The new year is well underway, and UPS and FedEx 2025 rate hikes are in effect. So why are experts predicting a drop in ground delivery costs for shippers when compared to the same period last year?

Some factors are external, but one element is within the shippers' control.

Today, we'll let you know why prices for some shippers are dropping despite the rising costs and how you can ensure the same treatment, lowering your shipping costs by 20-30% or more.

How is it possible for delivery costs to drop despite rate hikes and surcharges?

Last year, we saw increased rates and surcharges from UPS and FedEx, including eight fuel surcharge increases from UPS. And yet, the market is still one of high competition and lowered demand. These factors led the carriers to invoke aggressive discounting tactics to win customers using ground and express shipping services. Between Amazon's fast, free shipping for Prime customers and the newly announced Next Day Priority by USPS, the competition isn't set to cool down any time soon.

In August 2024, UPS Carol Tomé indicated the carrier's openness to negotiate with shippers of all sizes, saying, "Pricing architecture of the future gives us the opportunity to use modifiers and price that creates opportunities for value for our customers, as well as value for ourselves."

Those discounts led the express parcel rate per package index to drop to 0.5% above the January 2018 baseline, according to the TD Cowen/ AFS Freight Index Q1 report. It's not all bad news for the carriers, though. The Q4 ground parcel increased 0.6% over the previous year, surpassing expectations. It's impossible to predict the future, but— at least for now— the carriers seem motivated to continue negotiating more favorable rates with businesses of all sizes.

Negotiation 101: how to lower your shipping costs with ShipRx

There's one thing all shippers saving money have in common— stellar negotiation skills. The old saying, "If you never ask, the answer is always no," rings true here. And if you plan to ask for lower rates, you need ShipRx on your side.

Our team has over three decades in the shipping industry— working first building contracts for the carriers and now representing shippers like you. We can assess your current shipping rates, tell you exactly how much you can save, and advise you on how to get there. Through benchmarking data and a detailed analysis of your shipping operations, ShipRx takes away the guesswork and equips you with the insights you need to secure a shipping contract that reflects the high competition and lowered demand in the shipping industry.

With our expertise, we'll level the playing field and help you secure a contract with savings of up to 20-30% or more. Get in touch today for a free savings analysis and start the process of negotiating your 2025 FedEx contract or UPS contract.

Savings await— but you need to ask for them.