A long time ago, parcel shipping rate increases were far more simplistic than they are today. Rate hikes typically occurred during an annual General Rate Increase (GRI) in December or January, with minimal changes in between. Many shippers had contractual rate caps that limited base rate increases to a fixed percentage. Although surcharge increases were usually uncapped and could fluctuate, the underlying logic remained consistent.
Those simpler days are now over.
Between March 1 and June 2, 2025, UPS implemented changes on 11 separate days — far from the limited adjustments shippers were used to. Some were straightforward — such as the Overmax fee increasing from $1,325 to $1,775 on June 2. But many others were more complex, such as the introduction of a two percent processing fee on May 19 or adjustments to ZIP Code-to-zone mappings on March 24 and again on June 2.
Unlike traditional rate changes where shippers can compare old and new costs to assess impact, these newer, more nuanced updates require additional analysis to fully understand. Let's explore two specific examples and how shippers can evaluate their implications.
Two Percent Payment Processing Fee: Simple in Appearance, Ambiguous in Practice
At first glance, adding a two percent payment processing fee appears straightforward — just tack two percent onto the total spend. However, the announcement lacked critical details and introduced significant ambiguity. Shippers should have been asking two key questions:
·Is this a new fee or is it replacing an existing fee?
·Does this fee apply universally or only under certain conditions?
UPS’s announcement did clarify one point: the new two percent processing fee would replace the existing credit card surcharge. However, no detailed explanation of when the new fee would apply was included in either the announcement or the March 31 update to the UPS service guide.
To fill in the gaps, shippers had to contact their UPS representatives directly. Those who did learned that the two percent processing fee applies to accounts with payment terms of 21 days or longer, or to accounts that are credit-card-enabled — even if no credit card is used for payment.
To calculate the impact, shippers need to:
1.Identify total spend on accounts with 21+ day payment terms or credit card enablement.
2.Multiply that amount by two percent.
3.Subtract any prior spend previously subjected to the credit card surcharge.
By following this process, informed shippers can gain clarity on the precise details of this change, identify the accounts that would be impacted, and understand the financial impact to their business.
ZIP Code to Zone Mapping: A Hidden Driver of Cost
Unlike a typical GRI or surcharge, the ZIP Code to zone mapping update altered a core component of UPS's rating structure rather than a fixed rate. Specifically, it changed how zones are assigned for origin–destination ZIP Code pairs. Zones affect both base rates and zone-based surcharges, such as the additional handling or large package surcharges.
As with the payment processing fee, UPS did not publicly release the specific ZIP Code changes ahead of implementation. Shippers again had to reach out to their reps for details.
Once the details of the zone changes were obtained, the March 24th updates appeared neutral on the surface. Of all the ZIP Code pairs that had a change in zone, there were roughly the same number that had the zone decrease as there were that had the zone increase.
But a deeper look revealed this was not a balanced shift. Destination ZIP Codes with zone decreases had an average population of approximately 181,000, while destination ZIP Codes with zone increases had an average population of approximately 825,000. This means high-volume, densely populated destinations became more expensive to ship to, while less trafficked areas became cheaper — a net negative for many shippers.
While understanding how the zones change overlays with the US population is insightful, shippers need to get even more specific and understand how their network fits into the changes. To assess the impact of zone changes, shippers should do the following:
1.Review origin and destination ZIP Code pairs in their network.
2.Identify which pairs changed zones.
3.Analyze shipment volume and applicable surcharge volume per affected pair.
4.Calculate rate and surcharge impact based on the new zone assignments.
Failing to analyze these changes in detail could result in unexpected cost increases, especially for shippers with high-volume lanes into impacted ZIP Codes.
Complexity and Ambiguity Are the New Normal
These recent changes underscore a clear shift in how parcel shipping rates are being implemented and communicated. Carriers are now rolling out frequent, layered, and often opaque changes that can significantly affect shipping costs.
To stay ahead, shippers must take a proactive and analytical approach. As carriers introduce increasingly complex and less transparent changes — whether through new fees, underlying structural changes, or evolving surcharge criteria — shippers must be diligent in tracking, questioning, and analyzing each update. Now more than ever, shippers should be leveraging advanced analytical tools, internal data analysis, and regular dialogue with carrier reps to protect their bottom line.
Keegan Leisz is a Senior Project Manager in Professional Services at Intelligent Audit. He partners with enterprise shippers to uncover opportunities for logistics optimization, aligning cost reduction with service-level improvement. With a strategic, data-informed approach, Keegan helps clients navigate carrier diversification, performance challenges, and long-term transportation planning to drive meaningful operational gains.
This article originally appeared in the July/August, 2025 issue of PARCEL.
