The nation’s leading parcel express carriers are no strangers to peaks and valleys in the business, driven by economic forces or traditional market cycles. Yet the landscape is changing, and that change is accelerating.
Regional parcel players are expanding nationwide. Last-mile upstarts are increasing scope and coverage, chipping away at their more-established rivals’ market share. Shippers are more interested than ever in diversifying their carrier base, made all the more attractive by inexpensive and easy-to-use multicarrier management technology.
Large retailers are deploying their own “private” last-mile delivery networks, siphoning off more e-commerce shipments. Amazon continues to build out its U.S. domestic parcel delivery operations.
And then there is the tectonic disruption being caused by ever-changing and confusing tariff policies, regulations, and rates. The most significant was the elimination of the de minimis exemption, a longtime U.S. trade rule that has allowed goods valued under US$800 to enter the country without incurring duties or taxes, and with expedited clearance. Now a “baseline” 10% tariff applies to parcels from most countries, with rates escalating to 50% for what the administration has termed “worst offender” nations.
FOUR MILLION PACKAGES PER DAY
Jeff Wolpov, senior vice president for e-commerce at transportation and logistics giant Ryder, heads up the company’s e-commerce and omnichannel operations, which serve hundreds of customers. He cites one industry estimate that calculated that some 4 million packages per day were coming into the U.S. under the former de minimis rule. “That’s 1.46 billion packages a year that were all one-offs,” he notes. “Think about the disruption [the elimination of de minimis] caused on what was an accepted form of importing.”
Now those parcels have to find a different path to the U.S. consumer. Instead of entering the country as “one-offs,” many of those parcel shipments are now being consolidated, shipped primarily in airfreight or ocean containers, and coming into the U.S. as wholesale goods (which have a lower tariff) and are then deconsolidated at U.S. warehouses. The carrier or forwarder initially pays the duty—that’s necessary for the goods to be released—and then invoices the shipper for not only the tariff amount but also a host of processing surcharges for paperwork, customs, local transport, and other handling services.
“The winners are the air carriers and steamship lines due to consolidated freight shipments,” says Wolpov. “Domestic carriers on the ground will get cargo that lands in bulk; shipments will be allocated and distributed by specific order streams and then shipped into parcel networks from an inland warehouse point and on to the consumer once the goods clear customs,” he explains. “Before, small shipments were coming in direct to consumers from overseas.”
Fortunately, consumer sentiment appears to be holding up, notes Wolpov, albeit with an increasing sense of uncertainty and worries about rising costs. “In a recent study, 44% of respondents said they were going to reduce their [parcel] spend for the 2025 holiday season. Consumers are more cost conscious—do I buy now or wait for a sale?” The survey also revealed that consumers continue to place great importance on free shipping as well as returns that are easy to do and free as well, he noted.
PEAK SEASON FLAT, SURCHARGES RISING
“Given the economic challenges from the trade and tariff wars and the end of de minimis, we estimate that 2.3 billion packages will be delivered during the peak season of 2025, an increase of 5% over peak of 2024, mainly from an extra shopping day,” said Satish Jindel, president of ShipMatrix, in the consulting company’s “Parcel Market Forecast for Peak 2025” report.
As for costs, the “Big Three” parcel carriers—UPS, FedEx, and the U.S. Postal Service (USPS)—are pushing various levels of peak surcharges, all up from last year’s levels, Jindel noted. FedEx Ground’s surcharge increased 33% while UPS Ground’s was up 60%, according to the ShipMatrix report. “And while FedEx Ground Economy increased by 16% and UPS Ground Saver by 60%, UPS’s surcharge is still significantly lower than FedEx’s,” the report said.
On the express side, FedEx increased its peak surcharge by 5% compared to UPS’s 10%, both from the same 2024 baseline.
From a volume perspective, in 2025’s first half, Amazon’s U.S. domestic parcel volumes were up 6.1%, with FedEx volumes increasing 5.0%, the report noted. However, volumes for UPS and the U.S. Postal Service decreased by 5.4% and 6.7%, respectively.
“The volume lost by UPS and USPS combined was more than what Amazon and FedEx gained, and that additional volume of 102 million packages was either handled by private networks [operated by] large retailers like Walmart … or tendered to other carriers,” the report said.
