2%

• Oversize Charges: Increasing 26.1% to 28.6% based on zone and service

• New Policy: Minimum billable weight of 40 lbs for dimension-based AHC packages

Delivery Area Surcharges (DAS)

• Increases of 6-10% across services

• Expanded coverage to include 82 new ZIP codes in metro areas like Boston, Chicago, New York, Los Angeles, and San Francisco

Fuel Surcharges: FedEx has adjusted its fuel surcharge table, resulting in higher baseline charges even if fuel prices decline.

Discover more details on FedEx’s 2025 rate changes.

UPS 2025 General Rate Increase

Effective Dates: December 23, 2024 (main services) and January 13, 2025 (SurePost)

Service-Specific Changes

• SurePost Packages (1-9 lbs): 9.9% increase

• SurePost Packages (10-70 lbs): 5.9% to 7.1% increase

• 2nd Day Air (including A.M.): Near 7% increase in most weight bands

• 3-Day Select (Zone 8): 2% higher increase compared to the average

Accessorial Fee Increases

• Additional Handling Charges (AHC): Increases of 26-27% across weight, dimension, and packaging categories

• Large Package Surcharges (LPS): 26-28% increase for commercial; 26-27% for residential shipments

• New Policy: Minimum billable weight of 40 lbs for dimension-based AHC packages

Delivery Area Surcharges (DAS)

• 5-9% increases across Air, Ground, and Residential services

• SurePost DAS: 61.8% increase (from $3.80 to $6.15)

• SurePost DAS Extended: 69.4% increase (from $4.90 to $8.30)

• Expanded Coverage: 82 new ZIP codes in metro areas like Boston, Chicago, New York, Los Angeles, and San Francisco

Fuel Surcharges: UPS has adjusted its fuel surcharge structure similarly to FedEx, increasing baseline costs regardless of fluctuating fuel prices.

Discover more details on UPS’s 2025 rate changes.

Key Overview for Shippers: Who Will Feel the Biggest Impact?

Shippers will feel the biggest impact if they rely on specific services or package types. Here’s what to watch for:

• FedEx: Shippers using 2-day or 3-day services and shipping heavier parcels (10+ lbs) to distant zones will face larger-than-average increases.

• UPS: Shippers using SurePost for lightweight packages will see nearly 10% increases, while 2-day services for packages under 5 lbs will also incur steep surcharges.

Surcharges Taking Center Stage

Accessorial fees like AHC and LPS are increasing 21-29% on top of prior surges over the last two years. DAS coverage now includes densely populated metros for the first time, impacting urban deliveries significantly.

The Growing Fuel Surcharge Impact

Fuel surcharges are no longer a minor line item. Carrier adjustments have raised the baseline fuel surcharge, eroding previously negotiated discounts even as fuel prices decline.

Peak Season Premiums

Both carriers have signaled that peak shipping seasons will come with higher, longer-lasting surcharges. Retailers and e-commerce businesses should plan for notable cost increases during Q4 2025.

The bottom line: The base rate may have stayed flat, but operational and surcharge increases are unavoidable for many shippers. Understanding how packaging choices impact costs is more important than ever.

Planning Ahead

The 2025 GRIs bring new challenges, but shippers have opportunities to minimize their impact with the right strategies. Both UPS and FedEx have capacity in their networks and are more open to negotiating favorable rates, terms, and conditions than in recent years. This shift may be driven by slower demand growth, infrastructure improvements, and efficiency gains, creating leverage for shippers entering contract negotiations.

However, while carriers may be more flexible in contract negotiations, they’re becoming far less forgiving of inefficient packaging. Oversized boxes, lightweight high-cube shipments, and residential deliveries disrupt operational efficiency, and these shipments will now cost shippers more than ever.

To counter these rising costs, shippers are re-assessing their packing strategy. Packing intelligence platforms can help businesses rightsize every shipment, reducing DIM weight charges and improving space utilization. Pairing this technology with on-demand packaging machines has helped companies save significantly on transportation and material costs.

Want to learn how better packing strategies can help you minimize the impact of 2025 GRIs? Let’s talk about how Paccurate can make every shipment as efficient and cost-effective as possible.