For years, parcel shippers have relied on static, multi-year carrier contracts – agreements that promised predictable rates and stability. However, between fluctuating fuel costs, demand swings, and a growing competitive parcel market, fixed-rate agreements no longer reflect the true dynamics of shipping. Instead, the use of dynamic contracts is on the rise. Dynamic contracts are flexible, data-driven agreements that evolve in real time alongside market conditions using predictive logistics, which leverage analytics and forecasting to stay ahead of disruptions.
The Decline of the Static Parcel Contract
Carriers like UPS and FedEx have shifted toward variable-rate models that better capture real-time changes in demand, capacity, and network density. Surcharges are now dynamic, changing based on factors such as weather, fuel costs, regional constraints, and even shipment profiles.
Prior to the shift to dynamic pricing, parcel delivery networks were more predictable and competition was limited. FedEx and UPS relied on multi-year, static agreements that locked in base rates and discounts regardless of market conditions. Most regional carriers, couriers, and newer final-mile delivery providers simply adopted those contract structures as the norm.
Today, particularly during periods of high demand such as holiday peaks, surcharges automatically adjust to balance network capacity, while prices may ease when demand softens.
In response to this way of pricing, some large enterprise shippers have adopted volume-flexible agreements that link discounts to actual shipping behavior and forecast accuracy. For example, a retailer might receive better pricing if it meets volume commitments or optimizes delivery timing to reduce strain on carrier networks. This optimization in the fulfillment process carries benefits to parcel capacity and pricing but is now being leveraged cross-functionally to create efficiencies in overall business planning.
For those non-enterprise shippers who negotiated rates six months ago, they may already be out of sync with today’s market realities. Rapid changes in order volumes, business growth, product mix, and other factors — when paired with evolving carrier pricing structures — mean that shippers must be prepared to either constantly negotiate new concessions into their agreement, or absorb cost increases. Carriers, for their part, are pricing in this uncertainty upfront, especially for shippers with more complex or unpredictable shipping patterns. The shift signals a broader trend: parcel pricing is no longer a static exercise; it’s a living, adaptive process that reflects real-world volatility.
Dynamic Pricing: From Disruption to Opportunity
When dynamic pricing is embraced strategically, it becomes a powerful tool for cost optimization and service improvement. By using real-time data on capacity, demand, and delivery density, shippers can negotiate rates that more accurately reflect their network efficiency, and carriers can reward that efficiency.
For carriers, it can be used to generate revenue and profits during high-demand periods. For example, during the 2022 holiday peak season, FedEx’s dynamically adjusted surcharges helped bring in $150 million in profit from peak season home delivery fees, according to its Chief Customer Officer Brie Carere. FedEx is also using dynamic pricing and contracts to identify instances of customer overbilling.
UPS and FedEx have also introduced zone-specific adjustments that incentivize shipment density and penalize inefficiencies, aligning cost with operational impact. USPS and Amazon are following suit, leveraging better data and technology to close performance and pricing gaps. The more visibility both sides have into the factors influencing cost, the more collaborative and transparent pricing can become.
The Data Advantage: Predictive Logistics in Action
The growing use of dynamic contracting is being driven by data transparency. Shippers today have access to insights into performance metrics, cost drivers, and market benchmarks. Emerging analytics platforms can forecast everything from fuel surcharges to weather-related disruptions, helping logistics teams anticipate changes.
Two such examples are UPS’s Digital Access Program (DAP) and FedEx’s Pricing API. These platforms provide shippers with real-time insights into pricing, delivery performance, and network capacity, allowing contracts and rates to adjust dynamically.
UPS’s DAP integrates with shipping software services such as ShipStation and others, giving access to live rate comparisons, performance analytics, and surcharges that fluctuate based on delivery zone, parcel weight, and network congestion. When regional volumes spike or fuel prices rise, rates automatically adjust to reflect current market conditions, thus eliminating the need for static, multi-year pricing agreements.
Similarly, FedEx’s Pricing API uses real-time data to calculate rates that factor in variables such as shipment timing, destination density, and aircraft or vehicle capacity.
Predictive logistics turns intelligence into action. By modeling multiple “what-if” scenarios, shippers can simulate the impact of different carrier decisions, lane strategies, or fulfillment models before making a move. As such, predictive logistics becomes the “competitive edge” that carriers are using for their pricing. If shippers can implement it in how they build their carrier relationships and pricing, they will be ahead. This level of foresight not only supports dynamic pricing negotiations but also strengthens network resilience, enabling faster pivots when disruptions occur.
However, moving from static to dynamic pricing models requires investments in new tools, data, partnerships, transparency, and trust between shippers and last-mile carriers. Dynamic contracts depend on real-time data integration, predictive analytics, and automated pricing algorithms – capabilities that many organizations have yet to fully implement. Without accurate and timely visibility into shipping volumes, capacity and costs, dynamic adjustments can appear risky or unreliable. There are also concerns about fairness and volatility. Some shippers fear dynamic pricing could expose them to sudden cost increases.
The Road Ahead
As parcel networks grow more complex and customer expectations continue to rise, static contracts will fall further behind. Indeed, dynamic contracts are being embraced throughout supply chains. For example, DHL’s digital freight platforms enable shippers to lock in short-term, volume-based rates that automatically adjust based on lane capacity and performance metrics.
In ocean freight, Maersk Spot provides guaranteed space and equipment at instant, variable rates – prices that shift daily based on demand and vessel utilization. On the air freight side, Lufthansa Cargo uses AI to continuously recalibrate spot prices according to real-time capacity and demand forecasts.
Shippers and 3PLs who build flexible, data-enabled contracting strategies that react in days, not quarters, and continuously optimize both operations and pricing will be the real winners. Dynamic contracts, powered by predictive logistics, provide the framework for that agility. They enable continuous optimization of both cost and service by linking decisions to real-time market signals. Dynamic pricing doesn’t have to be overwhelming or a disruption; instead, it can be a strategic unlock that rewards transparency, technology and trust.
Matt Huckeba is Chief Strategy Officer, Evans Transportation.
This article originally appeared in the November/December, 2025 issue of PARCEL.
