New FedEx, UPS Rates in Effect for 2024
The new year is here, which means the annual general rate increase for FedEx and UPS are now in effect. While the overall increase to base rates is lower than the previous year’s, recent trends around faster-rising surcharges and the extension of “peak season” continue into 2024.
Both carriers raised their base rates by an average of 5.9% this year despite declining parcel volumes. Last year’s increase was 6.9%, a historic high rate hike.
But as always, the devil is in the details when it comes to carrier rate increases. Once again, the rates for surcharges are rising much faster than the headline number of 5.9% – meaning your costs are likely to increase by more than that figure.
As we’ve seen in past years, FedEx and UPS continue to target specific types of parcels for the most significant rate increases, including:
Heavy, bulky, and oversize packages
Residential and remote areas
Also noteworthy for 2024 is carriers rebranding what used to be known as “peak season” surcharges. Historically, carriers have used these charges to pass their costs onto customers as parcel volume increased at year’s end.
However, beginning last year, both carriers changed their “peak season” pricing strategy.
Instead of expiring as holiday demand fades, these additional charges remain “until further notice” and are now called “demand” surcharges.
Like the other parcels targeted for high surcharges, these accessorials apply to packages classified as oversized and those requiring additional handling – and apply in addition to the standard fee.
Here’s what else you should know about carrier-specific price increases for 2024.
FedEx 2024 Rate Increase Takeaways
FedEx rate increases took effect on Jan. 1, 2024, and raised the base rate by an average of 5.9%.
While rival UPS faces increased operating costs from its new labor agreement, FedEx is anticipating cost efficiency for 2024.
FedEx is also continuing the trend of extending demand surcharges, formerly known as peak season surcharges. Initially set to expire on Jan. 14, the charges are now in effect “until further notice,” per the carrier.
Demand surcharges apply to parcels subject to additional handling and oversize surcharges, and are added to existing fees for these parcels – meaning shippers pay twice.
These charges apply to the following services: U.S. Express Package Services, U.S. Ground Services, and International Ground Service. Shippers can expect to pay the following rates:
Demand - Additional Handling Surcharge: $2.00 per package
Demand - Oversize Charge: $20.00 per package
Just as we’ve seen in past years, shippers who send heavy, bulky, and/or oversized parcels are subject to much higher increases than 5.9%. Surcharges for these packages are seeing double-digit increases – up to 20% in some cases.
Shippers who send parcels to rural, remote, or residential areas will pay more for these deliveries.
FedEx shippers will also pay more for address corrections in 2024. The address correction surcharge is rising by 7.14% to $22.50. The previous rate was $21.00.
UPS 2024 Rate Increase Takeaways
UPS rate increases took effect Dec. 26, 2024, which means the base rates shippers pay are up by an average of 5.9%.
In addition to raising rates for baseline and accessorial fees, the carrier is also adjusting the ZIP codes it considers rural or remote – which come with added delivery fees. This change comes after last year’s zone alignment, where the carrier reevaluated which ZIP codes fit in which shipping zone.
In addition to rate increases, UPS has indicated that peak season surcharges are here to stay. Like its rival, the carrier now calls these added fees “demand surcharges.”
Demand surcharges apply to parcels subject to additional handling and oversize surcharges and are added to existing fees for these parcels – meaning shippers get hit twice.
It is worth noticing that UPS is charging higher rates than its rival, with the Large Package Surcharge coming in at double the similar charge from FedEx.
These charges apply to all U.S. domestic, import, and export shipments.
Shippers can expect to pay the following rates:
Demand - Additional Handling Surcharge: $3.50 per package
Demand - Large Package Surcharge: $40.00 per package
Just as we’ve seen in past years, packages considered heavy, bulky, and/or oversized are subject to double-digit increases – some exceeding 20%.
In addition to revising the ZIP codes subject to delivery area and remote surcharges, UPS is raising the associated fees. Shippers will also pay more for residential deliveries in 2024.
Should you need to change the destination for a parcel, you’ll be paying more for that as well. The address correction fee is increasing by 7.69%, to $21.00. Last year’s rate was $19.50.
What Shippers Can Do About Rate Increases
While carrier rate increases are frustrating, there are steps shippers can take to prepare. Here are a few steps to mitigate the effect of price increases on your bottom line.
First, understand your shipping profile and know your data inside and out. Understand which zones you ship to the most, the weights and measurements of your parcels, and which services you use the most. When you understand how rate increases impact your shipping spend, you can find opportunities to save.
Second, audit your invoices. With so many different service levels, parcel classifications, and applicable fees, carriers make mistakes all the time. By taking the time to audit your invoices, you can recover an average of 2-6% for late shipments, billing errors, and incorrect pricing.
Finally, find a trusted partner to help you manage your shipping spend. Despite how intimidating this year’s general rate increases may seem, a trusted partner can help you understand your shipping profile, audit your increases, and negotiate savings with the carriers.
Your trusted partner can audit your invoices for savings, analyze your shipping data, and benchmark your carrier pricing so you can understand how your rate compares to others and get detailed visibility into where you can save – which may be up to 30% of your total spend.
If you’re interested in gaining greater control of your parcel spend, let’s talk.
We founded AUSPI GROUP on the importance of partnership and the desire to empower businesses like yours with market insights and industry knowledge to lower shipping costs. Our goal is to act as an extension of your team and build a long-term relationship built on trust so you will always stay ahead of any curveballs the carriers may throw.
Our zero-risk, success-based services will give you the analytics and reporting to successfully manage your spend, gain insights, identify trends, identify efficiencies, and detect ways to save.