The impact of Amazon as well as the expanding private networks of Walmart and other large retailers is reshaping the market, Jindel believes.
In a May 2025 comment, Walmart’s CEO noted that Walmart’s U.S. store-fulfilled delivery sales were up 50% year over year. And notably, many of those orders were delivered the same day: The number of deliveries (through Walmart’s network) made in less than three hours grew by 91% on a year-over-year basis, the CEO said.
With more parcels moving in retailer store-to-door networks and being delivered the same day, “that is shrinking the addressable market for the Big Three,” Jindel noted, adding “by 2027, Walmart and Amazon collectively may be delivering more packages through their private networks than the big commercial carriers.
“The parcel carriers have never operated where a customer is actually their third-biggest competitor,” Jindel points out, adding that this is competitive territory the Big Three “have never been in before and are struggling with.”
At the same time, Amazon is leveraging its network to support other parcel shippers, not just Amazon customers. “They have an advantage because they know what parcel to fulfill from where and where it ships even before they produce a label. They have a better B-to-C [business-to-consumer] model than the others, designed exclusively for that market,” he notes. “The other two have focused on tweaking their B-to-B [business-to-business] model instead of building a B-to-C model that meets the needs of that segment.”
Jindel advises shippers to stay on top of carrier surcharges, both during peak and nonpeak periods, as they’ve become more complex and change more often than before.
“There used to be 30 or 40 surcharge codes,” he notes. “Now there are several hundred. Make sure your invoices are audited thoroughly [and that the auditors are] examining every accessorial charge and not just the base rates,” he advises, noting the more complex and extensive the list of surcharges becomes, the higher the chance of error—and the greater the need for a specialist who can help. And the money can be significant. “Some customers have found they were overbilled by hundreds of thousands of dollars.”
PRACTICING “STRATEGIC REVENUE MANAGEMENT”
That carriers are working hard and creatively to devise and implement additional fees and surcharges is not a new trend, notes Mingshu Bates, chief analytics officer and president of parcel for third-party logistics services provider AFS Logistics, which has some $4 billion in parcel spend under management.
For carriers, it is a focus on “strategic revenue management,” she explains, adding that she considers this a disingenuous way of describing the aggressive tactics carriers are using to increase—and collect—revenue from other categories, other services, or stricter contract terms and conditions. “I’ve seen this playing out at a much faster speed and frequency over the past 18 months,” she notes.
The strategy is primarily aimed at helping offset revenue shortfalls from flat or declining volumes, as well as increased operating costs. “That is where they come up with changes or new surcharges and fees, or just flat-out surcharge increases,” she explains. “Carriers are continuing to adopt [this strategy] going forward; this is how they can increase revenue and keep yield up,” she notes.
Examples of increased or new surcharges include fees charged for additional handling or paperwork processing for tariff-related services to clear shipments; a service charge for payment of duties or tariffs on the shipper’s behalf; stricter payment terms; resetting or expanding fees for high-cost delivery areas, such as rural, remote, or congested metro points; and higher fees for oversized or overweight shipments.
As a result, shippers are increasingly interested in breaking up their parcel spend in an effort to control cost increases and optimize spending at consistent service levels, she says. “There is a stronger than ever trend of shippers looking to diversify their parcel carriers, with one reason being cost,” says Bates. “There are definitely a lot of shippers who are sick and tired of all the off-cycle increases from the Big Two [FedEx and UPS].”
REGIONAL, LAST-MILE CARRIERS STEP UP
Enabling that switch is a growing abundance of regional carriers with good service and competitive pricing, other regionals who are joining forces to provide coast-to-coast alternatives, and last-mile carriers who specialize in smaller geographic areas or metros—all very much focused on the B-to-C market.
When considering a parcel carrier or even managing a current relationship, Bates advises shippers to focus on three “watch-outs.” Those are tiers, terms, and tariffs.
“Tier has to do with your contract and the volume commitments you’ve made,” she explains, and should be a consideration if you’re thinking about diverting some volume as part of a diversification strategy. “There is a lot of nuance here,” she says. “If your discount is based on one volume tier and the amount of parcel traffic you tender to that carrier falls below that, you’ll lose that discount and pay more.”
