How to Prepare for 2025 General Rate Increases

At the end of every year, parcel shippers must begin to prepare for rate increases. FedEx and UPS have each announced a general rate increase (GRI) of 5.9% for 2025, a number that represents only the average base rate increase. The true impact on shipping costs will be higher. Your base rates will increase more or less than 5.9% depending on your unique shipping habits, but most surcharges and accessorial fees increase at higher—if not significantly higher—rates. Preparation is the key for heading into 2025 in a good position, avoiding surprises. It’s critical to understand fully how the rate increases will affect you, and you cannot apply 5.9% across the board to calculate these projections.

The details of each GRI tell a story. Carriers like FedEx and UPS incentivize or de-incentivize certain types of shipments by raising rates comparatively more or less for specific services, surcharges, weights, and shipping zones. They use rate increases to manage their own profit margins and influence shipping choices.

For example, FedEx is raising rates more steeply for express shipping services to encourage shippers to switch to more cost-effective ground shipping options. Similarly, surcharges like Additional Handling and Oversize fees, which are increasing more for larger and heavier packages, are intended to push you toward smaller, lighter shipments that are more profitable for carriers and easier for them to manage.

How Much Will Your Costs Actually Increase? 

There is no easy answer to the question of how much your costs will increase. Take the following example. A package weighing less than 50 lbs. is being shipped to Zone 5. It is subject to an Additional Handling Surcharge because its longest side exceeds 48 inches, and it also incurs a Delivery Area Surcharge based on its delivery ZIP code.

Here's how each cost element changed: 

• Transportation +5.9%
• Additional Handling +25.9%
• Delivery Area Surcharge +6.3%
• Total increase +13.55%

The reasons you need to dive into your own data and apply the GRIs—from base rates to surcharges—to your historical and projected activity become obvious.

Tools for Data-Driven Decision Making

Using an advanced visibility solution showing actual paid activity provides the groundwork for this detailed analysis. Cass provides a parcel spend management that provides deep insights into your parcel activity and spend, for easily monitoring trends, tracking surcharges, and identifying cost-saving opportunities.

Based on the processing of your parcel invoices, we help shippers break down their costs for detailed reporting. A few of our tools for proactive analysis include:

• Reporting that can be segmented by carrier, location, charge type, cost center or any other data field we track. Several reports focus solely on areas of opportunity, such as repetitive address corrections.
• Dashboards, providing interactive insights so you can drill down to details on surcharges, carrier performance, service selection, and more.
• Scenario planning that helps you make decisions. For example, you can easily see the impact of switching from Air to Ground shipping for a particular carrier and zone or the potential savings from reducing package weights.
• Invoice audits, so you pay your contracted rates, which are especially valuable during high-error times such as after rate increases go into effect.

Take Control of Your Parcel Spend with Cass

GRIs are a reality that shippers must face, but with the right tools and strategies, you can manage the impact it has on your budget. With Cass’s parcel spend management tools and advisory services, you can fully understand how the GRIs will affect you and find ways to optimize costs.

Now is the time to prepare for 2025. Reach out to us to optimize your parcel spend and stay ahead of rising costs.