What Impact will the 2026 Shipping Rate Increases have on you?
2026 is shaping up to be a year of real cost increases from the two biggest parcel carriers in the U.S.: UPS and FedEx. On the surface, both carriers have announced a familiar 5.9% general rate increase (GRI), but the true impact on your invoices could be significantly higher once surcharges and structural changes are factored in.
Here’s what supply chain and logistics leaders need to understand – and how to act before rate shock hits your bottom line.
The Headlines: Average Rate Increases
UPS and FedEx have confirmed their 2026 general rate increases (GRIs):
- Both carriers are increasing base shipping rates by an average of 5.9% for most services. This mirrors the pattern we’ve seen for multiple years – a consistency in headline rate increases.
- UPS made its move slightly earlier – historically timing its increase at the end of December, capturing the tail end of peak shipping season. FedEx follows with January 2026 implementation. [Partnership]
Those numbers matter, but they don’t tell the full cost impact.
“The average rate tells part of the story. The rest shows up in your invoice—line by line.”
Surcharges Are Rising Faster Than Base Rates
Surcharges, the line items that often make up the majority of your parcel bill, are increasing in meaningful ways:
Residential Delivery Surcharge
Residential delivery fees, a major cost center for e-commerce and direct-to-consumer brands, are increasing by roughly 8.4% for FedEx Ground and Home Delivery services.
Delivery Area & Oversize Fees
Delivery area surcharges (which penalize remote or less-accessible ZIP codes) and oversize charges are also climbing – in many cases higher than the 5.9% headline rate. These fees stack on top of base rates, meaning the effective cost increase for shippers can be larger than the average GRI. [Parcel Industry]
The result? A headline increase that sounds manageable – “only 5.9%!” – can translate into 8–12% or more in real invoice impact, especially for retailers with heavy residential, oversize, or remote-zone volume. [Zero Down Supply Chain Solutions]
Structural Rule Changes Are Slipping Into Your Bill
Beyond higher fees, both FedEx and UPS are adjusting how they assess charges on your packages:
Dimensional (DIM) Weight Rounding
Late in 2025, carriers began rounding up every fractional inch when calculating DIM weight. That seemingly tiny rule means more packages hit higher billable weights – and thus higher charges – even if their actual weight hasn’t changed.
New Cubic Volume Fee Triggers
FedEx is updating its surcharge assessment criteria to include a cubic volume threshold, which can trigger additional handling and oversize charges on larger boxes that previously might have escaped such fees. [FedEx]
These structural tweaks are subtle but impactful – they shift cost risk toward shippers without changing your contractual rate.
“When contracts lag behind rate hikes, costs rise quietly—and fast. Timing isn’t optional.”
Peak Season & Contract Timing: You’re on the Clock
Many businesses renew carrier contracts annually or every few years. If your renewal window falls after these rate changes take effect, your baseline costs will be locked in at the new, higher pricing.
For example:
- UPS’s increases went live before FedEx’s, meaning many businesses are already seeing higher baseline shipping costs reflected in invoices.
- FedEx’s rate changes and rule adjustments roll out early in January, meaning there’s a short planning window to analyze and negotiate before they take full effect. [FedEx]
Without proactive analysis, many shippers simply accept these costs and renew contracts at higher rates.
What Leaders Should Do Now
You cannot manage what you do not measure, especially when headline rate increases obscure real cost drivers.
Here are key proactive steps:
Analyze Actual Invoice Impact
Don’t assume a 5.9% increase. Use invoice-level analysis to quantify:
- How much of your spend is base rate vs. surcharges?
- How much will new volumetric and cubic rules increase charges?
- Where does your residential and remote-zone exposure skew your costs?
Negotiate Before Changes Stick
Rate tables are one thing – negotiated invoice impact is another. Early negotiation, informed by actual invoiced data, strengthens your position.
Identify Cost Recovery Opportunities
Tools, including audit and optimization platforms, help identify billing errors and capture refunds that offset carrier-driven cost hikes.
Align Contract Renewals Strategically
Timing matters. Locking in a new contract post-rate increases without analysis means locking in higher costs.
Alleon Group’s supply chain and logistics analytics expertise helps companies quantify real shipping cost increases and negotiate smarter contracts based on impact, not just table rates.
Conclusion: The 5.9% Rate Hike Isn’t the Full Story
Headline rates are easy to quote – true shipping cost increases are complex. They depend on your specific service mix, surcharge exposure, package dimensions, and contract terms.
The carriers have shifted not just the price, but also the rules of the game. And many shippers are still treating rate hikes as a line item to accept rather than a line item to manage.
If you’re wondering “what’s my real cost increase?”, that’s exactly the question logistics leaders should be asking right now, before the new rates and structural changes become the baseline for your next renewal.