Next is term. She cites one example of a shipper who signed an extension with FedEx at the start of the year, with the contract broken into three terms. “The carrier is forcing the issue and [is now requiring] automatic negotiations [or increases] in the middle of what used to be an annual agreement. That’s not a new thing, but it is happening more frequently now. These terms can be tricky, with carriers giving a discount over a temporary time frame and then it expires,” she notes. “You really have to stay on top of your terms and all the details within them.”
Last is tariffs, which Bates characterizes as “a tax on your parcel spend.” Her advice: “Be careful to examine and understand how tariff-related surcharges and fees apply to your packages, how and when they are paid, and how that will affect your shipping budget.”
“IT’S BAFFLING”
Joe Wilkinson, vice president of professional services at freight audit and payment company Intelligent Audit, echoes many of Bates’ observations—and takes it a step further.
He sees the growing proliferation of parcel carrier surcharges as “a complete shift in the approach to pricing. Historically, you’d have annual general rate increases, peak surcharges, and maybe some fiddling here and there at mid-year,” he recalls.
Not anymore. “Today it’s a GRI [general rate increase] at the start of the year; then you have these small incremental off-cycle changes every few weeks that also increase prices individually by anywhere from three-quarters of a [percentage] point to a point and a half,” he notes.
Add all those together along with a peak surcharge in the fall—keeping in mind that these are all cumulative and additive—“and you’ll find they’re hitting you with cost increases of 10%, 12%, even 14% overall,” Wilkinson says. “If you were budgeting for a 7% yearly increase in your parcel spend and it comes in at 12%, you’ll have some explaining to do.”
Furthermore, he believes that “as the national carriers continue to add fees and charges, they are making themselves increasingly noncompetitive with the regional and niche players, and alienating their customers in the process. It’s sort of baffling.”
THE GOLDEN AGE OF UNCERTAINTY
The parcel market, driven almost exclusively these days by e-commerce shipments, is like a pendulum constantly swinging back and forth between service and cost, observes Scott Ashbaugh, CEO of DHL Group’s eCommerce in the Americas division, which operates 19 distribution centers in the U.S., and is seeing a shift to more localized fulfillment and larger package volume.
“We are in a period now where the pendulum has swung over to cost,” he’s observed. “That’s likely influenced by tariff pressures and trying to deliver at the same price point. Cost takes precedence.”
That places a premium on carriers’ being able to adapt quickly and be flexible. For DHL Express, the tariff situation has caused significant shifts in trade lanes, with volumes from China and Hong Kong down about 30% year over year, the company says. At the same time, it is seeing growth in traffic from countries like Vietnam, India, Malaysia, and Mexico. With rising tariff complexity, the company has expanded its customs team in the U.S. and added over 680 staff across operations, finance, and customer service to help customers navigate the new challenges.
Tim Robertson, CEO of DHL Global Forwarding Americas, summed it up in a recent press briefing, commenting, “We are in what I call the golden age of uncertainty.”
CHEAP AND SLOW? NOT ANYMORE
Vijay Ramachandran, vice president of marketing, product strategy, and marketplaces for parcel carrier OnTrac, which started as a regional player and has since expanded into coast-to-coast service, notes the elimination of the de minimis rule has changed how customers view cheap and slow, versus expensive and fast.
Before, an e-commerce seller in China could ship a parcel direct from Asia to the U.S. consumer. “It took seven to 10 days, but that is what the customer became used to—buying cheap and waiting a while for delivery,” he notes. With more expensive goods, particularly those sourced domestically, consumers’ expectation was, “It cost a lot, and I want it now.” The expectation was that an expensive item ordered online would arrive in one or two days.
That playing field has now been leveled. With international e-commerce sellers shipping consolidated lots into the U.S. via air and then dropping individual shipments into a local parcel network, delivery of these cheaper goods is now on par with domestically sourced expensive goods. “Domestic brands no longer have the delivery speed advantage,” he notes.
And while the national carriers have been aggressive in adding and increasing surcharges and fees, Ramachandran says that OnTrac has been able to hold the line. “We have reduced surcharges in some 1,600 ZIP codes,” he says, and that has helped OnTrac’s parcel volumes grow by 40%. “We are a natural fit in those areas where the big players are raising rates.”
