Strategies to Mitigate FedEx and UPS Surcharges 2025

Let’s not sugarcoat it. The 2025 UPS and FedEx surcharges are hitting hard, and if you run an ecommerce business, you’re likely already feeling it in your margins. These aren’t just petty rate hikes; we’re talking residential delivery fees, large package surcharges, and peak season multipliers that could straight-up wreck your bottom line if left unchecked. New surcharges and additional fees can quietly inflate costs for ecommerce businesses if not monitored closely.

So what do we do? Panic? Raise prices? Light a candle? Nah. Let’s talk smart ecommerce shipping strategy. This article will help you identify and address these additional fees before they quietly eat into your profits.

Why Are These Surcharges Getting Worse?

Simple: higher costs for carriers, inflation, delivery network strain, and the never-ending Amazon arms race. Carriers know ecommerce businesses rely on them, and they’re capitalizing on that reliance with complex, hard-to-negotiate fees. To increase revenue, carriers are introducing new surcharges and modifying their pricing structure, resulting in additional revenue streams that shippers must monitor closely.

It used to be seasonal. Now it’s structural. UPS recently added a higher “Additional Handling” fee for packages over 30 pounds, and FedEx followed suit with new zone-based surcharges on bulky items. These changes are part of the evolving UPS surcharges landscape, reflecting how carriers are using new fees and pricing structure adjustments to drive revenue. If your business ships large packages (think fitness gear, small furniture, or bundled orders), you’re in the crosshairs.

What This Means for Your Ecommerce Operation

These aren’t line items you can just absorb. Surcharges and fees affect not just shipping costs but also other aspects of your business, including a new 2 percent payment processing fee on most charges. If you’re not actively working to reduce shipping costs with UPS and FedEx, you’re leaving money on the table, or worse, eating it. That “free shipping” promise starts to feel like a bad joke.

Changes in shipping rates and surcharges can significantly impact shippers’ bottom lines. This is where shipping strategy becomes a profit lever.

1. Know Your Surcharge Triggers

First up: audit your shipments. Where are the fees coming from?

• Oversize or large package fees? (Services affected: typically ground and express shipments)
• Residential delivery? (Services affected: home delivery and residential ground services)
• Peak delivery windows? (Services affected: all expedited and time-definite services)
• ZIP codes with higher fees (“extended area surcharge”)? (Services affected: rural and remote area deliveries; charges subject: extended area surcharges)

Understanding which charges are subject to surcharges for each package shipped is crucial for controlling shipping costs and optimizing your logistics strategy.

Use this data to model scenarios: “What happens if I split shipments differently? Consolidate? Change carriers regionally?”

2. Reroute Using Distributed Fulfillment

If you’re shipping coast-to-coast from a single warehouse, you’re stacking up zone charges. A 4 lb box from NYC to Oregon isn’t the same cost as one going to Jersey.

Using distributed fulfillment cuts zone distance, enables faster delivery, and reduces per-package surcharge exposure, including those related to domestic ground shipping services. This is especially important for large or heavy ecommerce products.

Additionally, consolidating shipments can further minimize surcharge costs.

3. Leverage Regional Carriers and USPS

Don’t let UPS and FedEx think they’re the only game in town. Regional carriers like OnTrac and LSO are expanding coverage and love ecommerce volume. For lighter shipments, USPS remains competitive and immune to many surcharge layers. However, keep in mind that services like UPS Ground Saver® and various air services, including UPS Next Day Air, UPS 2nd Day Air, and international air options, are also subject to changing fuel surcharges, which can impact your shipping costs.

Use carrier rate shopping logic to auto-select the most affordable carrier based on destination, weight, and dimensions, and consider how surcharges on UPS Ground Saver and air services may affect your total rates.

4. Negotiate Like a Pro

Yes, you can negotiate UPS and FedEx rates, but you need leverage. Demonstrating high shipping volume and effectively managing frequent shipments can provide significant bargaining power. Show them your volume growth, historical performance, and willingness to shift volume elsewhere. Push for:

• Waived or reduced surcharges
• Custom DIM divisor
• Discounts for specific ZIPs or package types
• Better terms on traditional shipping rates and all ancillary fees, not just base rates

And don’t just do this once a year. Re-negotiate quarterly if needed.

5. Bundle Smart and Reduce Dead Weight

Product bundling sounds simple until you realize you’re accidentally triggering dimensional weight charges or bumping into a surcharge tier. Optimizing packaging can provide value-added benefits and reduce the risk of incurring extra surcharges.

Use cartonization software or fulfillment logic to optimize what goes in each box. Small tweaks to packaging design or SKU mix can save you thousands.

6. Offer Incentives to Offset Costs

Let your customers help. Offer:

• Store pickup or local delivery discounts
• Extended delivery timelines for lower-cost options
• Free shipping thresholds to encourage higher-margin AOVs

You’re not passing on fees, you’re framing value.

