Yes, it’s that time of the year when shipping rate hikes take center stage. Are you prepared?
When UPS announced its 2025 General Rate Increase (GRI), many eCommerce businesses started asking how it might affect their bottom line. While the headline mentions an average 5.9% increase, the true story lies in the details—especially in surcharges and targeted rate changes that could cost merchants significantly more.
This blog highlights key changes and provides actionable strategies to help you stay ahead and manage these shifts effectively.
What is the 2025 UPS GRI?
Starting December 23, 2024, UPS will raise its shipping rates by an average of 5.9%. While this mirrors previous years, several strategic adjustments are likely to impact businesses more than expected.
Here are some notable changes:
- Surcharges: Additional Handling Charges (AHC) and Large Package Surcharges (LPS) will increase by up to 27%. The Delivery Area Surcharges also see a rise of above 6%.
Updates to Additional Handling Charges (AHC)
| Category & Zone | 2024 Rates | 2025 Rates | Increase (%) |
| Weight 2 | $34.50 | $43.50 | 26.1% |
| Weight 3-4 | $37.50 | $47.50 | 26.7% |
| Weight 5+ | $41.50 | $52.75 | 27.2% |
| Dimensions (Length, Width, Girth) 2 | $22.00 | $28.00 | 27.3% |
| Dimensions (Length, Width, Girth) 3-4 | $24.50 | $31.00 | 26.5% |
| Dimensions (Length, Width, Girth) 5+ | $28.25 | $36.00 | 27.5% |
| Packaging 2 | $19.50 | $25.00 | 28.2% |
| Packaging 3-4 | $23.00 | $29.00 | 26.1% |
| Packaging 5+ | $24.50 | $31.00 | 26.5% |
Updates to Large Package Surcharges (LPS)
| Category & Zone | 2024 Rates | 2025 Rates | Increase (%) |
| Commercial 2 | $160.00 | $205.00 | 28.1% |
| Commercial 3-4 | $175.00 | $225.00 | 28.6% |
| Commercial 5+ | $197.50 | $250.00 | 26.6% |
| Residential 2 | $190.00 | $240.00 | 26.3% |
| Residential 3-4 | $205.00 | $260.00 | 26.8% |
| Residential 5+ | $235.00 | $297.50 | 26.6% |
- Minimum Billable Weight: Packages qualifying for certain surcharges must meet a minimum billable weight of 40 lbs, disproportionately affecting lightweight, bulky items.
- Base Rate Adjustments: Domestic Air and Ground rates are climbing, with international shipping averaging a 7.4% increase—and some routes, like exports to Mexico, seeing hikes as high as 10.3%.
- Domestic Ground (Residential): The average increase is approximately 5.9%, but longer-distance shipments (Zones 5–8) may experience higher increases.
- 2nd Day Air: Rate increases vary by zone, with longer zones (5–8) facing increases above 7%.
- Additional Handling Charges(AHC): The length plus girth definition for AHC will be replaced by a cubic volume definition to determine the applicability of AHC, from January 27 onwards.
- Large Package Surcharge(LPS): This will be determined using revised calculations based either on the length, weight, or cubic volume of shipments.
Impact of 2025 UPS Rate Increase on Shippers
For shippers, this rate increase could mean higher shipping costs, tighter margins, and the need for better shipping cost control. Here’s how it plays out:
- Higher Shipping Costs: Increased fees and surcharges directly impact profit margins.
- Peak Season Challenges: Bulky package surcharges could cut deeper into profits during high-volume periods like Black Friday, Cyber Monday, and Christmas.
- Growing Competitive Pressure: Competition for parcel delivery continues to intensify with Amazon, regional carriers, and the USPS expanding their offerings. UPS is focusing on areas these competitors struggle to serve, such as heavy and oversized packages.
- Impacts on Small Businesses: Merchants with limited shipping volumes or reliance on bulky shipments may feel a larger brunt of these increases.
Steps to Mitigate The Effect of Rate Hikes
Facing these increases, there are steps you can take to keep shipping affordable and efficient:
- Optimize Packaging: Use right-sized boxes to avoid unnecessary surcharges, especially for large or lightweight items.
- Rate Shopping: Diversify carrier base and compare costs to find the best deal for each shipment. Tools that automate this process can save time and money.
- Negotiate Contracts: Use your shipping data to renegotiate carrier agreements. Highlighting volume, distance, and service type can lead to better terms.
- Leverage Technology: Shipping management solutions like ShipperHQ can help automate shipping decisions and reduce address errors.
Staying Competitive Amid the UPS Rate Increase
The yearly GRIs by carriers like UPS highlight the increasing complexity of managing shipping expenses. For merchants, staying proactive is essential to navigating these changes without losing profitability.
Here are a few strategies to stay ahead:
- Rate Shopping Across Carriers: Compare shipping rates in real-time to identify the most cost-effective option for each shipment. This ensures you can maintain delivery speed and reliability without overpaying.
- Dimensional Packing: Efficient packaging reduces costs by avoiding unnecessary surcharges based on size or weight.
- Custom Shipping Rules: Set tailored rules for shipping based on order size, weight, or destination to minimize costs and avoid unexpected fees.
ShipperHQ’s Advanced Shipping Management Tools
Merchants using ShipperHQ have successfully tackled complex shipping challenges during past GRIs. From automating rate shopping to offering flexible delivery options, the platform equips shippers with the tools they need to reduce costs, improve operational efficiency, and enrich the customer experience.
Don’t let the rate increases catch you off guard. Turn shipping into a competitive advantage with ShipperHQ. Schedule a 1:1 demo today and discover how to take control of your shipping strategy.
