What Shippers Need to Know About UPS’s 2025 General Rate Increase (GRI) 

A new year is fast approaching and with it comes annual rate adjustments from carriers. On 10/8/24, UPS announced a 5.9% 2025 General Rate Increase (GRI). Staying consistent with previous years, this GRI matches that of shipping competitor, FedEx.  

While seemingly a straightforward change, this yearly rate increase is much more complicated than what meets the eye. This is especially true this year, as UPS has announced some key assessorial changes. Here is a breakdown to help you navigate this critical time of the year.

Carriers like UPS and FedEx raise their list rates for services each year to account for inflation, technology investments, and rising operating costs. Contrary to popular belief, this is not just a simple flat increase. The 5.9% increase this year indicates that your rates will increase on average by that amount across all services, weights, and zones. See example chart below: 
 
In this much simplified example, even though the increase is different across the weight/zones, the carriers would still be adhering to a 4% GRI as it averages out to that amount. It is important to note that this percentage increase strictly applies to base rates for services. Surcharge increases are generally much higher. (We'll cover this later.) 

There is a familiar saying among the parcel industry regarding FedEx and UPS: “What one does, the other will surely follow.” In a world where the two shipping giants are consistently competing for volume and profits, any new surcharge or fuel index increase that one of the carriers charges shippers, the other carrier usually will quickly match that new cost to neutralize their rival’s gainshare. Annual GRI is no different. See the chart below. 
 
Year after year, FedEx and UPS consistently have matched each other’s annual rate increase. A GRI of 4.9% was a long-standing trend for both carriers from 2014-2021, but that changed in September of 2021 when FedEx broke the mold and announced a 5.9% increase. The following year, FedEx once again raised the bar by announcing a 6.9% increase, a historical 200 basis points increase over two years.  
FedEx usually is the first to throw down the metaphorical gauntlet, and this year was no different as they announced a 5.9% GRI on 9/13/24, and UPS followed suit on 10/8/2024, matching the rate hike.

UPS announced that the effective date for this increase will be 12/23/2024. Historically, UPS’s GRI has gone into effect either the 26^th or 27^th of December. This is a new measure introduced by UPS, improving profits to their bottom line, even if only a few days earlier. Comparatively, FedEx’s effective date is 1/6/2025.  

As alluded to earlier, a General Rate Increase only applies to base rates for shipping services. Surcharges (AKA accessorials) receive their own individual cost increases each year. These annual changes are often much greater than the base freight changes. These surcharge increases will be announced at a later date, but let's review a few historical examples: 
 
 
 
From the charts above you can see that list rate changes for Address Corrections and Residential Fee list rates have historically been raised by 7%-8%, while other surcharges such as Large Package see nearly 20% increase from year to year!  
Depending on your shipping metrics, accessorials can make up anywhere from 20%-30% of your total shipment cost. It is important to know your company’s cost-driving surcharges so that you can be fiscally prepared for those rate changes. 

In the past, shippers usually only had to worry about increases once a year, but that ship has long sailed. With recent UPS’s Teamsters negotiations and FedEx’s technology investments into One FedEx, compounded with softened volume, both carriers are seeking to pull every financial lever possible at their disposal to manage their bottom line. They have shown this numerous times in 2024 with new surcharges and fuel index adjustments enabled by the carrier service guide language. UPS’s GRI announcement also contained language alluding to future changes regarding DAS Zip Codes, Large Package/Additional Handling, and more. 

As stated earlier, it is crucial to know your cost drivers. Some questions you should be asking yourself: 

These are all seemingly simple questions that will lead to very complex answers. This is where having a trusted strategic partner to help unravel these nuanced changes and optimize your parcel network comes into play. The largest shippers in the world trust Green Mountain to navigate these challenges as an extension of their team. Let us empower your team to make better informed decisions with greater velocity.