UPS Is Increasing Its Shipping Rates Again Just In Time for Summer

The company states that its rate hikes will be invested in service expansion and capability enhancements

This summer, UPS will roll out its latest General Rate Increase (GRI) for 2025, raising prices across domestic, international, and freight services. Effective December 23, 2024, the adjustment reflects an average increase of 5.9% for most Ground, Air, and Worldwide services. The company says the revenue from this increase will be reinvested into delivery network improvements, enhanced automation, and service expansion to meet growing demand, particularly for e-commerce shipments. Industry analysts note that while the headline figure is 5.9%, many customers will see a higher effective increase once surcharges and zone adjustments are factored in. UPS has also revised ZIP code boundaries and delivery area classifications, meaning some shipments that previously avoided extra fees will now incur them.

For shippers, these changes come at a time of tightening budgets and increasing customer expectations for fast, low-cost delivery. The GRI is not optional and applies to all customers unless specific contract terms cap rate increases, so now is the time for businesses to assess how these adjustments will affect their shipping costs and take proactive measures to offset the impact.

Details of the Rate Increase

• Average 5.9% increase on UPS Ground, Air (Next Day, 2nd Day, 3 Day Select), and International services
• Significant surcharge hikes: Additional Handling and Large Package Surcharge (LPS) rising between 26% and 28%
• Residential and Delivery Area surcharges increasing 6% to 8%
• Fuel surcharge adjustments will continue to fluctuate monthly based on market conditions

Although the 5.9% figure is widely reported, shippers should look closely at the fine print. For example, if your products require larger-than-standard packaging, the LPS and Additional Handling increases will likely add much more than 5.9% to your bill. Similarly, if you frequently ship to residential addresses or rural areas, the surcharge hikes could lead to a double-digit effective increase. Businesses that operate on thin margins should be especially cautious about how these costs compound during peak season.

Why UPS Raised Rates

UPS attributes the increase to rising operational costs such as labor, fuel, and maintenance, as well as ongoing investments in automation and capacity. Over the past two years, UPS has been expanding its Saturday and Sunday pickup and delivery capabilities, adding more UPS Access Point locations, and increasing the number of automated sorting hubs. These improvements aim to make last-mile delivery faster and more reliable, which is critical for meeting same-day and next-day service commitments in competitive markets.

The carrier has also faced higher wage costs following new labor agreements, as well as continued investment in sustainability initiatives such as electric vehicle deployment, alternative fuels, and carbon-reduction technology. UPS says these efforts require significant upfront spending, and the GRI helps fund both ongoing operations and long-term projects.

New and Increased Surcharges

• Additional Handling (AHC): Rising approximately 26% to 28% for packages based on weight, dimensions, or non-standard packaging
• Large Package Surcharge (LPS): Up to 28% higher in some zones, applied to items over 96 inches in length or 130 inches in combined length and girth
• Residential Surcharge: Increasing about 6% to 8% for deliveries to home addresses
• Delivery Area Surcharge: Rising similarly, particularly affecting rural and remote ZIP codes

These surcharges can easily push the total cost of a shipment well above what customers expect from the base rate alone. For example, a large but lightweight box shipped to a rural residential address could incur all four surcharge types, resulting in a shipping cost increase of 20% or more compared to last year. Shippers are encouraged to review packaging dimensions, consolidate shipments, or consider fulfillment from regional facilities to reduce the need for costly service zones.

Comparisons to FedEx

FedEx implemented a nearly identical 5.9% GRI effective January 6, 2025, covering Ground, Express, and Freight services. Surcharge increases were also comparable, with Additional Handling and Oversize fees up more than 25%, residential fees up 6% to 8%, and delivery area fees seeing similar hikes. Both carriers have updated their dimensional weight calculations and ZIP code classifications, which means even without shipping heavier items, some customers will still see higher bills.

For businesses that use both UPS and FedEx, the rate hikes reduce opportunities for cost savings by switching carriers. However, differences in service coverage, transit times, and negotiated discounts can still influence which carrier is best for specific lanes.

Impact on Shippers and Consumers

The immediate impact for shippers is higher costs, especially for those without strong volume-based contracts. E-commerce sellers may face difficult decisions about whether to pass on these costs to customers, absorb them, or adjust free-shipping thresholds. Brick-and-mortar retailers offering home delivery will also see increased expenses, particularly for large, bulky, or residential shipments.

Consumers may notice subtle changes such as longer delivery windows for free shipping, higher minimum purchase amounts for free delivery, or surcharges for expedited shipping options. Smaller sellers who cannot negotiate lower rates may be hit hardest, as they have less room to absorb increases compared to major retailers.

Tips to Reduce Shipping Costs

• Audit shipping invoices regularly to identify which surcharges hit most often and adjust fulfillment processes accordingly
• Use packaging that minimizes dimensional weight while protecting items
• Consolidate orders to reduce per-package surcharge frequency
• Negotiate contract terms, including minimum charge floors and zone boundaries
• Consider regional carriers for local or lightweight shipments
• Use flat-rate programs such as UPS Simple Rate or FedEx One Rate for predictable costs
• Fulfill from multiple warehouse locations to shorten shipping zones

Ultimately, while UPS’s 2025 GRI is in line with industry trends, the combined effect of base rate and surcharge increases can have a significant financial impact if not managed strategically. By planning now, reviewing shipping data, and exploring alternative carriers or service types, businesses can minimize disruption and keep costs under control through the summer and into the peak holiday season.