7. Monitor, Adjust, Repeat

Surcharges change quarterly, and as mentioned, fuel surcharges are especially important to monitor as they can significantly bump your shipping costs. Fluctuating fuel prices directly impact how carriers adjust fuel surcharges, so it’s essential to track these changes and adjust your strategies accordingly. Don’t wait for the damage to show up in your P&L. Set up automated reporting by carrier, SKU, zone, and surcharge type. Watch trends.

A client of ours shipping workout gear will trim \$40 K from their shipping budget by simply redesigning two SKUs to avoid “additional handling” fees. Total cost: \$3 K in packaging R&D.

Recent changes include more frequent updates to fuel surcharges based on weekly fuel price indices, and new surcharge structures that can significantly bump costs if not closely monitored. The key takeaway: Stay proactive by tracking all surcharges, especially those affected by fluctuating fuel prices, and be ready to adjust your shipping strategies to minimize the impact on your bottom line.

8. Stay Compliant: Commercial Invoice Requirements

If you think surcharges only hit you at the shipping label, think again. Earlier this year, UPS rolled out a new “Paper Commercial Invoice Service Surcharge,” meaning every time you send a shipment with a paper commercial invoice, you’ll get dinged with an extra fee. For businesses still relying on traditional invoicing methods, this is one more way shipping costs can quietly inflate.

A commercial invoice isn’t just paperwork; it’s a required document for international shipments, detailing what’s in the box, its value, and who’s sending and receiving it. Get it wrong, and you risk delays, compliance headaches, or even more fees. Get it right, and you keep your shipments moving and your costs in check.

To avoid this new surcharge, start paying closer attention to your invoicing processes. Switching to digital form, electronic invoicing (e-invoices) not only helps you dodge the UPS paper invoice fee but also streamlines your shipping workflow and reduces manual errors. Make sure your shipping software or logistics provider supports digital commercial invoice generation and submission.

Bottom line: staying compliant with commercial invoice requirements isn’t just about avoiding penalties, it’s about keeping your shipping costs under control and your business running smoothly. Don’t let outdated invoicing practices add unnecessary fees to every shipment. Embrace digital, stay ahead of the surcharges, and keep your logistics costs lean.

Final Thoughts

The 2025 UPS and FedEx surcharge landscape isn’t going to let up. But ecommerce brands that treat shipping like a strategic function, not a static cost, will thrive.

To succeed, adopt a holistic approach to managing logistics costs across your entire supply chain. This means not only focusing on shipping rates, but also understanding how payment processes, payment habits, and payment fees impact your bottom line. Regularly review your payments strategy to optimize for efficiency and maintain healthy cash flow.

Be aware that late payment fees, processing fees, and payment fees on most invoice charges can quickly add up, disrupting cash flow and increasing overall expenses. Late payers face a steep 9.9 percent late fee, and prior late fees will be incorporated into your past-due balance, compounding the cost of overdue accounts. Tracking each transaction and understanding the fee per payment method, whether ACH payments, wire transfers, or paper invoices, is essential for cost control.

Traditional payment methods now often incur additional charges, so consider switching to ACH payments, which are typically fee-free and help streamline payment processes. Avoid extra costs by moving away from paper invoices and printed invoice copies, as these now come with a \$5 fee per invoice. Digital invoicing solutions can help you save money and improve efficiency.

Always check the effective date of new surcharges and payment policy changes to ensure compliance and avoid unexpected costs. For expert guidance on navigating these changes and optimizing your logistics strategy, consult with an expert.

Audit. Distribute. Negotiate. Automate. Adjust.

It’s not about fighting surcharges with brute force. It’s about outsmarting them.

So take a deep breath, pull up your shipping data, and start cutting where it counts. The savings are there. You just have to dig.

Frequently Asked Questions

What are the new UPS and FedEx surcharges for 2025?

UPS and FedEx have introduced increased surcharges in 2025 for large packages, residential deliveries, and fuel costs, significantly impacting ecommerce shipping expenses.

How can ecommerce brands reduce the impact of surcharges on large packages?

Brands can redesign packaging to meet dimensional thresholds, negotiate cubic pricing, or split shipments when appropriate to avoid oversized surcharges.

Can smaller ecommerce stores negotiate lower UPS and FedEx rates?

Yes, especially by leveraging third-party fulfillment networks or 3PLs that aggregate volume across multiple sellers, giving them stronger negotiating power.

Is it worth switching carriers due to the 2025 surcharge changes?

That depends on your shipping profile. Some regional carriers or hybrid services may offer better rates and fewer surcharges for specific zones or package types.

What role does shipping software play in managing surcharge costs?

Shipping software can help reroute orders, compare carrier rates in real-time, and optimize label selection to minimize surcharges and boost cost efficiency.

• Category: Uncategorized
• Tag: Cahoot, News, Shipping and Logistics, Strategy